The Mac App Store: can it change the software business?

The Mac App Store: can it change the software business?:

What is it that makes the iTunes App Store so compelling? Will the value the App store added to the iPhone be added by the Mac App Store to the Mac?

Here are the characteristics I think make the App Stores valuable:

  1. They redefine software as content. The pricing, marketing, discovery and buying process is identical to that for content like music or video.
  2. They redefine the skill required to create a relationship with customers. They allow a new class of less-skilled and less-capitalized developers participate in selling software directly to the buyer. By “skill” I don’t mean engineering skill but marketing skill. A developer can create a product that can reach millions without having to acquire with channels and distribution skills.
  3. From a consumer’s point of view, they simplify purchasing and lower the price of software.

These three characteristics of app stores make them disruptive. The disrupted companies are the traditional software publishers. The response from game publishers to the App store were predictable: they condemned it for destroying value, “cheapening” their product, and creating a race to the bottom. They also predicted that it would all end badly as nobody would make any money.

The truth is that they were disrupted by different cost structures. The entrants did not need to spend on market development, and focused on innovating on the essential novelty of the user interface.

So the Mac App Store could be disruptive to traditional software vendors. A large new population of software developers could emerge targeting the Cocoa environment and they may bring new apps that move the jobs that the computer is hired for to appeal to new users.

However there is a problem. The Mac is a small target market relative to iOS. Apple announced that there are 50 million Mac users. This compares badly to the 130 million (or so) iOS users. It won’t be long before 50 million iOS users will be added every three months.

So the first thing that Apple needs to do is grow the Mac installed base. Perhaps the new Air and following updated to the MacBooks will do just that. But the growth rate needs to be an order of magnitude faster. And I suspect price is an obstacle to this growth.

Regardless of this obstacle, the Mac App Store has the potential to change the appeal of the Mac. As the first personal computer with an App Store, new uses may emerge and create the same app-platform effect.

[All good points. See more here.]
Source: asymco

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