I’ve been reading and listening to much of the commentary regarding the proposed OS X App Store and thinking about the long term impact.
There’s a lot of noise in both directions, with the pro camp coming from people like the OmniGroup who have an application suite that are a perfect fit for this type of new retail channel. They have 100% OS X applications, that easily fulfill the App Store requirements that are sold at a reasonable price, that’s to say, under $100 so the 30% cut is a deal compared to the cost of selling of a boxed application through traditional retail channels.
The more paranoid seem convinced that Apple will eventually treat OS X like iOS and block all other forms of application installation at some future date, although that seems highly unlikely for a general purpose computer. I think that Apple is very clearly developing the iOS for people that don’t need to do ‘computing’ and OS X remains the truck for heavier lifting and more varied use cases.
Other complaints are about the 70/30 revenue split, although this seems to me to be a reasonable cost for the service offered, especially when compared with the complexity and cost required to get a box into Best Buy or WalMart.
From a practical standpoint, the smaller independent developer stands to benefit immensely from this new distribution channel. There’s no longer a requirement to handle hosting, licensing tools, payment processing and all of the general overhead that goes along with direct distribution.
The larger established players on the other hand will find this channel of less interest. They already have significant sunk investments in their web sites, marketing and advertising and have established relationships with payment processors like VISA, Mastercard and PayPal. Not to mention that many of them like Microsoft and Adobe use complex non standard installation processes and different licensing rules which will require significant retooling to meet the App Store requirements. Also, the price for these packages is significantly higher so the 30% cut for Apple looks more expensive from their point of view.
Upgrade pricing?
This is something that has gone along with software development since the early days. You write a first version, sell it to some customers at a relatively expensive price to recoup your investment. Then you continue developing the application and sell it full price to new customers, but you offer an upgrade pricing to your existing customer base.
From what we’ve seen from the App Store structure, this model won’t be possible. Once an app is purchased, any upgrades to that package are free and if you want to offer a substantially new version for a price, you need to actually put a brand new application bundle in the store.
But if you look at how Apple has handled this for the iLife and iWork suite of applications they have a different point of view of how this should be handled. There is no upgrade pricing option available. Each generation is sold as a brand new package. But this comes with a change in pricing policy that is a direct slap in the face to the established norm in that the price of these packages is, for all practical purposes, the upgrade price. iLife ‘11 is $49 and iWork is $79. Compared to Microsoft Office Mac which is offered at $279. Whoops, it looks like Microsoft has adapted Apple’s stance while keeping the high prices1. For the general consumer, there is no longer any upgrade pricing option2.
This has the additional advantage of immensely simplifying the back office management requirements and costs for serial number and customer tracking to ensure that someone is eligible for an upgrade. It’s also about reducing the friction for the customer. I don’t have to go trawling through my archives to find the original receipt to check on the date of purchase and get the original serial number and the account under which it was registered.
Instead of investing several hundred dollars to get into the game you can jump into using a new software package for a much more reasonable price. I think part of the objective here is to drive down software pricing to something that is more attractive to the general public rather than business customers who can write off the cost. Apple has clearly understood that their primary market is the general public and not the enterprise. This IMHO also offsets many of the piracy issues and justifications. $300 of discretionary spending requires much more consideration than $50.
The enterprise elephant in the room
From a technical standpoint, aside from the App Store ‘retail’ interface, the OS X App Store nothing but a software repository, very similar to the Linux repository concept. You have a list of available software components that you can browse and install automatically by simply checking off the ones that you want.
The question I’m asking, especially in light of the news regarding the alliance with Unisys for selling into the enterprise and government is what the next OS will include for managing Macs in a business environment.
OS X Server includes the ability to run a caching proxy of the Apple Software Update service. Updates are copied down from the the online service to a local server, and then used for internal distribution of the updates. Very similar to Microsoft’s WSUS product. Now what if the App Store allows the same model where you can install an internal App Store instance on OS X Server where you can distribute internally developed applications or site licensed commercial applications.
Right now you can do this for your iOS applications as part of the iOS Enterprise Developer Program although the qualification requirements are a little steep. So it seems logical that the same structure could be applied to the Mac App Store. This would also make more sense in a business environment where the local app store instance would use a corporate iTunes account for purchases rather than individual user accounts with the ability to limit purchases to certain amounts or to certain applications that are corporate standards.
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