Apple App Store – Coup d’état.

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A meritocracy becomes a plutocracy.

• The anticipated changes to the Apple App. Store will no longer mean that the apps most liked by users will rule the roost and it may also do some damage to the instant messaging platforms.
• It looks like Apple is going to overhaul the user experience in terms of how users discover apps in the Apple App Store and at the same time add a new revenue stream.
• This is long overdue as the app store has remained untouched for a very long time.
• With 2.28m apps in the store, finding what one wants has become much more difficult for users.
• It also causes real problems for the smaller developers as very often their apps sink without trace regardless of how good they are.
• When the app store was in its infancy this was not a problem and the three main charts combined with categories and editor’s picks was enough.
• However, apps are now a multi-billion dollar business and the app store so big that more sophisticated discovery is needed such that users are able to discover apps and services that they are willing to pay for.
• I am pretty certain that better discovery will lead to an uplift in the amount of money that users spend on a monthly basis.
• This is why I suspect that Apple has been hard at work making changes to how apps are discovered and may even be about to add a paid search function.
• This would allow app developers to have their apps feature at the top of search results in a vein similar to Google.
• However, I think that this will make life even harder for the smaller developers who can’t afford to pay to have their apps positioned more prominently.
• This is why the search function and Apple’s understanding of its users will be very important.
• Very much like TV, there are a few apps that everyone uses and then a very long tail of special interest apps that appeal to specific types of users.
• It is this that Apple has to get a handle on and ensure that its AI and search algorithms are good enough such that the right apps are discovered by the right users.
• I expect to see some progress on this at Apple’s developer conference (WWDC) in June.
• I also think that a big improvement in app discovery will cause some problems for the instant messaging players.
• Instant messaging is hugely popular but incredibly difficult to monetise which is why many of the suppliers have started to evolve their IM platforms to do other things.
• Part of the reason for their success in encouraging third parties to develop within their IM platforms has been the difficulty in app discovery on the much larger Apple App Store and Google Play.
• Consequently, if discovery becomes much easier on the Apple App Store, developers’ inclination to develop elsewhere is likely to decline.
• However, the major instant messaging platforms are now so big that they should be able to offer developers a decent return.
• Hence, it looks like Apple’s opportunity to quash this off-shoot of third party app development has passed.
• The net result of these changes is likely to be that the biggest and the strongest app developers will have even more influence over what users download and pay for.
• These developers also have the marketing budgets to advertise through the traditional channels as well as online which will make like even harder for the smaller developer.
• Consequently, I hope that the other changes that Apple makes to the App Store will help level the playing field as it is often the smaller developers that come up with the novel and innovative ways to use the smartphone that drive the industry forward.
• Apple remains beset with fears of falling orders and low growth and against that backdrop it is hard to see the shares rallying.
• However, the shares are so lowly valued that those happy to sit and hold for the very long term are very unlikely to do badly.