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Rory Cellan-Jones

The App Economy

  • Rory Cellan-Jones
  • 20 Apr 09, 15:23 GMT

As Apple prepares to celebrate a billion downloads from its iPhone App Store, I've been talking to some of those making a living from building mobile applications - and trying to work out whether the UK is developing an app economy.

We set out to track down solo developers who were making enough from their applications to live on - and found three. But none of them was really sure that the app economy was going to provide them with a long-term living.

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Malcolm Barclay has created Tube Deluxe, which helps Londoners find their way across the capital's underground system. He built this paid application after starting with a free app, Tube Status, which has been downloaded more than 100,000 times. Right now, he's getting around 11,000 downloads a month for Tube Deluxe, earning him about £4,000.

Tube map appMalcolm is a freelance software developer who usually works for major corporations but has taken a couple of months out to see if he can make it as a phone developer. He's put many hours into building his application in the kitchen of his London flat, which has become a temporary development studio.

From his home in Edinburgh, Matt Farrugia, has created Slideshow Builder, which gives iPhone users a better way to display their photos. He's another freelance developer who decided last autumn that the market for enterprise software was looking pretty ropy and he needed to try something new:"The only market that wasn't shut down was the iPhone," he explains.

Unlike Malcolm Barclay, he began with a paid option, but business was slow until he launched a free "lite" version three weeks ago. That, along with promotion in the iTunes store, appears to have worked the trick. He reckons that at times he's now earning at a rate of £100,000 from Slideshow Builder, though that's only on the best days.

Michael McNeeraBut Michael McNeela has perhaps the best success story. He is a 17-year-old schoolboy from Harrow in London, who's so far made something like £15,000 from one very simple iPhone app. He realised that 02 customers on monthly contracts needed a simple way to find out how many of their minutes they'd used. So he came up with Mobile Allowance, which tells you exactly that. So far, 40,000 people have downloaded the app at 59p a time, of which Michael gets 36p. He's now planning to buy himself a very expensive laptop.

So a new breed of young software developers are finding ways to make a living from the iPhone. And this is a market that is going to get much bigger, with Google's Android app store beginning to take off, and Blackberry and Nokia also getting their app acts together. With the sales of new handsets falling off a cliff, no wonder the industry is excited about this new source of revenue.

But our three UK solo developers seem unconvinced that they will be doing this in a year's time. Matt Farrugia told me that apps had settled down at a price which was just not sustainable. "People have it in their heads that 99 cents - 59p - is the right price. The price point makes it difficut to make a living.When I tot up all the hours I've put in, I'm working for less than minimum wage."

He says the only developers that are likely to make serious money in the longer term are games businesses - and a look at the top sellers in the App Store seems to prove his point.

Malcolm Barclay is working away at a number of other transport-related applications, but thinks he'll probably be looking for another contract as a developer with a major company soon. "It's halfway between a business and a hobby," he told me.

And Michael McNeela is enjoying a windfall that might turn any teenager's head, but is realistic: "I think it's a one-off - a lot of the applications that are big hits are also short-lived. I doubt I will be making another."

Just as in the early days of any gold-rush, there are some fantstic stories emerging of lone prospectors striking it rich. But in the longer term, it will be the bigger established software houses who really stand to profit from the app economy.

Comments

  • Comment number 1.

    The challenge for single developers is how to stand out from the crowd. In the games section of the AppStore, there are 6,700 games, 2,000 of which are free.

    To get good sales, you need to get your game onto a recommended list, on which there are a limited number of slots.

    The odds are not as bad as playing the lottery, but it's still tough.

    For the iPhone (and other smartphones) to remain a viable option for independent developers, the AppStores need to develop a much better search, discovery and recommendation system than the one in place.

    But in the meantime, kudos to those who are experimenting and innovating on these exciting new platforms.

  • Comment number 2.

    Great that apps are finally taking off after more than 4 years on the market. Apple has offered a platform where a google search can be dressed up as an app, and sold as something that adds value -and well done to them.

    There are however, some points that need consideration, where the consumer and licence payer loses out:
    - Paying for things that were free: National rail now available through an app that you have to pay for, whereas it was free before.
    BBC saying that this is the birth of an industry
    - BBC Reporting this as the birth of a new industry, when it isn't - Handango and other "AppStores" have been going for the past few years, and it's a shame that the BBC miss the angle that Apple has not created a new area, just done it a whole lot better than anyone else has before...


  • Comment number 3.

    nlovell is right - at the moment, the App Store is not much more than a flat database. It's not much in terms of customer experience. There's a great piece by Marek Pawlowski at MEX, "How did app stores forget the user experience?"

    http://www.mobileuserexperience.com/?p=622

    And we have witnessed the birth of a new industry - Apple has brought together an excellent software development kit, a good deal for users, a single platform (iPhone OS) to target and, crucially, a killer route to market - the App Store is front-and-centre on every iPhone and and iPod Touch they sell. No-one else will be approaching 1 billion app sales anytime soon.

  • Comment number 4.

    The TubeDelux app looked interesting but at no time during the news item did I see any reference to London Transport who have, in the past, been rather defensive of their map and their copyright and I hate to say it but it did look like he'd just used an existing tubemap and added a few things to it.

    Considering that an anagram version of the LT Tube map met with a hostile response from LT's legal representatives if I was Malcolm I'd be keeping the cash safe in case someone comes knocking for it.

  • Comment number 5.

    Cheltenham_steve has hit upon a very good point, and one that links it to the week's other big story - will the Iphone app store be brought to book for making profit for aiding in the access to unauthorised copyrighted materials?! Me thinks not...

  • Comment number 6.

    "He reckons that at times he's now earning at a rate of £100,000 from Slideshow Builder"

    £100,000 per what? Day? Month? Year?

  • Comment number 7.

    I love tuning in to dot.life for my daily dose of twaddle..

    Clearly this cannot be having that much of an impact on the economy if the unemployment levels are going above 2 million...

    But whenever 'technology' is being discussed little things like 'healthy scepticism', 'a sense of perspective', and 'taking a circumspect view' fly out of the window as, like children, the reporters say 'look, bright colours, things moving ! lovely !'.

    If we wanted PR tosh we could just go to the sales websites of any number of technology companies. We expect a slightly questioning approach from you - that is what is called in the trade 'journalism'.

  • Comment number 8.

    lordBeddGelert - where in the post did Rory even hint at this having a significant effect on the economy? He actually says he could only find three people making enough to live on, and not one of them thinks it's a long term option.

    Where exactly is the 'tosh' in any of this? Just in your head, by the looks of it.

  • Comment number 9.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 10.

    _Ewan_

    "Just as in the early days of any gold-rush, there are some fantastic stories emerging..."

  • Comment number 11.

    And why is the BBC using facile abbreviations like 'app' without a full stop, to indicate where letters have been dropped ??

    Just because this is a 'technology' article does not give a waiver from normal BBC standards of journalism and the 'style guide'.

  • Comment number 12.

    @Cheltenham_Steve: Malcolm has a TfL license for the use of their iconic tube map - his license number is on the bottom left of the map inside the app if you want to confirm :)

    @lordBeddGelert: why are we saying "iPhone": shouldn't it be "Apple's touch-screen multimedia mobile phone"?

    The term "app" has become another word: not just "application" shortened.

  • Comment number 13.

    Dear LordBeddGelert,

    I am delighted that you are a regular reader of this blog and derive so much pleasure from it.

    Upon re-reading this post, I can't quite see how you can construe it as indicating that mobile phone application development is going to be the industry that puts two million UK workers back in a job.

    I do, however, believe that writing software for phones is a growth industry, and one where we as a country seem to have some strengths. But, as I make clear, we are in the early days of a gold-rush (not sure why you regard that line as PR tosh - most gold prospectors end up broke), and it's difficult to say just who the winners will be.

    This blog aims to give readers an insight into new areas of technology, from both a technical and commercial angle. If you see topics like phone applications(many apologies for the facile abbreviation) as unworthy of examination, then I'm sorry but I disagree.

    Every new development is heavily marketed - and our job is to try to cut through the PR guff and work out where the technology industry is going. You obviously feel we are failing in that job, but we'll just have to go away and try to do better.
    Best wishes,

    Rory Cellan-Jones

  • Comment number 14.

    "No-one else will be approaching 1 billion app sales anytime soon."

    I'm willing to bet S60 passed that mark through Download, N-Gage and third party downloads quite some time ago.

  • Comment number 15.

    This adve... ahem! Blog, the bbc don't do ads, was brought to you by Apple BBC... Actually Rory you lasted at least 3 blogs without blessing the mighty Apple corp... lol.

  • Comment number 16.

    Funny how a mention of the word Apple in these blogs brings out the retentive child in some.

    Interesting piece on an interesting and booming sector that will broaden across all brands on, and coming to market.

    Keep up the good work.....

  • Comment number 17.

    You've got to have a laugh some time.

    My last few posts on various Apple and non-Apple related blogs were far too serious.

  • Comment number 18.



    .....True ;-)

 

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