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The iPad Pro has an App Store problem

The iPad Pro has an App Store problem


Smaller developers are trying to figure out how to make money

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Much of the marketing around Apple’s new iPad Pro has been centered on its ability to run professional grade software and the variety of creativity apps it supports. But for smaller developers of pro software, the iPad Pro may present more of a quandary than a new computing platform.

The reason? Despite the new tablet’s processing power and capabilities, it’s still running on mobile software — and developers aren’t totally convinced the economic incentives exist in the App Store for iOS. In short, they feel they wouldn’t be able to charge users the amounts they normally would for a version of their software that runs on a desktop.

It’s a problem that exists not only around the iPad Pro, but mobile software development in general, and highlights the very real challenges that smaller software companies face when deciding which software platforms to prioritize — especially as mobile tablets and PCs converge.

One of the common complaints made by software developers who spoke to The Verge is that they can’t offer free trials of their apps as part of the App Store download process, or issue paid upgrades to long-term users. Others say that selling apps through the App Store can create a kind of wall between them and their customers if the customers have issues with their software. Broadly speaking, the iPad Pro is forcing them to rethink their monetization strategies.

"Apps on iOS sell for unsustainably low prices."

Bohemian Coding co-founders Pieter Omvlee and Emanuel Sa, whose app Sketch is geared toward professional graphic designers, have been especially vocal about the fact that they’ve chosen not to make a version of their app for the iPad Pro. Sketch is currently available as a Mac desktop app, and has received rave reviews from product designers — exactly the kind of app you’d think would port well to the iPad Pro. But two months ago, Sa left a comment on the website Designer News saying that he and Omvlee had "no plans for an iPad Pro."

"Yes, it has a beautiful screen, but there’s more to consider…," Sa said. "Apps on iOS sell for unsustainably low prices due to the lack of trials. We cannot port Sketch to the iPad if we have no reasonable expectation of earning back on our investment."

A trial means there's the option for a consumer to download a free trial of the software before committing to the full price of it — something that is fairly standard for heavy or expensive software downloaded directly from a web browser.

"Sketch on the Mac costs $99, and we wouldn’t dare ask someone to pay $99 without having seen or tried it first," Omvlee said in a recent interview with The Verge. "So to be sold through the App Store, we would have to dramatically lower the price, and then, since we’re a niche app, we wouldn’t have the volume to make up for it."

Jared Sinclair is another developer who has been outspoken about what he sees as a "stubborn refusal" on the part of Apple to let "pro iOS apps to flourish."

Sinclair says he sees the iPad Pro as "a computer, no doubt about that," because of its performance capabilities. But Sinclair, an iOS engineer at a Seattle-based digital agency called Black Pixel, believes the difficulties in turning pro software into iPad Pro software have nothing to do with engineering. It’s mostly because of App Store policies, he says.

"There’s no way to issue a refund if someone decides they didn’t like it," Sinclair says. "Or, people have a frustration, they go to the App Store, they leave a one-star review and you can’t respond or find out why they’re dissatisfied."

All of this is just "the reality of software."

Another common lament is around the fact that iOS software developers can’t offer paid upgrades to longtime app users through the App Store, forcing them to sometimes even consider launching an entirely new app instead.

"I think what a lot of people are worried about is the lack of upgrade pricing for those of us who want to keep incrementing these apps over the years," says Chris Liscio, creator of the popular music instruction and production app Capo. Capo for desktops sells for $29.99 on the Mac App Store, whereas the iOS, touch-optimized version of the app sells for $9.99.

Liscio calls himself an optimist and notes that it's early days for the tablet still. He says he’s excited about the iPad Pro, and has an app in the works for it. But, as desktop and mobile platforms converge, Liscio says, "that’s when the mobile pricing structures will have to be different."

The founder of Paper by FiftyThree, a free app revered by designers that was originally created for the iPad and has been optimized for the iPad Pro, says all of this is just "the reality of software."

"Maintaining software is more expensive than building it in the first place," FiftyThree co-founder and CEO Georg Petschnigg says. "The first version of Paper, we had three people working on it. Now we have 25 people working on it, testing on eight or nine different platforms, in 13 different languages." FiftyThree makes money by selling hardware, a popular $60 stylus called pencil, and has raised $45 million in venture capital funding from the likes of Andreessen Horowitz and New Enterprise Associates.

Still, Petschnigg says, "there’s clearly something amiss right now" when it comes to app monetization.

"The thing that makes me sad is that the clever and life-changing ideas don't come from big companies, they come from the small shops."

The story is a different one for software giants like Adobe, or Microsoft, who both appeared on stage during Apple’s iPad Pro announcement this past September and have optimized a variety of different apps for the iPad Pro. Neither of those companies have to worry about the number of mobile downloads they’ll get for their creativity and productivity apps, which they offer as free, lightweight versions of their core apps. Both make money by driving customers to subscriptions for their cloud services. The economic environment for smaller mobile developers, who need to give Apple a 30 percent cut of any paid download or app subscription fee, is more tenuous.

Apple has said that it paid out $10 billion dollars in revenue to its developers in 2014, and developers have made $33 billion to date from the sale of apps and games. These are not insignificant amounts; Apple also likes to point out that developers still get 70 percent of revenues from app sales. There are currently more than a million apps for iPhone in the App Store, and 850,000 for iPad.

But as Ben Thompson has pointed out before in his well-respected blog, Stratechery, 95 of the top 100 apps are free to play (free to download with purchasing options once you’re in the app). According to Gartner research, in-app purchases are expected to drive 41 percent of app store revenue in 2016, and apps that cost between 99 cents and $2.99 will account for the overwhelming majority of paid-for downloads by 2016.

Apple has paid out $33 billion to app developers to date

At the same time, developers say that even charging just 99 cents for a one-time download of their app reduces demand for it. All of this leaves fewer options for makers of expensive, professional-grade software, who neither a) do free-to-play or b) want to charge as little as a buck for their software.

Apple declined to comment for this story.

So, unless Apple changes the App Store business model for makers of pro software, what are the solutions for niche app developers weighing the iPad Pro as a new computing platform? For a lot of people, selling hardware while also raising millions in venture capital funding isn’t realistic.

The most obvious solution for pro software developers may be subscription models, or doling out new tools and features as in-app purchases. Bohemian Coding’s Omvlee says for apps like Sketch, that might not work. "Some tools like Microsoft Office or Adobe Creative Cloud have enough force behind them that they can demand this and people, grudgingly, pay it. Many of our customers don’t use Sketch daily, though, and to charge monthly for that is harder to justify," Omvlee says.

Some software makers attempt a combination of paid apps on iOS and paid apps on the web, so they can still take advantage of the giant iOS ecosystem. Animoto has been taking this approach since 2007, charging between $9.99 and $29.99 for its creative video editing software on the web, and offering a free mobile app download with a $4.99 per month in-app subscription through the App Store. Both types of paying customers get advanced software features.

But founder and CEO Brad Jefferson says Animoto is "still working through the economics" of making apps. And the company is holding off, for now, on making a version of the app optimized for the large screen or the accessory Pencil of the iPad Pro.

"What we made for the smaller iPad is still going to work on the larger one," Jefferson says. "So there’s a little bit of, ‘Let’s see what adoption of the Pro ends up looking like.’"

Verge Video: A designer's take on the iPad Pro