The App Store is obviously a huge success for Apple, this goes with out saying. With over 65,000 apps to choose from and 1.5 Billion downloads in the first year, Apple is smiling, with good reason.

Apple may be grinning from ear to ear, but that’s not the case for many developers. Granted, some have made a killing. Most have not, which brings me to an interesting thing said at Apple’s recent conference call.

Enter Mr. Charles Wolf analyst for Needham & Co. Wolf suggested in a question to Tim Cook COO of Apple, that there was a “race to the bottom” in the App Store.

What did Wolf mean by “race to the bottom”? In a word: Pricing.

With an unlimited supply at hand, and a series of developers that do this as a hobby and not as a living, they can afford to price their apps, which are often junky, at $.99. Developers looking to make substantial money are being deterred from charging more than a few bucks because they have to compete with crappy applications at low prices. This artificially dilutes the cost of applications of all calibers, because the public is too cheap to pay for better quality, and instead goes for the cheap stuff. This isn’t a fair fight.

Apple is simply bunching all of the apps together and letting them fight each other, effectively killing real competition. The best marketing tool an app developer can hope for is to sell enough product to show up on the “top 25 list” in the App Store. How do you get on this list? By selling the most, not by merit. Most of the apps on this list are $.99, meaning the chances of a $4.99 app grabbing a place on the list is almost non-existent.

This of course, is crap.

Mr. Craig Hockenberry, long time Macintosh developer summed up Apple’s view of the situation rather nicely in this tweet:

You may need 10,000 songs, but essential apps are < 10.

Exactly. Apple is running this show very similarly to how they run the music store. That approach works splendidly for music, not so much for apps. $.99 a song feels right. $.99 for a truly groundbreaking app feels cheap, and is cheap in any sense of the word.

This isn’t even considering the cascade of other problems the App Store has, like user/developer communication. You don’t need feedback from the music artist if you have a problem with a song, you do however need feedback from developers if you have a problem with an application. The same goes for developers, they need user feedback to continue to improve their apps.

So what is Apple doing to fix these problems? Nothing has been said yet on the communications problems, but back at the conference call, Cook did say that Apple had “some ideas” on how to improve the experience. So Apple is looking into the problem. I wouldn’t hold my breath.

Wolf later wrote:

“In some respects, the App Store has taken its place alongside YouTube, where poor taste is the defining metric. More ominously, it has led to a deterioration of the entire pricing structure for iPhone applications. The risk is that developers who hope to build quality applications that have a long shelf life may be discouraged from doing so because prospective development costs exceed the revenues they expect to earn on the applications. In short, this race to the bottom has the potential to degrade the overall equality of the applications sold at the App Store.”

This quote sums up everything I could hope to say about the App Store situation in far better language than I could ever conjure.

Clearly, the App Store is a success, possibly for the wrong reasons. Apple must address these pricing issues immediately if they hope to continue to see a growing thriving developer community in the App Store.

These are strictly my views and may not represent the views of other Mactropolis city counselors.