The problem with app stores

App stores are conceptually great, from a user experience point of view. They are however gravely economically flawed, because by eliminating choice, and imposing unreasonable regulations, they undermine their own economic foundations, making them unattractive to developers.

Patmore Douglas 9/30/2016 2:39:00 AM

App stores are mainly mega monopoly digital software stores, available on smartphone, tablet, and the modern Windows and Mac PC platforms. They offer a clean, secure, and controlled way to search for and quickly download apps for your digital devices. The user experience of downloaded apps, is almost always slick and responsive. The apps themselves aren’t really technical marvels, and generally are not as rich as the applications you see on Windows and Macintosh personal computers. There are some apps like the FXCM Trading Station app found on Android and iOS, that are beautifully implemented, and compare very well with their PC counterparts, in terms of features. But these apps are the exceptions rather than the rule.

So what’s wrong with app stores? They do not drive their platforms to continued growth, like the PC did for decades. Why is this? Because they do not provide fertile economic ground for most developers to make money. Developers have little control over the prices they can make their apps available, that is market acceptable. Also, there has always been a severe downward pressure on app prices in app stores (pushing them to zero), further limiting the amount of money developers can make. On the Windows desktop, a developer can make his application available throughout a range of online and physical stores, as well as his own website. The advantage of this approach, is that he can take advantage of relatively high prices at different stores, as well as various promotions, bundling schemes, etc. at myriad locations. All these options or choices are eliminated with app stores. A developer has only a single place to sell his app on a platform with a native app store.

Smartphone and tablet sales are stalling, largely because there is little innovation taking place on these platforms with third party software. Real innovation is not going to happen until native app stores are no longer monopolies, so that developers can sell their apps at the stores of their choosing, as well as from their own websites. This is free market 101. You can tell that monopoly app stores are run by liberal minded companies, because they believe free market competition rules do not apply to them.