• 01.21.10

Why App Stores Are Not the Business Model for the 21st Century

Apple’s App Store has been a runaway success, but Farhad Manjoo warns its growing rank of copycats that it’s not the business model for the 21st century.

Why App Stores Are Not the Business Model for the 21st Century
Illustration by Frank Chimero

Jim Marggraff, CEO of Livescribe, had been thinking for years about how to expand his company’s main product, the Pulse Smartpen, a clever gadget that records and digitizes both handwriting and audio as a user jots notes. One option: release a public programming kit that would let any developer publish add-on software for the pen, for users to install themselves.


But last fall, Marggraff found a more appealing option. Call it Apple’s way. Livescribe would maintain a central clearinghouse for Pulse apps. When a developer wanted to create a pen app, he’d submit it to Livescribe, and the company would review it before deciding to make it available to Pulse owners. “The applications need to represent the medium well,” Marggraff says. “The worst thing is to have a bunch of bad apps come out and have people question the platform.”

Livescribe is just one company across a range of industries joining the App Store parade. Not only has the idea been copied by every other smartphone maker, but Ford is also considering it to create programs for Sync, the automaker’s in-dash communications system. Even stodgy old utility companies are get-ting into the app act. “Every utility will have its own ver-sion of the iTunes App Store,” declared Andres Carvallo, CIO of Austin Energy, at a recent green-energy conference. Inspired by the spectacular success of Apple’s App Store — which observers believe pulls in more than a billion dollars in annual revenue (Apple isn’t telling) — companies increasingly see it as the future model for all software distribution.

But the widespread homage may be premature. Don’t be surprised if the app bandwagon soon hits a dead end. While others rush to set up their own stores, Apple’s gatekeeper model of software distribution is being questioned by developers and industry leaders. The struggles point to the difficulties that other app stores may face, none of which should be a surprise. In the age of the Web, developers can get their programs to end users without anyone intervening, so locked-down software sales will always be going against the grain.

An app store lets companies tap into ideas from third-party innovators while retaining firm control over their brands. And that’s both its charm and its flaw. “The way Apple runs the App Store has harmed its reputation with programmers more than anything else they’ve ever done,” wrote Paul Graham, cofounder of the venture firm Y Combinator, on his blog.

The central problem is Apple’s heavy-handed management: Nothing gets into Apple’s store without the company’s express approval. Its restrictions have pushed several high-profile developers to quit the iPhone, and have bred ill will with the programmers who’ve remained. Apple may feel it has room to misbehave. No other phone can offer developers anywhere near the number of customers to be found in the App Store, so what choice do they have?

That’s a miscalculation, because the App Store’s true rival isn’t a competing app marketplace. Rather, it’s the open, developer-friendly Web. When Apple rejected Google Latitude, the search company’s nearby-friend-mapping program, developers created a nearly identical version that works perfectly on the iPhone’s Web browser. Google looks to be doing something similar with Voice, another app that Apple barred from its store. Last fall, Joe Hewitt, the Facebook developer who created the social network’s iPhone app, quit developing for Apple in protest of the company’s policies. Where did he go? Back to writing mobile apps for Web browsers.


Apple’s app bonanza won’t end anytime soon, but you’d be a fool to ignore the long-term trend in software — away from incompatible platforms and restrictive programming regimes, and toward write-once, run-anywhere code that works on a variety of devices, without interference from middlemen. As different kinds of mobile devices hit the market, from phones to tablet PCs to smartpens to e-book readers and beyond, developers will find that trend harder to ignore. They’ll need to create programs that can work not just on iPhones but on everything. Fortunately, there’s an app for that: It’s called the Web.

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