E-Commerce

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Walled Garden or Virtual Prison: What You Need to Know about the App Store's New Approach to Selling Software

by Kenneth E. Kendall, Rutgers University

Are you aware that there are new ways to purchase software? Whether you use a Mac or a PC, there are things you should know. Your world is about to change. In this month's column, we explore the Apple's iTunes App Store and it's new Mac App Store. We'll examine the positive and negative aspects of this new approach to buying software online and we'll look at a couple of examples that show why you will be attracted to this new way of buying software.

Many years ago, Web users were introduced to the term "walled garden." It was used to describe an area where users of America Online (we know it now as AOL) could "safely" go to get information. I remember reading about it first in The Economist. Those of us who were new to the Web at that time could click on any links to sites (like Travelocity for airline travel) and feel safe that (1) we were dealing with a reliable, established company; (2) we could divulge our personal information and not worry; and (3) there would be no objectionable content in this area. After successfully navigating in this protected environment, Web users became emboldened and left the walled garden so that they could click on any link and visit any site they wished. The entire Web was now available. While the concept of the walled garden vanished for many years, it is now back. Its latest manifestation is in the form of an App Store.

The Attraction
Apple calls its software programs "apps," short for applications. It has done so for some time. You can find this software in a folder called "Applications" on an Apple desktop or notebook just like you can find your software on a PC running Microsoft XP in a directory called "Programs."

The word "apps" became mainstream with the introduction of iPhones and iPods that can run these small programs. Apple sells these apps in their iTunes store much the same way music is sold. You can download the app, then install it on your iPhone.

The Economics
Apple charges a software developer a $99 fee to develop and list their app in the iTunes store and then takes 30 percent commission on everything it sells. Some think the author's 70 percent is too little, but it depends on your perspective. I seem to remember that my college bookstore gets 20 percent of the cost of a textbook for selling a book.

In February 2011, Apple announced that it will soon be selling subscriptions to magazines and online newspapers for a period of time rather than per issue. Once again Apple will take 30 percent, but only if the subscription is made from within the iTunes store. Apple allows publishers to sign up subscribers from their websites directly and will not take a cut for doing so.

Users love the pricing in the App Store. Many apps are free, a very large number of iPhone apps are $0.99. When the iPad was introduced, $1.99 rather than $0.99 became the standard.

The iTunes App Store for devices that ran iOS (the operating system for iPhones and iPads) opened in July 2008 as an update to iTunes. On January 22, 2011, the 10 billionth app was downloaded.

The Advantages
Apple made a key decision to allow users to purchase an app in iTunes, download the app, and then install it on any compatible iOS device (numerous iPhones, iPod, or iPad). That means that if your family has two phones, two iPod Touch devices, and two iPads, you can purchase the app once and legally use it on all of the devices. The App Store can be accessed on the iOS device as well.

 

These are a few of my favorite things. I used Delicious Library 2 to organize my collection of DSI Fellows' books. The new Mac App Store made me aware of this productivity software.

 

The Limits
Apple insists on approving everything sold in its App Store. This means there are some restrictions that frustrate software developers and sometimes, consumers. Here's where the walled garden comes in. You won't find any app with objectionable content on the iTunes Store. But then you won't find that great app that lets you reprogram the mute button on your iPhone to function as a camera shutter either. Too bad. That is a desirable feature.

The Exception
You maneuver around the restrictions Apple has imposed by loading software that will allow you to break those rules. You can then buy software, which is not available via iTunes, and use it on your phone. It's called "jailbreaking" and recently it has become legal for you to do so. But beware, if anything goes wrong, you can't go running to Apple to fix it.

The Competition
The iTunes store for apps was a great success, but the apps were for Apple products only. Recently Amazon introduced their own App Store devoted to Android applications. In the meantime, Apple launched the App Store for OS X applications (the operating system for Apple desktops and notebooks) and applied for a registered trademark. Apple then sued Amazon to refrain from using the name "App Store." Amazon subsequently relaunched the site as the Amazon Appstore for Android (Schmelkin, 2011).

The Amazon Appstore actually improved on Apple's version. The Amazon store lets you try before you buy. The feature is called TestDrive, and gives a prospective buyer a chance to preview the app (Etherington, 2011).

The New Approach
When Apple decided to launch The Mac App Store (simply calling it the App Store just like the one for devices running on iOS) in which Apple desktop and Notebook users can buy and download applications, it created something unique. Years ago we had to buy a floppy disc, then later a CD, containing a copy of the software we wanted to run. This is still the case for Microsoft Windows 7, Microsoft Office, and many of the Adobe products.

But with the new store you can download an application and you will automatically be informed of any updates to the software. Updates are free. Sure, there were many programs that you could buy directly from the manufacturer and then download to your computer, but it was never as convenient as it is now.

The Leaderboard
Why is "Angry Birds" always the number-one downloaded app? Is hasn't always been that way. In the early days of the iTunes App Store a program called Koi Pond always seemed to float to the top. Being on top definitely brings in more sales. Some companies run sales occasionally, drastically dropping their price for a couple of days, just to get into the top 20. I don't know what the Apple model for rating the top program is, but it could be based on an exponential smoothing model. In this way, a program may stay at the top a little longer than it deserves.

In the Mac App Store, however, the top 20 list in each category has been fluctuating wildly recently. We use the term "whipsawed" in the stock market when a stock's direction is suddenly reversed. We should name this effect as "appsawed" when discussing how one app is on top one day, while its competitor is number 30, only to see it reversed the following week.

The Consumer Reaction
Mostly joy. Obviously, the iTunes store has been a great success. The new Mac App Store will be as well. There are a couple of programs I was holding off on. I didn't want to buy them because I didn't want to buy multiple copies, and I surely wasn't going to install them illegally. So when the Mac App Store allowed me to legally download the software to any Mac I own, I was very happy. I am sure other customers were as well. Secondly, the Mac App Store seemed to generate an interest in developing new apps. Several first appeared in the App Store and soon got glowing reviews from customers and critics.

The Dark Side
Will Apple force developers to sell their software via the App Store? Will this be the only way a Mac user will be able to purchase software in the future? Time will tell. It was recently announced that only apps sold through the App Store will be eligible for Apple Design Awards (Myslewski, 2011).

The Bright Side
What is so good about the Mac App Store? Here are a couple of examples.

Should I buy Adobe Acrobat Pro at $449 and install it on one computer or should I buy PDFpenPro for $99 and be able to conveniently download it on every Mac I own? The developer of PDFpenPro is Smile, and they are putting smiles on those customers who have purchased their software. Any of you Mac owners who want to convert websites to PDF files, mark up documents, create forms, add signatures, move and resize images, correct text, and even perform OCR, should take a look now. Spending $99 and having it on three computers drops the cost down to $33 a computer compared to the $449 per computer price of Adobe Acrobat Pro.

The app I used to create the photo that goes with this column is a program called Delicious Library 2. I noticed this app in the App Store because I was running another app called Store News, that watches out for sales in the App Store. I saw this same software in a brick and mortar store awhile back, but didn't give it much thought. But when it appeared on the sale list in the new Mac App Store, I became curious.

I installed Delicious Library 2 and was pleasantly surprised. It allows me to catalog all of my books, my CD and DVD collections, and all of my electronics. Furthermore, it works well with my built-in camera, but I may buy a handheld scanner that would let me read ISBN numbers as I go from bookshelf to bookshelf. I'm going to scan in a number of books and then export them in an XML format so I can use them as citations in my next manuscript.

Entering information was even easier than that. I added the book Systems Analysis and Design that I coauthored just by typing my last name and then choosing the book from a list. When I chose the book, Delicious Library 2 announced it. I smiled broadly. I welcome it as a time saver and another way of getting organized so I can publish more.

The Garden (or Prison)
The concept of the App Store is wonderful. At the present time, Mac users can benefit by getting quality apps like these delivered to their computers in seconds. Many may feel comfortable in Apple's walled garden with its apps that flourish and its freedom from objectionable "weeds." Others may feel confined as if they were in a virtual prison where they can only run certain apps and view censored content. My experiences with the Apple Apps Stores have been thoroughly positive. I hope to see a similar store for PC users some day soon. We would all gain from it.

References

Etherington, D. (2011). Amazon's TestDrive is the real strength of Appstore.
Posted on Mar. 28, 2011, http://gigaom.com/mobile/amazons-testdrive-is-the-real-strength-of-appstore/

Myslewski, R. (2011). Apple limits design awards to App Store residents.
http://www.theregister.co.uk/2011/ 03/28/apple_design_awards_restriction/, March 28, 2011, 18:52 GMT.

Schmelkin, C. (2011). Apple sues Amazon for trademark infringement. http://legal.tmcnet.com/topics/legal/articles/157823-apple-sues-amazon-trademark-infringement.htm, March 25, 2011.

http://www.smilesoftware.com/PDFpenPro/features.html

http://www.delicious-monster.com/

 

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