App stores: early or not at all?

In the past 10 months, the Apple app store has been a tremendous success, helping to fuel the success of the iPhone. Now all the other platforms owners (Google, Microsoft, RIM) and operators are planning their own app stores.

There are some dubious assumptions that both app store owners and app developers are making about app stores.

• Early apps were successful so we can be too.
• Early apps were successful but it’s too late for us.
• App stores made Apple a success and will make our platform a success too
• All we need is the “killer app” to make our platform a smash hit.

The answer is: Your mileage will vary.

All this is a preface to a discussion Wednesday in San Mateo by two Symbian Foundation executives — “catalyst” David Wood and interim marketing VP Ted Shelton — on their own planned app store.

The app store plan for Apple is pretty simple: Apple makes the phone, Apple makes the platform, and Apple strong-armed the carriers into providing (on-deck) access to App Store apps on any iPhone. For firms that license their OS (Google, Microsoft, Symbian) the story is quite a bit messier, since both the phone maker and the operator may want to get involved.

At the Nokia Developer Conference last month, Symbian Foundation head Lee Williams announced Symbian will be developing its own app store. It appears most analysts in the US missed the story, to the point that some (like my friend Matt Asay) are growing impatient.

Shelton and Wood talked about the app store Wednesday night to a small grouping of developers and analysts. The name is not settled, but the name I thought fit best was “Symbian App Warehouse.” Rather than sell to end users, they will certify applications and distribute them to all manner of application stores (e.g. Nokia Ovi) run by handset vendors, operators. The claim was that it would be without a fee, but I (like others) suspect in the long run they will need a minimal fee to cover operating costs; Mike Mace suggested 5-6%.

Symbian is shopping for lead ISVs: 5 developers in July, 100 in October for the 2009 Symbian Exchange and Exposition (“Come and SEE the future of mobile.”) The idea is to scale slowly to work out some of the kinks — not to impose some sort of limit as to the number of applications.

So the offer from Symbian was simple: do you want to be app # 45,678 at the Apple store or one of the first five at the Symbian store? As Shelton said, “the first movers have a greater opportunity to make money because there is a lower signal to noise ratio.” Palm has been making similar claims to prospective Pre developers (but with 0% share for its new platform vs. nearly 50% for Symbian).

Shelton had a point: ceteris paribus, later is worse. When I launched my Mac software company in July 1987 I had a far harder time getting carried by the channel and getting noticed than had Silicon Beach Software 3 years earlier. (I also had less money and less compelling applications). Of course, big companies with big budgets are better equipped to enter late than small self-funded (perhaps garage-dwelling) startups.

The iPhone App Store with its high visibility (and high download rate) would be very attractive if I had a narrow niche program, such as a virtual bass guitar. Unfortunately, PocketGuitar (99¢) already does that, and there are also other electronic guitars, several pianos, drum sets and even simulated sax, flute and bugle (blow on the mike). This is among more than 1300 applications listed under the “music” category.

So the Apple app market is heavily fragmented, and with a free online course being viewed by 100,000 developers, it will only get worse. Expectations for the Android Market mean that it is likely to head in the same direction. What should a developer do?

In the long run, developers will enter with one platform and then (if their app is hot) port to everything in sight; as with videogames, a platform will have only a temporary exclusive. The web-based apps (Facebook, MySpace, Google maps etc.) are already heading in this direction. A handful of companies (like Pangea Software on the iPhone) will figure out a way to come up with a string of hits.

In the short run, young developers need an open field market entry strategy: go where the competitors ain’t. Videogame developers have done this for more than a decade, just as companies choose geographic markets that are most promising. Once all the app stores have their initial launch ISVs, it will be up to developers to figure out a way to stand out of the clutter.