11/17/2014 10:25 am ET Updated Dec 06, 2017

5 Ways Platform Ecosystems Will Shrink


I found the recent Developer Economics survey results astonishing. VentureBeat published an article titled: 10,000-developer survey: 2 percent of coders split staggering 54% of all app revenue. Here are some snippets:

A new 10,000-developer survey by Developer Economics says that 50 percent of iOS developers and 47 percent of Android developers are "below the app poverty line" and making less than $500 per app per month. That means "the majority of app businesses are not sustainable at current revenue levels," Developer Economics says.

88 percent of developers split just 11 percent of all app revenue and make under $10,000/month. Another nine percent split 35 percent of total app revenue, making between $10,000 and $100,000 per month. And the big winners with massive games, who make up just two percent of all developers, split a staggering 54 percent of all app revenue, making over $100,000 per month.

Well, this confirms what I have always felt was wrong with the way the platform eco-systems are being run. Here are five ways they will fail:

1. Entrepreneurship Skills Lacking: The focus on technical skills is necessary but not sufficient. These developers, if they are to operate as micro- and mini-entrepreneurs, need to be taught business skills. Without that, they may succeed as developers, but they will fail as entrepreneurs.

2. FREE Equals Death: The obsession with FREE will choke the system.

3. Go Get A Job: Technical skills are in high demand. Developers do not need to be satisfied with $500/month. They will, eventually, abandon the idea of being entrepreneurs and go get jobs, making, easily, over $100k a year. Good ones will make a great deal more.

4. Number of Apps Will Decrease: The number of apps in the app stores will go down dramatically. Since most of these apps are bogus anyway, this will be no loss to the consumer, and no real loss to the developers making them. In fact, the clutter decreasing is highly desirable.

5. Free Marketing Diminishes: Today, app developers tend to do a ton of marketing to promote their apps that, at the end of the day, end up promoting the app stores. 50% of this goes away, if 50% of the app developers go get jobs and stop marketing their apps.

If I were running a platform ecosystem, I would ensure that the promising developers get sufficient entrepreneurship training.

Without that, we're going to see a huge exodus of developers.

Of course, these developers may exit being entrepreneurs, but still continue to be developers on the platform, while working for a larger company.

But may be, they won't.

May be, they will go to a different technology area altogether that is more lucrative ... Big Data? Machine Learning?

I am interested in speaking with people running developer ecosystems. What strategies are you using? How are you addressing the issues discussed here?

Photo: David Goehring/Flickr.