People have been talking up the iPhone 3GS’ souped-up hardware capabilities, particularly, its potential to upstage gaming handhelds such as the PSP and DSi. Despite that, it’s highly unlikely that the platform will do so at its current stage. The reason has nothing to do at all with either the hardware or the software. Instead, it’s all about price.
During a recent analysis of App Store pricing from developer App Cubby, one thing became apparent: the App Store is becoming a bargain basement storefront for cheap software. According to the research, the new unofficial price ceiling is now at $5, down from the $10 it was before. That means that general user perception dictates that anything over $5 is “too expensive,” essentially restricting the software’s ability to sell in large numbers.
The problem is that $5 isn’t exactly the kind of price tag you want to put on a piece of software that you invested an entire year of development for, making it a less-than-desirable platform for unleashing top-end applications. Before the iPhone can rival the PSP and DSi, it has to be able to provide the same profit levels that game studios can realize developing for the dedicated platforms – something that’s clearly not possible at this stage of its development.
Average App Store pricing is now $1.39 for games and $2.58 for all apps, with majority of consumers refusing to pay for anything that even goes near two dollar digits. With tens of thousands of decent apps for 99-cents, of course, who can blame them?
Like every new business model, the App Store is currently in the process of maturing. Will pricing finally be able to reflect quality? Eventually, yes. How quickly it will happen, though, is the question and it doesn’t appear to be soon.
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