Free Apps Business Model

forbes.gifThere’s an article on Forbes ‘Apple: Sony, Nintendo Can Panic Now’ that comments on the iPhone App store…

  • something like 80% are free
  • of the 100 most popular apps, a mere 7% cost money

This has led Haydn on the Symbian Blogs to conclude that "we don’t understand apps economics" and "We don’t know how many (the majority of) apps’ builders are getting by and what their business models are. We don’t know what the impact of apps is, we don’t know what they are taking attention and revenue away from. And we don’t know what a sustainable sector will look like"

This made me start thinking about motivations for creating free applications. Here are some reasons I can think of based on applications I have developed and motivations of other developers I know…

  • A way of achieving fame or personal satisfaction
  • A way of fulfilling a missing need
  • A way of having fun
  • A way to learn a new platform and advance career
  • A way a company can extend PR for another product
  • A way to promote a fuller version of an app

Going back to what Haydn said, only the last two involve any form of implicit business model. I could be wrong but I don’t think PR and Lite versions make up a huge proportion of free apps. I tend to think Forbes is correct. It’s difficult to compete with someone who has no intention of making any money. However, think beyond Sony and Nintendo. You need a very good proposition if you intend to make money from selling a mobile application.