When I recently received my new iPhone 4, I took great delight in organizing my apps into folders, finding new apps in the app store, and seeing how beautiful various apps looked on the new screen. Then I used it for a couple of days and realized, not counting pre-loaded Apple software, I use exactly five apps: the New York Times, Dropbox, Pandora, MenuPages and Skype. Why am I wasting time collecting and organizing all these apps? We're in an app bubble.
My app library -- littered with exactly 87 apps I used once and never touched again -- now reminds me of a graveyard of defunct company logos from the dot-com boom. Like the go-go days of 1999 when everyone had to have a Web site, today everyone wants an app. iPhone, iPad, Android apps for all, plus Blackberry for the very ambitious.
Here are eight signs we're in an app bubble:
- Apps don't generate profit for developers. Apple CEO Steve Jobs has said the App Store has generated more than one billion in revenue for developers. That sounds like a big number. But in this context it's not. One billion dollars in revenue for the approximately 225,000 apps is $4,444 per app -- significantly less than an app costs to develop. In a well-thought-out analysis of the economics of iPhone apps, authors Tomi T. Ahonen and Alan Moore paint a bleak picture. A typical iPhone app costs $35,000 to develop. The median paid app earns $682 per year after Apple takes its cut. With these calculations for the typical paid app, it takes 51 years to break even. It's not any better for free apps. A free app also costs about $35,000 to develop. But there are so many free iPhone apps that at a rate of twoseconds per app, it would take approximately 34 hours for someone to check out each one. That's not great odds for a revenue-model based on advertising.
Does this mean companies should stop making apps? Unfortunately, no. Until the bubble bursts, apps are the only mobile game in town. And without a doubt the future of digital is the ubiquitous, pocket-sized screen. What's needed are apps tied to real business models that have real ROI. And,companies should build apps with their eyes open about what they should realistically expect to accomplish with what they develop. Having an app for an app's sake is not enough.
This story was originally published on FastCompany.com.