ORIGINALLY POSTED DECEMBER 10, 2008
Today a saw a post on Digg:
This discusses a letter sent by an iPhone developer named Craig Hockenberry to Apple CEO Steve Jobs. You can check out the letter here:
This post got me thinking… I don’t own an iPhone myself. I refuse to consider it until they are on a half-way decent cell network (and I’m personally a fan of Sprint specifically). Besides, I’ll make the unpopular admission here: I actually like Windows Mobile! Putting aside the fact that I’ve developed and sold a few products for that platform, I just prefer it. My HTC Mogul has served me very well, thank you very much!
So I don’t really have a vested interest (right now anyway) with what’s going on with the iPhone and the App Store. However, Craig’s post struck a nerve with me as a developer that has sold some products in the mobile space.
Part of Craig’s argument is that the abundance of .99 apps make it hard for him to compete. He says in the letter, and I quote:
…The problem now is funding those products. We have a lot of great ideas for iPhone applications.
Unfortunately, we’re not working on the cooler (and more complex) ideas. Instead, we’re working on 99¢ titles that have a limited lifespan and broad appeal. Market conditions make ringtone apps most appealing.
Before commencing any new iPhone development, we look at the numbers and evaluate the risk of recouping our investment on a new project. Both developers and designers cost somewhere between $150-200 per hour. For a three man month project, let’s say that’s about $80K in development costs. To break even, we have to sell over 115K units. Not impossible with a good concept and few of weeks of prominent placement in iTunes…
Here’s the thought that jumped into my head as I read that: maybe you shouldn’t be in business if you don’t want to take the risk of developing the “cooler” products that in all probability would sell extremely well if they are truly that cool.
You see, good products, truly GOOD products, of any kind, tend to sell pretty well regardless of price. Oh sure, the price point has to be reasonable, and there will always be people who just want the cheapest alternative available, but most people are perfectly willing to pay a premium for a perceived better product.
However, the manufacturer has to be willing to take the risk. I realize it’s not easy when you’re a “little guy” (and what that term means is up for debate these days), but that fact doesn’t change.
Speaking from my own experience… I spent nearly a year developing a Windows Mobile game called K&G Arcade. The “budget” for the project was minuscule, under $1,000. I’m damned proud of that product, I think it came out really well. However, the world at large didn’t agree: we sold less than 200 copies all totaled. Clearly, the ROI on that project didn’t work in our favor. Would I have not done that project if it had cost me more up-front to do it? No, I still would have done it, and now I’d be up shit’s creek, to put it bluntly. I believed in the project, thought it was really cool, and I would have taken the larger risk without hesitation. Sometimes you win, sometimes you lose.
And sometimes when you lose, you go out of business, and that gets back to my main thought. Business is all about risk. If you aren’t willing to take that risk, you shouldn’t be in business. It’s about the willingness to spend money to make money. Hell, look at the big three automakers and the problems they (and by extension, all of us!) are having: if they had decided some years ago to start pushing new technologies and innovative products and just plain taking some risks, instead of playing it safe and putting out all the tanks (SUVs, minivans, etc) that everyone wanted at the time, maybe they’d be diversified enough now to survive without having to beg for money in the United States Congress.
The tanks are the .99 apps in the App Store, and the new technologies and innovative products are, to hear Craig tell it, the “cool” apps he’s not developing because he still feels he needs to develop the tanks instead.
Current market conditions are only current market conditions until they aren’t. Sometimes what the consumer wants changed the conditions, but often times a great product will tend to lead the consumer. Think of this: how many people knew they JUST HAD TO HAVE a portable MP3 player before Apple came out with the iPod? Not too many, that product lead consumers, no everyone (err, except me!) has one. The iPhone is a very similar product, everyone (except me again!) wants it, but they probably didn’t know they wanted it before Apple put it out there. Anyone of the “cool” ideas Craig isn’t pursuing because he feels market conditions don’t warrant it could be the next product that leads consumers and changes the very conditions he’s worried about.
Craig, if your ideas really are that “cool”, and you really believe they are, then take the chance regardless of what the numbers say and you just might change the equation. Yes, it’s a risk, but that’s what business is all about. If you’re not willing to face that risk, you probably should get out, or at least, stop sending bitch letters (albeit thoughtful and eloquent bitch letters!) to Steve Jobs. You might as well spend that time developing!