The App Store: Fad or Fixture in E-Commerce?

Apple has made the app store a seemingly must have addition to the business model of firms that sell software via online channels. It is believed that Apple has gained more than $1 billion in revenues from its apps store. Now, Amazon will try to replicate Apple's success by marketing apps for the Kindle e-reader. It is a dream scenario: software with low price points, no physical inventory, and no shipping costs. Do the success of Apple and the launch by Amazon signal a significant shift toward app stores sprouting across the Internet?

According to an article by Farhad Manjoo in February's Fast Company magazine, software developers and brand marketers should probably refrain from looking to app sales as a prime revenue source in the future. The reason? The history of software development for interactive communications has been based on the idea of open development. That philosophy has clashed with the tight control Apple has exercised over the content created by developers of apps for the iPhone. Apple is obliged to control content associated with its brand, but it comes at a price- creating a disincentive for some programmers to innovate.

Certain brands will likely thrive selling apps. Apple has already proven that it can succeed. Amazon seems to be a good candidate given the success of Kindle. Adding more capability to the product via apps should make it even more attractive to current and prospective users. Otherwise, apps revenue will be a modestly small part of revenues for most firms. But, as the long tail of the Internet has shown, revenues will not always come from "home run" products. Niche markets exist; its is up to software developers to create apps that meet the needs of small customer segments.

Fast Company - "Why App Stores Are Not the Business Model for the 21st Century"

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