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back to article Getting rich off iPhone apps is b*llocks, say UK devs

Almost no apps cover their development costs and software services only make money in "extremely unusual" cases, some proper engineers have told MPs. A panel of engineers and boffins drawn from the Institution of Engineering and Technology and the Council of Professors and Heads of Computing poured cold water on the idea of the …

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Anonymous Coward

Some of these people should have done maths and not engineering

I mean, how many sales at 99p do you have to make to pay for 5 developers on 30k pa...

And I'll let you off the slightly harder sum of adding in other business expenses and Apple's cut.

Don't moan about your shit poor business skills in identifying the size of the market for your software before you start writing it...

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Re: Some of these people should have done maths and not engineering

Was it not exactly the point of the professors and engineers that you have to sell a lot of apps just to break even?

Furthermore, what they appear to be saying is that you need a lot of investment, and that the idea of getting rich quickly from an app slapped together in a few weeks/days of coding is a pipe dream. That seems to make sense.

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Anonymous Coward

Re: Some of these people should have done maths and not engineering

Yes, but thats like saying "I've had a really clever idea - the sun is a large energy emitting source".

Its completely damned obvious.

The only people "making money" are those who actually aren't counting costs in the first place - ie someone writing something in their evenings or whilst sat at their desk being paid to do something else ;-)

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Re: Some of these people should have done maths and not engineering

I think OP's point is: Don't sell at 99p if you can't make a profit at 99p. For what it's worth most of the apps I have on my iPad cost rather more than that, because I'm willing to pay for good apps.

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Anonymous Coward

Re: Some of these people should have done maths and not engineering

5 devs @ 30k = 150k.

Plus ancillary costs (tax, benefits, pension, legal) so say 200k.

Add a bit more for kit, rent, marketing etc, so say a cool 300k to be safe.

Selling an app at 99p of which they get 66p.

300k/0.66 ~= 455,000 sales to break-even (assuming you can go from nothing to fully tested and commerce ready version in a year).

That is, frankly, rather a lot and at that level a small team might find the free or open model more beneficial. Would all depend on what they are developing.

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Happy

Re: Some of these people should have done maths and not engineering

"Yes, but thats like saying "I've had a really clever idea - the sun is a large energy emitting source".

Its completely damned obvious.

The only people "making money" are those who actually aren't counting costs in the first place - ie someone writing something in their evenings or whilst sat at their desk being paid to do something else ;-)"

Agreed, it is obvious, but politicians need people to point out obvious things to them. Frequently.

And of course the pointing out the bleeding obvious must be done by qualified people like professors and engineers, or else the politicians might look silly.

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Anonymous Coward

Re: Some of these people should have done maths and not engineering

Exactly, if its 99p, its rubbish and there is probably some free app there that does the job with ads, but if you want good games/apps, pay £3--£4 for it...

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Re: Some of these people should have done maths and not engineering

Sadly I do agree. Can all businesses argue that "our expenses are too high, give us more money!". I'm currently looking to make gold plated loo roll. Then I'll complain when I cannot recoup my investment.

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Uneven distribution

One company will make a fortune and the others none. Then the one which does best will introduce a free ad-supported version and the others will have to be free as well.

Most people will just buy the best-reviewed.

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Re: Some of these people should have done maths and not engineering

Somewhere north of 250,000. Ideally it should be in the millions once you consider other costs.

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Devil

Re: Some of these people should have done maths and not engineering

And everyone is just accepting the cost of 5 coders, at £30k pa each. So the biggest overhead is £150k in pay.

Are you seriously asking me to believe that some of the £0.69p apps I have (and enjoy) took five man years of development?

Were they ALL products of Redmond?

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Anonymous Coward

Re: Are you seriously asking me to believe

One app at five man years, or 250 apps at a man week each, the total sales requirement remains the same.

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Re: Some of these people should have done maths and not engineering

"I'm currently looking to make gold plated loo roll"

I'll buy 3 nine packs.

Cheers.

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@AC Re: Some of these people should have done maths and not engineering

Actually the costs of 5 devs will be higher - you're forgetting employers' contributions and NI, which will equate to almost an entire annual wage again for each person. BUT, it's unlikely that you'll have 5 full-time devs working on a single mobile app over the course of a year.

A member of my fanily works as a full time games developer, and has spent 6 months developing a game almost single handedly, with smaller amounts of input from other devs and designers, who are also working on other projects. He has also had smaller amounts of input into other projects.

The success of mobile development is unpredictable, and is about balance. A big, resource intensive game or app can flop massively, and a fairly quick, simple app developed at home can become a roaring success (although that is becoming less likely as the market continues to saturate).

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WTF?

Re: Some of these people should have done maths and not engineering

This thread is retarded. It doesn't take 5 developers to develop an iPhone app, nor does it take a year. You can do most games with a programmer and an artist in 3 months, and some can be done with a programmer and a few OTS art resources in a few weeks. Around £60K PA including costs, or £15K for the whole thing. £15K / 66p = 23,000 sales to break even. The 1-month project costs more like £5K, so 7,500 sales to break even. This is assuming up-front cost pricing model, which no one is using any more, since you can get 100,000 downloads of a free app and monetize that to £15K a lot easier than you can get to £15K on upfront purchases.

Current app in development: art budget £5K, programmer budget £2K. So you can go even lower than the above figures if you think hard about it.

People are typically making a few hundred quid per month per title; over the lifetime of a title (say 2 years) that's going to get you within the right ballpark. One in ten titles will do 10x better, though, and once you get one of those you're in profit overall. Other titles do 100x to 10,000x better, which is the obvious attraction of iPhone development. There is a power law at work; about 1/N of titles will make Nx the typical figure.

The idea that iPhone software development isn't a viable business is obvious bullshit given the size of the industry. It's a marginally profitable enterprise with the possibility of huge returns if you strike the right note in just the right way.

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Re: Some of these people should have done maths and not engineering

I'd like to think 5 app developers would be able to come up with more than one idea a year, if this is all thats expected from them i'm in the wrong job

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Re: Some of these people should have done maths and not engineering

Indeed. 5 programmers for a year? LOLWUT?

If your app takes one coder more than three months, you either need a better coder or you need to stop wasting your time trying to make an uber-complex master app. (There are occasional exceptions to this. But not many.)

"The idea that iPhone software development isn't a viable business is obvious bullshit given the size of the industry."

There are a lot of part-time hobby apps cluttering up the store -> bad news for the professionals. And arguably the market has peaked now that world+dog already have their own apps. So headcount on its own isn't proof of anything, except a bubble/bandwagon/gold rush.

But there's still a lot happening in the US. And there will be future changes in iOS 6, 7, 8... which may possibly do Cool New Stuff, and will need updates and/or innovation.

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Awww...

So you mean our Silicon Roundabout really *can't* compete with Google, Apple, Microsoft and Facebook?

Awwww. ='(

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There are few tools worth paying money for and so many free alternatives. It's only really games that make money. Nothing changes :)

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JDX
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I always wondered about 99p apps

I mean I appreciate you are aiming for mass-market, but the PC had casual games before mobile took off and they didn't sell for a quid, more like 10 times this.

That's why I'm aiming my iPad apps at the specialist commercial side, £10-100.

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Lower uptake...

Everyone commutes to work. Angry Birds gives someone who commutes by bus/train something to do in that time which previously didn't exist as computer program using-time for most people who travel in on public transport. If you use any laptop bigger than an 11" macbook air on the tube at rush hour you deserve an ASBO, frankly. Mass market smartphones? Now you're talking.

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Anonymous Coward

Facebook

I'd hesitate to include Facebook in that list of successful commercialisations. "Pyramid scheme" would be a more fitting description.

Does anyone have any clue how much money was actually chucked at Google in the early days? And of course not all of its creditors would have expected any return (well, in the monetary sense anyway).

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Re: Facebook

Backed by the CIA isn't it?

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That's the point

We don't have a good venture capital network the way the yanks do. And most start-ups do fail. So if what they're saying is we need people and funds who can chuck money at start-ups and a tradition of creating these companies.

But yes, there's a dividing line between shops with an online presence (conventional businesses who would like better internet/mobile presence) and pure tech companies like Google created from a PhD thesis. The latter need more support but can do something much more special.

Incidentally, we have one big advantage here over the USA: free healthcare. The most serious risk to would-be start-up creators in the USA doesn't exist here.

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Anonymous Coward

Re: That's the point

not true - there are loads of venture capitalists in the UK.

http://www.bvca.co.uk/About-BVCA/features/OurMission

Do your homework.

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Not disputing this

But it's not on a US scale. The next Facebook will be built in California not Shoreditch. And that's the problem.

And we should be beating the USA. We speak English, are an hour's flight from Europe and there are lots of translators in London. So expanding into lots of different countries should be easier than US companies find it. The UK has ties to India that the USA just doesn't, for instance.

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Anonymous Coward

Re: Not disputing this

That's funny, as I was reading how silicon valley has less influence that it once did as areas like London gain expertise, or so said Wired, and how the savvy business taps into the experience from the various tech hotspots that now exist.

You can't blame London for not being inviting, ultimately your strategy is flawed in some way. Hiring 5 devs to develop an app that isn't going to make any money, for a start the at London rates you are only getting a mid level dev at best. As the Joker says, "if you're good at something, never do it for free"... and the same applies for doing it really cheaply :P

I've long wanted to get into some app development, but realised early along that games make most of the money... if you want an app to be used, it needs to be free, for at very least the base version... it needs to be of very high quality, and it bloody well better integrate into something that makes money.... unless your long term business plan is "be bought out by someone"

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Anonymous Coward

Re: That's the point

What about the MoshiMonsters franchise, surely that proves we can come up with a something akin to Facebook? MM is UK based but the owners were not just content to limit themselves to an online game for kids. Kids being kids the owners knew that kids have pester-power, just market the online game via physical toys, games and other merchandise tat.

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DJV
Alert

Proper engineers?

Who the hell let proper people talk to MPs? It's just not on! I mean to say, isn't listening to sound-bite merchants the usual way MPs get their information? If this goes on there's the danger the MPs might actually come to a sensible decision for a change!

</sarcasm>

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Pirate

Re: Proper engineers?

Don't worry about it - half of the committee would be asleep and the other half too busy twitting what they had for lunch to actually listen to anyone. As any fule kno - to an MP the only voice worth listening to is their own.

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Facepalm

Re: Proper engineers?

Colour me skeptical. So, you get invited to submit proposals to a govt committee concerning future industry growth...and your first request is...yep...'Give us some money'. To make it look better, write off initial gains to make the equation look financially untenable whilst bigging-up potential riches if funding is made available.

The Treasury gets this stuff every week and will laugh them off the agenda.

Surprised El Reg didn't get in a dig about Apple's outrageous 30% cut <sarcasm>

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Holmes

Silly Rabbits

Don't they know the real money is in taking 10 million in VC money to build sharemyvideoofwhatimeatingfordinner dot com then flipping it to facebook for 1 billion before you've even made so much as a penny in revenue. This is the new new economy.

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Anonymous Coward

1 finger typing etonians know best

bury this report and in a few weeks the bozo's in government will start telling us how an army of school leavers will save the economy by writing and selling apps.

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Anonymous Coward

Re: 1 finger typing etonians know best

:)

Bozo's in government that have cut commitment to computer science and software engineering.

its a shame government doesn't follow the model view controller patter so we could just swap out the crap logic they apply - without them nailing every service to the floor.

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Need more emoticons,

apparently.

Well, at least according to Chad: http://www.fourhourworkweek.com/blog/2012/04/22/how-to-build-an-app-empire-can-you-create-the-next-instagram/

This is real proselyting language:

Appreneurs earn money while creating lifestyles of great freedom. Two of my appreneur friends spend several months of the year doing nonprofit work in Vietnam, while their businesses are generating seven-figure incomes.

Interesting that he promotes blatant copying:

To make the design process easier, I look at certain apps in the App Store and reference them to show my programmers what I’m looking for. For example, I’ll say, “Download the XYZ app. I want the ABC functionality to work like theirs. Take a look at the screenshots from this other app, and change this.” I take certain components of apps that I’d like to emulate, and give them to the programmer so that we are as clear as possible.

I agree with JDX; far better to sell to the business market. 99c 'apps' work for Apple in the same way that arbitrage works for banks, but not for an individual investor / developer.

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WTF?

Re: Need more emoticons,

"Interesting that he promotes blatant copying:"

Hardly surprising, that whole thing's obviously a blatant rehash of the joke "Bong!" columns around here.....

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Anonymous Coward

Re: Need more emoticons,

"Interesting that he promotes blatant copying"

To all right thinking people, maybe. To companies like Zynga this is known as a 'Fast Follow'.

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FAIL

Re: Need more emoticons,

Chad's selling a book on how to make your fortune as an appreneur, which is a portmanteau word that's like entrepreneur, only better.

As far as I can tell, it involves coming up with an idea for an app, getting a third world coder to build it on the cheap, and then living a life of leisure whilst the money rolls in. I'm not convinced it's that easy, nor do I believe that he's as successful as he claims. Both he (and Ferris, whose blog it's posted to) strike me as snake oil salesmen.

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This is why the goverment have Martha Lame Fox as UK Digital Champion, founder of lastminute.com - A company which soaked up millions of investment while consistancy making huge loses and yet mysteriously is hailed as the pinnacle of British internet business.

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Anonymous Coward

Be very worried..

It did not consistently make losses for Ms Fox though, I'm damn sure she made a very tidy sum out of it (£13 million apparently) and that's the difference.

Sell the sizzle, the sausage can be truly hideous (if it ever even exists.)

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Anonymous Coward

Academic funding

is, surely, what this is about.

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Anonymous Coward

So I'm not quite as mad as I thought!

I always pictured iPhone developers sat in Starbusks on a £3k laptop with a copy of emacs writing hilarious fart apps to show their friends whilst emailing their parents to send them more money.

Waiting to see how Microsoft's bandwagon app model differs...

http://news.cnet.com/8301-1023_3-57416115-93/microsofts-windows-store-goes-global-with-33-more-countries/

Market entry barriers. Have they really been such a problem for devs?

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Anonymous Coward

Re: So I'm not quite as mad as I thought!

Microsoft are at the other end of the spectrum, they are paying devs to port games to windows mobile. If you play your cards right MS might actually fund you enough to get the game on to three platforms!

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Bod

Stating the bleeding obvious

So how much of taxpayers money was spent on finding out what most professionals knew ages ago?

Apps by themselves don't make money.

A free app that drives sales and services, even indirectly, is another matter.

The other area that makes money is to have a great idea and product that currently makes no money but someone is foolish enough to buy your company for a lot of money. Hmm, Instagram ;). Or really in the Instagram model, the key is to have value in a vast database of users, images and their associated GPS locations.

Ideas, patents and information. That's the money.

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Anonymous Coward

But that's the problem...

"Apps by themselves don't make money.

A free app that drives sales and services, even indirectly, is another matter."

The government's aim is to make money flow round the UK economy: I give it to you and you give it back to me. That way everyone feels a lot richer than if there's the same amount of money and the haves keep it in their bank accounts (weird but true).

Most small businesses (I'm thinking 2-4 shop chain) would have no idea how to make an iPhone/Android app to allow customer ordering and order tracking. Still less how to make customers trust it. And yet they might do well to get one. And shopify will make one for you quite easily. For a lot of this the tech is out there, people just need to be pointed to it.

Look, think of this example. Small business run by 55-yo technophobe decides on to build an app/website for itself which is a customisation of previous apps. It hires a graphic designer to spend two days creating a good icon for it, a photographer to take some product photos and a programmer (maybe one who doesn't need much experience) to customise and tune up a pre-created shop framework or price quote system to match their requirements. Customers can more easily find out what the shop's selling and are more likely to place an order. Everyone's happy.

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Coat

App development how-to

Is there an App for that?

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Anonymous Coward

Geniune question

how many of you negative people have experience of publishing an app on the app store?

also, what about knocking out an app every two weeks until one of them 'out of the blue' generates a lot of sales then keep polishing that one to keep boosting sales? - or maybe I dont know what I'm taking about and you're all experts in the field :-)

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Headmaster

Re: Geniune question

Interestingly, I do wonder where people would go if looking for an app programmer. Specifically Android, but possibly iOS...

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Re: Geniune question

LinkedIn, for one. I see several a week, and that's just for Windows Phone, I'm sure the Android and IOS groups have much more activity.

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Holmes

Because selling non-app software has been really successful lately?

Other than games, operating systems, and a handful of the top "essential" applications (microsoft office), what consumers were really paying a lot of money for applications *before* the app store? Wasn't that what the whole SaaS thing was about? Consumers don't pay for software, and its too easy to pirate, so charge for the service and have a free basic plan to bring them in and get them hooked.

Apple did their job getting people to actually pay for software again. And in the beginning, yeah, you had some get rich quick fart apps. That's not the case anymore. Competition is stiff, and you have to be smart about your options. You have to be realistic about the costs and the uptake. There is successful software selling for $100 in niche areas, and there is plenty of software that cost $10 that I gladly purchase because it is worth it to me, and it isn't riddled with ads or in-app purchases. Finally, there is always the fallback SaaS style model. The app is free, but the account might cost money. There are a lot of options - you can't just pretend like Apple is handing out free money. Let's look at the history and remember what happened in the original gold rush.

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