My father hails from Scotland and knows how to put the pinch on a penny. What I learned from him about money management probably wouldn’t make me a successful business executive, but I wouldn’t go broke from trying.
When looking at the landscape that surrounds Apple I see two areas where money is an issue. But not for Apple.
First, there’s Apple’s competitors. Across the board, from PC manufacturers to smartphone and tablet makers, the number of companies that make a heft profit can be counted on a single hand (with a few fingers left over).
For example, Samsung makes a profit, though not as much as Apple. Microsoft makes a profit from Windows and Office but little else. Who’s left? Google is highly profitable with traditional search engine advertising, but has yet to figure out how to diversify the business model in the post-PC era of mobile devices.
Every other device maker struggles for relevancy, feeding off the bottom end of the price spectrum where margins are lower than low. Nokia and Motorola were sold for scraps. HTC may build the best smartphones that no one buys.
How long can a company continue to lose money fighting against Apple’s profit machine?
Second, there’s the app business. Apple’s platforms may provide plenty of customers and revenue for some app developers, but not all. Many new apps are freemium– free to try, but added functionality comes with a price.
Other apps have a price, collect many users, but the app they bought originally becomes orphanware as the app developer abandons the app and ongoing upgrades in favor of a 2.0 version– all new. With a new price. No upgrade.
Let me use GoodReader as an example. It’s a great iPhone and iPad app to read various files– from PDFs to Word to audio and many other formats. But you paid separately for the iPhone and iPad versions.
The latest version adds more features, costs more, but it’s also universal. A few dollars more but the app now runs on both iPhone and iPad. There’s no upgrade option from the old version to the new version. What you bought may work now, but may not in a few more versions of iOS. For that you’ll need the new version.
Developers need to make money, and Apple’s iOS platform and stores– for iPhone and iPad– does that better than Google Play and Android. These days, when I buy a new app, I check the Updated date. If it hasn’t been updated in the past year or so I usually move on an look for something else.
Infrequent updates tell me that an app may have become abandonware or orphanware. App development is business economics. Developers need to have enough revenue coming in to cover their costs, and upgrades from the current customer base can make that happen. Unfortunately, Apple doesn’t provide an easy way for customers to upgrade to a new version of app– a paid upgrade– without buying the whole shebang all over again.
As a certified Apple watcher, I wonder how much longer competitors can go on losing money competing against Apple’s bread and butter– Mac, iPhone, and iPad. And, I wonder how long before Apple realizes that paid upgrades are still part of the application business.