We thought we’d take a different turn this week and muse over how this Multi-Billion Dollar works, in relation to some of principles cited by popular Economist Greg Mankiw and how they come to play in this crazy, high-octane world of apps. Let’s look at four principles that go into decision making via the three important stakeholders/pillars of this economy i.e. Users, Platforms and Developers
For Users: The constant dilemma of paid vs free apps. The massive consumption of free apps comes with its own share of trade offs; obtrusions (in-apps,ads etc.), data privacy and security (enabling rights to access data).
For Developers: Theses come in the form of platform dependency. To embrace the entire app ecosystem or not. Each has its own merits/demerits and developing competencies across the board is a tough ask, even for the biggies. To begin with, a majority of new apps which make it big, hit iOS first more often that not.
For Platforms: Garnering market share against hardcore innovation has always been a tough call to take. Started back in 2008, Apple’s introduction of the App Store and the subsequent beginning of a new industry has made itself more attractive to developers than Google’s Android Play Store (2010 onwards) and the rest. By 2012 though, Android’s Play Store had surpassed the Apple App Store with more connected users and a higher number of apps and downloads; but the quality ones still start off on iOS.
‘The cost of something is what you give up to get it’
For Users: The opportunistic cost of ease of use vs actualisation. Apps like user generated content of public establishments compared vs the art of discovery and concept of personal.
For Developers: The lure of a multi-billion dollar industry churning out rags-to-riches often results in talented designers, developers and other employed professionals to leave their steady sources of income in pursuit of the holy-grail.
For Platforms: The creation of regulated marketplaces to crowdsource innovation has resulted in massive acquisitions, notably Whatsapp and Instagram and a dearth in true development, like the tacky new Samsung Galaxy S5 and Apple 5C.
‘Rational people think in terms of margin’
For Users: The seamless experience that come with paid apps vs delivering only individualistic opportunities.
For Developers: Creating a unique product experience with marginal improvements over time (updates) is sometimes a deliberate choice and not always due to technical limitations.
For Platforms: The restrictive or regulatory nature of App Stores (more specifically iOS) is a result of a rational measure to preserve the quality of apps at the expense of earning a few extra billions. At the end of the day, it is users and their engagement that makes Apple’s iOS the crème de la crème of the $25 billion plus App Industry. On the other hand are the likes of Android and the lot who are running towards plain numbers. Who survives is still a matter of debate amongst many with opinions evenly divided.
‘People respond to incentives’
For Users: The App industry has been the harbinger of tremendous ease of use lately (utilitarian as well as hedonistic). From highly engaging and fun titles like Angry Birds to game-changers like Evernote and CamScanner, people respond to new apps that incentivise more than the previous one.
For Developers: The lure of different platforms and technologies to explore hasn’t managed to lift Microsoft’s fortunes vis-a-vis Apple’s iOS. Then again, Apple creates a highly lucrative selling proposition for itself with its loyal user base.
For Platforms: The convergence of user choices and divergence of devices aplenty has made platform owners think and innovate faster. It took Apple nearly 5-6 years to ditch skeuomorphism and jump ship to the ‘flatter’ philosophy when it released iOS 7 as the incentive of maintaining its loyal fan base was far too big to ignore .
In hindsight, it’s funny just how this industry runs.