Developing Perspective

#148: Trading in Pork Bellies.


00:00:00   Hello and welcome to Developing Perspective. Developing Perspective is a podcast discussing

00:00:04   news of note, and iOS development, Apple, and the like. I'm your host, David Smith. I'm an independent

00:00:09   iOS developer based in Herne, Virginia. This is show number 148. And today is Friday, October 25th.

00:00:15   Developing Perspective was never longer than 15 minutes. So let's get started. All right,

00:00:18   so I am back from my various travels, all up and down the East Coast of the United States. And

00:00:23   things should be settling down and things should be falling back into a more regular schedule again.

00:00:29   So apologies for the slightly off schedule,

00:00:31   as it's just been often about doing various things.

00:00:34   Things should be settling down.

00:00:36   All right, so I'm going to be talking mostly today

00:00:39   about a few reactions and thoughts from the, I guess,

00:00:42   the October keynote, or whatever Apple will actually

00:00:45   be calling it.

00:00:46   Most will probably refer to it as the iPad event.

00:00:48   That happened this last Tuesday.

00:00:51   Overall, it's roughly exactly what we expected,

00:00:55   which is always a little bit underwhelming in some ways

00:00:57   when you get exactly what you were expecting, exactly what you could have predicted even

00:01:03   beyond just sort of rumors and leaks and those types of things.

00:01:06   It was a lot of sort of the same again, the same again, which is fine.

00:01:10   I mean, that's where we are.

00:01:13   And at some point, there'll be something new and fancy, I'm sure.

00:01:17   Hopefully at some point, we'll get our retina cinema display or something like that that

00:01:22   I think we're all kind of hoping for.

00:01:23   I'm not holding my breath for that, just looking at the existing options, not from Apple.

00:01:32   There's a couple of 4K, I think they're usually about 32-inch displays that are interesting,

00:01:38   but they're all about four grand or something, so it's pretty steep.

00:01:41   I can see Apple waiting until that technology just gets another six months or 12 months

00:01:46   under its belt before they enter into that market as much as I wish that was quicker.

00:01:51   The thing I was going to talk about mostly today, because the hardware isn't all that

00:01:56   interesting, is the overall theme that Apple took with their approach to software.

00:02:02   And it was kind of an interesting approach that I think they very consciously, and with

00:02:07   a lot of purposeful words and their choice of words even, made it very clear that there's

00:02:14   There's a reason that they would prefer

00:02:19   and are driving towards a place where software

00:02:24   on their devices is very low cost, if not free.

00:02:28   And they held up people who were charging for software,

00:02:33   people like, in this example, things like Microsoft

00:02:36   with Office and Windows, as not caring about their customers

00:02:38   in the same way or not allowing their customers

00:02:42   to take advantage of things that they really should be.

00:02:43   And that is certainly a little bit worrying.

00:02:47   As somebody who makes my living from the sale of software,

00:02:50   that it's worrying, but not unsurprising.

00:02:55   And I say not unsurprising in that there's

00:02:57   the old statement about the best thing you can do

00:03:02   is to commoditize your compliments.

00:03:04   And the software that I sell, the software

00:03:06   that many of you who listen to this show would probably sell,

00:03:08   are compliments to Apple's core business.

00:03:10   And Apple's core business right now is selling iPhones.

00:03:13   And to some degree, their second business is selling iPads.

00:03:16   And their third business is selling Macs, probably.

00:03:19   I might have to look at the actual numbers.

00:03:21   But that's roughly, in my head, in that order

00:03:23   with a very steep drop off.

00:03:25   Apple's business, they want to sell as many iPhones

00:03:28   as they possibly can.

00:03:29   That's where they make their revenue.

00:03:30   That's where they make their profit.

00:03:33   And everything else to that is secondary.

00:03:35   They talk about the amount of money, the billions of dollars

00:03:37   that they've given developers, which is great,

00:03:42   although I suspect a lot of that is going to

00:03:46   sort of the free-to-play, so to speak, apps in the store

00:03:48   rather than to kind of more traditional software developers

00:03:52   or utility developers, those types of things.

00:03:56   But either way, the reality though is that Apple's primary goal

00:03:57   is to sell that, and as well as it should be.

00:04:03   I mean, and in many ways, I can't blame them for that,

00:04:04   Because what I want as a developer,

00:04:06   and part of why I developed for this platform,

00:04:08   is that it has such a wide audience.

00:04:10   That for almost anything I write,

00:04:12   there are hundreds, if not thousands,

00:04:15   if not millions of people who could potentially

00:04:17   be interested in using that software.

00:04:19   And I'm able to address that market in one place,

00:04:21   through the App Store.

00:04:23   However, it is a little bit worrying

00:04:25   that this is kind of the expectation

00:04:30   that Apple is developing.

00:04:31   And moreover, I think it is just something

00:04:33   people need to understand and we just collectively as developers need to start adapting ourselves

00:04:41   to that.

00:04:42   Sort of to this reality that we've talked about a little bit before, but broadly speaking,

00:04:46   this is the way forward.

00:04:47   I think Apple is expecting to continue to drive and condition customers that there will

00:04:53   be lots of, if you buy a phone, you will get tons of great software free on top of that.

00:04:59   And that you have a reasonable expectation of that's what you're getting when you buy

00:05:02   buy an iPhone, and that's what's different when you buy an iPhone versus if you buy an

00:05:05   Android or if you buy a Windows phone or whatever it is.

00:05:09   That here, if you buy a Windows Surface 2 or whatever they're doing there, it's like

00:05:15   you have to buy Office potentially rather than here.

00:05:17   It's like, hey, you buy an iPhone, we'll give you pages, keynote, and numbers just free.

00:05:22   And the first time you open the App Store, your very first, if you imagine if you were

00:05:25   a brand new user, you never have had a smartphone before, been using a feature phone for years,

00:05:30   you think, oh, maybe I'll go get an iPhone.

00:05:31   you go get an iPhone, you open it up,

00:05:36   first time you hit the App Store,

00:05:38   if I remember correctly, it'll prompt you and say,

00:05:39   "Hey, here's some great new free software."

00:05:41   So your very first sort of anchoring experience,

00:05:44   kind of choose to use the marketing term of anchoring,

00:05:48   where you can set someone's expectations

00:05:49   by presenting them with various options.

00:05:52   They're creating a very strong anchor on free.

00:05:54   And the software they're providing for that

00:05:58   is very good in the sense of,

00:05:57   It's not like they're providing a few basic, free, simple, trivial apps.

00:06:02   They're providing things like keynote numbers pages, GarageBand,

00:06:05   iPhoto, all these kinds of applications that are very robust,

00:06:10   that aren't just some of their storefronts.

00:06:13   It was one thing when iBooks was a free app,

00:06:14   but in reality, iBooks was mostly a storefront for them,

00:06:17   so it made sense for it to be free.

00:06:19   But these are full-on utility productivity applications

00:06:21   that are now just free.

00:06:24   That's an interesting bar to adapt to.

00:06:24   And I'm not all sad about this.

00:06:29   I'm not someone who's going to be picking on this

00:06:31   and be overall too sad.

00:06:34   Because I think the reality is that this is just where we are.

00:06:36   And worrying about it and complaining about it

00:06:40   isn't really productive.

00:06:43   I don't think it would necessarily change anything,

00:06:44   nor do I think it will really be a constructive activity

00:06:46   to focus time and attention on.

00:06:49   And I think what that's doing, though,

00:06:51   is, and this is coming out of a couple of conversations

00:06:51   I've been having recently with a variety of developers.

00:06:54   And I think there's a lot of movement going forward

00:06:59   where developers should be focusing

00:07:02   a lot of their attention on two.

00:07:03   There's really two areas where you could still

00:07:07   make the good living.

00:07:08   And for developers, only one of those is really available.

00:07:11   But it seems like there's a lot of money right now

00:07:13   in vertically integrated or hardware type products.

00:07:17   And they could certainly some of that in some ways

00:07:19   with-- as a software developer, if you have an add-on--

00:07:24   so I think about the Thermoto people

00:07:26   who made a little thermometer that plugs into an iPhone.

00:07:28   They can sell the Thermoto for a reasonable markup

00:07:31   and then have free apps associated with it.

00:07:33   And they're still making their money on the physical hardware.

00:07:36   And then the other side is on services.

00:07:38   This is something that I've been exploring and understanding

00:07:40   pretty good, fairly well recently,

00:07:43   in with Feed Wrangler, where people are perfectly willing

00:07:46   and have no resistance to paying for services in a lot of ways.

00:07:49   where there's an expectation still,

00:07:54   and there's an understanding of why that would be the case.

00:07:56   When I charge somebody $19 a year for a service,

00:07:58   they're like, "Oh, great, sure."

00:08:02   In fact, it's actually fairly competitively priced.

00:08:03   But it's still a per-user value of massively more

00:08:06   than you could get almost anything.

00:08:09   And I think those are two areas that I think going forward,

00:08:11   there's going to be a lot of opportunity and things.

00:08:14   And as I'm thinking about where I'm going to be putting

00:08:15   my efforts and where I'm going to be putting my focuses.

00:08:20   I think focusing on things like services has a lot of likes to it, beyond things that are just software

00:08:22   or wrappers for other APIs or those types of things.

00:08:30   And that's kind of encouraging.

00:08:34   And certainly the interesting contrast to this is yesterday I think it was Tweetbot 3 launched

00:08:35   and is currently the number one paid app and top 10 grossing overall in the store.

00:08:40   And that's awesome.

00:08:45   And I'm genuinely pleased that that is still possible.

00:08:46   That a small independent team, Mark and Paul in this case,

00:08:50   have created something that is so loved and endeared and desired.

00:08:53   They can launch an app at $3 and do very well.

00:09:00   How long that lasts is hard to know.

00:09:03   And unfortunately, as I thought about that, a lot of that this morning,

00:09:05   though, it's unfortunately, I think it's the example that contradicts

00:09:09   the rule rather than probably the rule itself going forward.

00:09:13   Mostly because they're in a kind of unique situation

00:09:15   where no one's built-- there's not a lot of innovation

00:09:18   in terms of new competition coming into that space.

00:09:21   Because Twitter has basically said,

00:09:23   we're going to kill the prospects of any new Twitter

00:09:27   client.

00:09:27   And so you can't get-- right now,

00:09:29   if I were to sit down and say, I'm

00:09:31   going to make an amazing new best of breed Twitter client,

00:09:34   I could at most sell about 100,000 copies of that,

00:09:37   which is pretty unfortunate.

00:09:42   And so I try not to draw too much conclusion

00:09:45   from the great start that Tweetbot has had,

00:09:48   as happy as I am that that is the case,

00:09:52   because they're sort of in this weird protected,

00:09:54   almost like they have a legislated monopoly or something,

00:09:57   that them and Twitterific and a couple of other people

00:10:00   who have enough tokens to make a real business of it,

00:10:03   who they can take advantage of.

00:10:03   But I don't know how broadly that will apply.

00:10:08   So that's kind of what I'm thinking about.

00:10:12   These are the things that I think Apple is driving us towards

00:10:14   and that we should probably be embracing as developers,

00:10:17   is that understanding that it's going to be harder and harder

00:10:21   to combat a customer's expectation

00:10:23   that an app should be free.

00:10:27   And so we're going to be addressing that

00:10:28   in a variety of ways.

00:10:30   We can be doing in-app purchases for a variety of things.

00:10:28   We can be doing advertising, those types of things.

00:10:33   And then the third that I think is most interesting

00:10:38   is to be charging for services,

00:10:39   charging for things that people will,

00:10:41   that we're not charging for the software themselves.

00:10:44   And I guess honestly in some ways

00:10:47   that's what I've been doing.

00:10:48   And now that I think about it,

00:10:49   that's actually a little bit awkward,

00:10:51   given what I'm saying, for the way

00:10:53   that I've been structuring things.

00:10:54   Say, for example, in feed Wrangler,

00:10:55   where the service is what you pay for,

00:10:56   and then I give away all my apps

00:10:54   and all my software for free.

00:10:55   I'm kind of reinforcing that same mentality,

00:10:57   that the software component is free,

00:11:00   and the services is something you pay,

00:11:01   versus what Apple's doing where they're saying,

00:11:03   the hardware is what you pay for,

00:11:04   and the software that runs on it is free.

00:11:07   I think that's our new reality.

00:11:09   And it's kind of like we're just kind of

00:11:10   in the commodities market now.

00:11:12   And it's kind of, I wouldn't,

00:11:15   you know, I think about the way that

00:11:17   trading in a commodity is always gonna be

00:11:21   a risky business, and it's also gonna be

00:11:22   low margin business because there's not a lot of differentiation.

00:11:27   You think about the commodities exchange in Chicago.

00:11:31   They're selling pork bellies or they're selling frozen orange juice or coffee or whatever it is.

00:11:35   All the products that are broadly lumped together are interchangeable for that, in that perspective.

00:11:41   And I think in some ways that's where we are, that we're increasingly becoming commodities.

00:11:47   I think Apple officially announced that the App Store had hit, I think, one million apps available.

00:11:51   And as awesome as I think each of us are,

00:11:56   and as awesome as some of the applications

00:11:58   can be unique and can be creative

00:12:00   and can be things that we pour a lot of energy

00:12:02   and time and careful design into,

00:12:05   it's very hard to have a strong, strong differentiation

00:12:07   between things now with a million different options.

00:12:11   There's a lot of different ways that,

00:12:15   and honestly it's probably better for customers

00:12:18   because a customer can now find, almost assuredly,

00:12:20   they can find the app that is tailored exactly

00:12:23   to their preferences.

00:12:24   And for better or worse, that's likely going to lead

00:12:26   to a large amount of very diverse and dispersed revenue

00:12:32   for developers, rather than if there were only--

00:12:34   as in the example for Twitter clients,

00:12:36   there's only a couple of Twitter clients possible.

00:12:39   And so it's concentrating everyone down in, rather than

00:12:41   dispersing them.

00:12:42   So those are just some thoughts and some things

00:12:44   that come out of the keynote.

00:12:45   Overall, I'm still very optimistic and confident

00:12:48   about this product, of this platform and where I am.

00:12:53   Coming up, I think I'm almost right on my five-year

00:12:55   anniversary of my first app being accepted into the app store.

00:12:59   And I'm just as excited about the market overall as I was back then.

00:13:03   And I think the reality, though, is we just need to make sure

00:13:08   that we're being flexible, that we're being adaptive,

00:13:10   and we're not being too curmudgeonly about,

00:13:13   "Oh, it would be great if things were like they were before."

00:13:13   Because honestly, things weren't that great before.

00:13:18   They had their whole other set of problems,

00:13:19   and now we just have our new set of problems.

00:13:22   And I kind of like these new problems in that it lets me focus

00:13:23   on different things than I think I would have had to focus on before.

00:13:28   I like that a lot of what an app success now is how broadly it can be adopted.

00:13:31   And that's kind of nice.

00:13:38   There is something very satisfying about working on a platform

00:13:39   where you can have applications that have millions of users.

00:13:40   And that's really cool, as someone who just sits in my basement talking into a microphone

00:13:43   and typing on a keyboard.

00:13:45   That's pretty cool.

00:13:46   Anyway, so that's it for today's show.

00:13:48   As always, if you have questions, comments, concerns, or complaints, I'm on Twitter @_davidsmith.

00:13:51   You can email me, david@depopnprospector.com.

00:13:53   Otherwise, I hope you have a great week or a great weekend.

00:13:57   Happy coding, and I will talk to you next week.