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  • Another Apple Secret: Keep the Apps Cheap!

    August 20th, 2009

    Let’s take the infamous Apple Tax argument only so far and no farther. Comparably equipped Macs and PCs cost pretty much alike. There’s no sense in discussing configurations Apple doesn’t offer, could offer, should offer or anything else. It’s all about A versus A, not A versus Z or some other combination.

    However, once you’ve paid the price of admission, the price of using your Mac is apt to be a lot less than you might expect. You see, personal computers aren’t designed as pieces of artwork that you’re supposed to look at. Well, at least most of the time. The late Apple Cube, for example. It didn’t do so well from a sales standpoint, but it sure looked great.

    Yes, some of Apple’s current gear might fit into the category of lookers as well, but that’s not why you buy them. You see, they’re designed to run apps, as we all know. To the surprise of many skeptical media pundits, a lot of iPhone and iPod touch owners bought them to run apps too, numbering some 70,000 varieties at last count.

    The current lineup of iPhone ads, for example, speak less of the product and its features, and far more about the fact that there is an app available for all sorts of uses. Stretch your imagination as far as you can, and there’s probably an app to fit the need. If not, one might already be under development, or being considered by Apple, and the less said about that the better.

    One of the most important features about iPhone apps is not their usability, but their price. Thousands are free, in fact, and others are available for as little as 99 cents. Very few are priced beyond the impulse category, which means almost any developer, whether large or small, stands a chance of getting a hit, which can mean hundreds of thousands of sales in the space of just a few weeks. That adds up to a whole lot of money, particularly in a struggling economy.

    At the same time, there are lots of shareware publishers out there with Mac and Windows apps that are lucky to move a few dozen user licenses in any given month. Lots of people download the products, use them, and never pay a cent. It’s a tough business out there, and you wonder why some developers stay in the business, particularly if it’s their day job. Maybe they need to consider some changes to their business models.

    Do you see where I’m going here?

    Let’s look just a little bit further, at the way Apple is handling Mac apps these days. iLife comes free with new Macs, and a retail copy for the entire collection of great consumer apps is a mere $79. The same holds true for iWork, a surprisingly powerful productivity suite that more and more people are embracing in place of Microsoft Office. At the same time, Microsoft is changing the name of their email app, Entourage, to Outlook for the next version, hoping that will make you believe that it’s a closer compatriot to the Windows edition. They will probably not be cutting the price, however.

    Moving up the scale, the last two releases of Apple’s Logic Studio, an audio production suite for professionals, have sold for $499, with upgrades pegged at $199. That may seem a bit much until you compare the price to almost every other comparable software collection. In movie business, Final Cut Studio is a mainstay in the film and TV industries, and it retails for just $999, hardly more than one of the major desktop publishing apps.

    So it is quite true that Apple doesn’t build cheap computers. But they compensate by keeping the prices of their software relatively low. You see, Apple evidently believes they can make more money be selling apps cheaper, simply because much greater quantities will be moved. Fair prices also mean less piracy.

    All this is, of course, a lesson largely lost on Microsoft, which evidently tries to snag as much as they can from everything they build. Yes, if you purchase a million copies of Microsoft Windows, you’ll end up paying a relatively low sum for each user license. If you’re a lone consumer, you’ll pay several times as much, unless you’re building your own PC. Then you can buy a so-called OEM license at a fraction of the regular price, even though you are only manufacturing one computer.

    The care and feeding of your Windows box is made more expensive by the price of malware protection. Yes, there are free alternatives, but most people buy the commercial variety. Here you can’t just buy a copy and be done with it. You have to renew the update subscription every year or you will suddenly find your protection is out of date. That’s one reason why lots of consumer-level PCs end up as spam bots, feeding junk mail to unwary victims around the world.

    When it comes to software with both Mac and PC versions, you’ll see pricing to be pretty close, although there are some Mac-based surcharges that make no sense whatever. All in all, however, the Apple value proposition makes the care and feeding of a Mac less costly than a Windows box. And that is regardless of any real difference in the original purchase price.



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    3 Responses to “Another Apple Secret: Keep the Apps Cheap!”

    1. dfs says:

      Let’s not forget the fact that Apple charges each and every user the same amount for OSX and gives them exactly the same features, rather than selling a crippled version with a lot of disabled features as its base model and then charging extra money to turn those features on according to a graduated scale of prices (which must be both exasperating and confusing to the customer). Why not call that marketing model a “Microsoft Tax”? And in fact doesn’t MS do something similar with Office?

    2. Peter says:

      “Thousands are free, in fact, and others are available for as little as 99 cents. Very few are priced beyond the impulse category, which means almost any developer, whether large or small, stands a chance of getting a hit, which can mean hundreds of thousands of sales in the space of just a few weeks.”

      Of course, what’s involved in making an “impulse” App?

      The Store is choking over 99 cent Apps that do very little. That’s not to say these are bad Apps necessarily–frankly I’m not going to pay more than 99 cents for a tip calculator or a digital whoopie cushion. But it sets expectations low. So someone who actually makes a serious App and charges more gets looked askance–“Why are you charging so much?”

      I remember reading somewhere that the “typical” iPhone App takes less than 3 months from concept to shipping. What kind of App are you getting with 3 months of development time?

    3. @ Peter: Good question. But not all the cheap apps are single-purpose things churned out on a moment’s notice. Actually, considering the wealth and extent of Apple’s developer tools, if I told you the time it took for the original version of AIM, which is not a simple app by any means, you’d be shocked.

      According to my friend Lee Givens, the Mac product manager at AOL, it took “2 weeks to build a prototype and about 3 months to get it to shipping quality.”

      So what are you getting for 3 months development time? A whole lot more than some of you expect. Mac OS and iPhone apps come together a lot faster than the stuff done for Windows. 🙂

      Peace,
      Gene

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