“If you’re trying to make money, dump your iPhone strategy”

bubble2 So says Konny Zsigo,  a 20-year veteran who runs WirelessDeveloper Agency, a company which supports mobile publishers with North American distribution, licensing and production of mobile content (video, games, apps, ringtones, wallpapers, themes and more).

Not mincing words, his position on the iPhone Apps store is very clear:

“If you’re trying to make money selling consumer games and apps, it’s time to dump your iPhone strategy and march straight back to the cellular phone carriers and beg them to take you back.”

Blaming the App store for price homogenization due to intense market-speed pressure, fuelled by a low barrier to entry and  fierce and open competition to get to the 99-cent hit game, he called the result a “giant digital fleamarket” where “You can’t even tell a good one from a bad one.”

The result is that even good software gets forced down to bargain basement prices.

He notes “I’m a Scrabble fan and I’ve bought the game several times for mobile. Once for my Treo 650, again for my BlackBerry Pearl, and then again for my iPhone. I’m pretty sure I paid $19.95 and $14.95 the first two times (though that may not be exactly right; it’s been awhile). But I do know, for sure, that I just bought EA’s version of Scrabble for my iPhone for a measly $5.99. That’s a beautiful game by EA, polished, error-free, easy-to-use, fun and absolutely gorgeous. I should have paid $24.95 for that game and been happy about it! Instead, EA had to sell it to me for $5.99. What a shame.”

Describing the lemming-type behaviour which led iPhone developers into spending thousands on very little return, he said:

“They all knew that unless pricing was in the sweet spot, the big download numbers wouldn’t come. So they priced their products at half what they would sell them for on the carrier decks and held their breath. (What sells on Verizon for $2.99 per month with eight month retention is termed a "rip off" when presented on the iPhone at a one-time download price of $1.99.) They slotted into new releases and made money hand-over-fist, for about seven days. They extrapolated those sales onto their Excel spreadsheets and went racing back to their investors with the good news. Just in time to fund the next title.

Because they knew they were gonna get rich (because everyone was getting rich selling iPhone apps, right?) they jumped right in again. Since they didn’t make money the first time but everyone else was (right??), they assumed they just had a bit of bad luck or bad timing, so they tried again. After all, it only costs $5,000–OK, maybe $15,000 to build something nice.”

His conclusion is that traditional sales channels are a much more lucrative play, especially now that most mobile developers are distracted by pouring good money after bad in the iPhone space.

“In the short term, the most lucrative play is back with the carriers. With the economy and iPhone distraction, much less product is flowing into the carrier system than a year ago. So there’s less competition on deck and a warmer reception from the content buyers.”

Whether developers will take heed of advice from veterans of the mobile application world remain to be seen, but there is certainly a backlash brewing against the iPhone app store which may very soon burst that rancid bubble.

Read the full article at FierceDeveloper here.

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