Whither App Sales?

It's been a great year for Apple, now with over 100,000 apps in the App Store and over 2 billion apps downloaded. And Apple gets 30% of each and every one... analysts estimate this has added a cool $1 billion to their bottom line. The story isn't so good for app developers; the vast majority of the apps don't make a profit (irregardless of whether or not they are free).

The situation doesn't look to get any better. Apple seems perfectly content to let things go on the way they are now; there's no hint that they intend to improve the App Store significantly any time soon. I think most of their energy is going into keeping up with the demand for app approval. So don't look for any magical help from Apple to get people to find and pay for your app.

Speaking of which, many developers are saying piracy is a big problem. This hurts not only in potential lost sales, but for apps that use your servers, pirated apps hit your server but pay nothing for the additional bandwidth they chew up. Fortunately it looks like the piracy issue diminishes over time, but it's still another barrier to profitability.

What's an app developer to do? It's wise to look at your development costs and your potential market size, and your competition, and your marketing plan before you embark on your project. Maybe that idea is cool, but not cool enough to make a profit. Or maybe you should hold off until you figure out how you're going to market that app before you start spending money on making it.

Ideally an app would take a small amount of development resource to create, and generate a large amount of interest and sales. Unfortunately, with 100K+ apps around, the odds are better than ever that the most obvious ideas have already been done, and done pretty well. Competitive analysis should be an essential part of your plan, if your goal is to make money.