There are over 130,000 apps in the App Store. About 100,000 of those expect you to pay cash money for a download. Sometimes it’s worth it! Often, it’s not. Prof. Dealzmodo’s here to help you tell the difference.

Oscar Wilde was right about cynics: they know the cost of everything and the value of nothing. On your next trip to the App Store, don’t be cynical. Be smart—even if it means spending a little money.

The App Store Effect Is Real. Use It.

Last fall, John pondered the App Store Effect, which holds that Apple’s model results in price deflation so severe that it’s unsustainable… in the long term. In the short term, though, it’s your ticket to apps that cost far less than their analog (or web-only) counterparts. And sometimes, they’ll include even more functionality.

Examples? Certainly! Here’s a range of apps, from professional to gaming to reference to navigation, that’ll save you anywhere from a few bucks to a few thousand:

It’s probably most helpful to think of these in terms of the broad categories where you’re most likely to find a cheaper app alternative.

Hobbyist: If it’s an activity that at least a few thousand people enjoy, there’s likely an app catering to it. GuitarToolkit‘s a perfect—if extreme—example. For $10, you get a library of over 500,000 chords, a chromatic tuner, and a metronome. Purchasing all those items individually gets expensive and, more importantly, bulky. An app? A fifth (or less) of the cost, all stored in your phone. Frequent traveler? Download HearPlanet‘s collection of over 250,000 audio guides instead of shelling out around $8 for one at each location. If you have a common passion, someone’s developing for it.

Professional: BarMax costs as much as an App Store product is allowed to, but the law exam prep app is still $2,000 less than an in-classroom service like BarBri. In fact, shortly after BarMax was released, BarBri retooled its pricing structure to be more competitive. It wasn’t a coincidence. And other professionals—including pilots and nurses—have a bevy of targeted apps to choose from as well.

Cannibalistic: Companies are so eager to be represented in the App Store that they’ll undercut themselves to be players there. An online subscription to Zagat.com costs $25 per year. The Zagat to Go app costs just $10, and includes location services and an offline mode that the Zagat website doesn’t. You can play Grand Theft Auto: Chinatown Wars for $30 on the PSP, but it’s only $10 on your iPhone. And Major League Baseball’s MLB.com at Bat app lets you stream games for $1 a pop, while MLB.TV charges $99 for a yearly subscription. Sure, if you watch a hundred or more baseball games a year on your iPod Touch’s tiny screen you’ll want to go with the latter, but the pay as you go option is ideal for the casual fan with a vested interest in his eyesight.

Remember: with so many developers targeting the App Store, it’s more than likely that there really is an app for that. But wait… what if there are several apps for that? How do you choose the right one?

App Overlap

Because the App Store is such a big ecosystem, it’s inevitable that there are redundant applications. Some categories see more overlap than others, but in general it’s common to find multiple apps that do the same thing. So where does the cost difference come from?

Functionality: The most basic—and most obvious—reason for an app to be more expensive is that it can flat-out do more. A casual Twitter user might be happy using Echofon for free, but if you need support for multiple accounts and the cleanest UI around, you’re going to be happy coughing up three bucks for Tweetie 2. Make sure to read up on the full feature set of what you’re buying. If you’re about to pay for something with more firepower than you need, there’s likely a free (or cheaper) version that’ll suit your purposes. The paid app will still be there if you decide you need more functionality down the road.

Ad Support: Often, and particularly with casual games, the only difference between the free and paid versions of an app is whether you’ll be saddled with advertisements as you use it. It really depends on your threshold: is it worth three dollars to play Words With Friends unfettered, or are you willing to endure the between-turn sales pitches that accompany Words With Friends Free? Each app integrates ads differently, so it’s worth trying out the free version first. Too many banners cluttering your screen? You’re only a click away from an upgrade.

Ripoffs: It might be helpful to think of the App Store as a giant, unruly bazaar, with thousands of vendors peddling their wares. There’s some oversight when things get out of hand, but even the $999 “I Am Rich” app was downloaded eight times before it got shut down. Like in any sales environment, it’s important to remember that what something costs usually has very little to do with what it’s worth. Don’t just go by the star system; read through the reviews to make sure that the app lives up to the developer’s description.

Easier Said Than Done?

There’s no question that a little research should go into whatever app you buy—starting with our Essential iPhone Apps Directory. Beyond that, here are a few common App Store categories with stand-out expensive, cheap, and free apps, along with our recommendations of when it’s worth it to pay up:

Cooking

Expensive: 20 Minute Meals – Jamie Oliver ($8)
Verdict: Don’t Download


Cheaper: Martha’s Everyday Food ($1)
Verdict: Don’t Download


Free: Epicurious
Verdict: Download

Jamie Oliver and Martha Stewart are powerful brands, but that’s pretty much all you’re paying for. Epicurious has thousands of recipes—including from famous chefs featured in Gourmet and Bon Appetit—a shopping list feature, and will suggest meals based on the ingredients you have handy. It’s really the only cooking app you’ll ever need.

File Storage

Expensive: Air Sharing Pro ($10)
Verdict: Don’t Download


Cheaper: Air Sharing ($3)
Verdict: Download


Free: Dropbox
Verdict: It Depends

While Air Sharing Pro includes printing and emailing, the regular version should get the job done for most people: you can transfer your files to your iPhone’s flash memory via Wi-Fi for storage and transport. The trouble with the “free” option, Dropbox, is that it’s not a standalone app. However, when you link it to your Dropbox account you can share and sync up to 2GB of files for free. It’s good if you already have an account, but if you don’t, you probably should skip it.

Messaging

Expensive: BeejiveIM ($10)
Verdict: Download


Cheaper: AIM ($3)
Verdict: Don’t Download


Free: Meebo
Verdict: Download

It might sound crazy to pay ten dollars for a messaging app, and for a lot of people it would be. But if messaging is your primary mode of communication, BeejiveIM‘s multi-account management, intuitive interface, and seamless push implementation are well worth it. For more casual IMers, it’s hard to beat Meebo‘s multiprotocol support and push notifications. They even log your conversations on their servers. Another solid free option is Fring, which includes Skype support. What you don’t want is to pay $3 for a messaging app like AIM, which only supports services on the AIM network and Facebook and is missing some features—like blocking contacts—found on the desktop version.

Navigation

Expensive: Navigon MobileNavigator ($90)
Verdict: Don’t Download


Cheaper: MotionX GPS Drive ($1)
Verdict: Download


Free: Waze
Verdict: Don’t Download

Just to be clear: Navigon makes one of the best navigation apps out there. But MotionX GPS Drive is a very good navigation app at a tiny fraction of the cost. So before you spend $90 on a top-flight turn-by-turn system, spend a few weeks figuring out if MotionX is good enough for your purposes. Chances are it is. And if it’s not? It was worth a dollar to find out. As for Waze, anyone who’s ever dealt with a backseat driver should appreciate just how unreliable—and aggravating—crowdsourced navigation can be.

Personal Finance

Expensive: PocketMoney ($5)
Verdict: Don’t Download


Cheaper: MoneyBook ($3)
Verdict: Don’t Download


Free: Mint.com
Verdict: Download

The first rule of money management: don’t pay for something you can get for free. Apps like PocketMoney and MoneyBook aren’t bad at what they do, they just look a bit hypocritical with Mint.com Personal Finance around. Mint automatically syncs to your online accounts to help you keep track your budget and investments. It’s the best personal finance app out there, and not just because it’s free.

RSS Reader

Expensive: NewsRack ($5)
Verdict: Download


Cheaper: Reeder ($3)
Verdict: Don’t Download


Free: NetNewsWire
Verdict: Download

You can get by with a free RSS reader, and NetNewsWire‘s a great option that syncs with Google Reader. Like the majority of free options, though, it can be a bit sluggish and prone to crashing, especially if you’re loaded up on feeds. Among the paid apps, NewsRack (formerly Newsstand) shines for its reliability and speed. In-between options like Reeder? Well, if the developer’s best troubleshooting suggestion is to limit the number of items you have to sync, you’re not getting what you paid for.

Twitter

Expensive: Twitterrific ($5)
Verdict: Don’t Download


Cheaper: Tweetie 2 ($3)
Verdict: Download


Free: Echofon
Verdict: Download

Tweetie 2 is our favorite Twitter app : it’s fast, intuitive, and loaded with features. I can understand if you’d rather not pay to use Twitter on your phone, and Echofon’s a more than capable free alternative. But only a twit would pay $5 for Twitterrific when the class of the field is just $3.

The Value and the Cost

Remember that the App Effect is working for you, at least for now, and that we’re in an age of unprecedented deals on app content and services. Try not even looking at the price at first. Start with the feature set, see what’s comparable. If it’s free? Great! But even if it’s $10 or $20, it still might be a steal.

We’ve gotten to a point where it feels almost perverse to pay for an app. But think of it in a larger context: you’re buying software. On your desktop, that used to—and often still does—command exorbitant sums. Even on mobile platforms, Windows Mobile and Blackberry apps used to cost 10 or 20 times the average App Store paid download. Comparatively, App store downloads are peanuts.

And remember, too, that by paying for apps that are actually worth the money, you end up supporting the developers that are delivering innovative content and services. That means a better app experience down the road for all of us. Even the cynics.

Prof. Dealzmodo is a regular section dedicated to helping budget-minded consumers learn how to shop smarter and get the best deals on their favorite gadgets. If you have any topics you would like to see covered, send your idea to tips@gizmodo.com, with “Professor Dealzmodo” in the subject line.

91.2 million total customers, 2.2 million of whom joined in Q4, $27.1 billion operating revenue in the quarter, and you still make a loss? Well, in fact Verizon made a tidy profit, which may be considered comparable to Google and Intel’s latest results, but its culling of jobs at the end of last year cost it a whopping $3 billion (presumably in redundancy settlements). Still, the company looks buoyant with that quarterly revenue number growing by 9.9 percent year-on-year, and CEO Ivan Seidenberg noting that significant costs were incurred in setting up for a 4G network deployment in 2010. Our favorite nugget of info? The “cash expense per customer” per month number: $27.62, which presumably includes Droid subsidies and the like. How does that compare to what you’re giving VZW each month?

[Thanks, Josta]

Verizon lost $653 million last quarter in spite of increasing revenues originally appeared on Engadget on Wed, 27 Jan 2010 03:28:00 EST. Please see our terms for use of feeds.

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It’s uncanny. When known software gets repackaged for iPhones and iPod Touches and passes through the hallowed gates of the App Store, something happens: Almost invariably, it gets cheaper. Waaay cheaper. Good right? Well, not always.

The App Store is a strange new place for developers. Veterans and newcomers engage in bareknuckle combat, driving prices down to levels people wouldn’t have imagined charging just a few years ago. Margins drop to razor-thin levels while customers expect apps to get cheaper and cheaper, but with ever increasing quality and depth.

For developers, for other software platforms and potentially for the increasingly fickle customers themselves, it’s uncharted, and treacherous, territory. But the most bizarre thing of all is—in an effort to keep people in the App Store, and to prevent competitors from getting a toehold in the mobile app business—Apple’s charting a course straight into it.

“The App Store is a very competitive environment,” says Caroline Hu Flexer, co-founder of Duck Duck Moose, an indie developer of children’s edutainment apps like Itsy Bitsy Spider. “As an independent developer without a large PR budget or well-known brands, it can be very challenging, and you’re pretty much at the mercy of Apple.”

The Problem

Most iPhone apps had no life before the App Store, and currently have no life outside it. But with those that did, you start to see a pattern. App prices could reasonably be expected to fall over time—an older game is worth less to customers than a newer game, and with other types of software, a late-stage price drop is a great way to scoop up late adopters. What’s strange, though, is how prices dramatically collapse after hitting Apple’s store.

Two weeks ago we flagged some bizarre differences in pricing between equivalent PSP and iPhone games. Big titles, like Tetris and Fieldrunners, were inexplicably cheaper on the iPhone, even in cases where it was executed better. This didn’t make a whole lot of sense. As it turns out, it had nothing to do with Sony and the PSP, and everything to do with the App Store.

As you can see in the chart above, many apps and services take a price dip in the App Store. Zagat’s premium To Go guides cost a healthy $4/month for Windows Mobile phones, but sell for just $10/year on the iPhone. CoPilot 7, a navigation app, used to set you back a full $200 on a Microsoft-badged device (later lowered to $100); the much-improved version 8 sells in the App Store for a measly $35 today. The premium version of WeatherBug runs $5 for people who happened to buy BlackBerry’s touchscreen phone, but just $1 for anyone who bought Apple’s. VR+ voice recorder, a full-featured dictaphone app, runs $30 on BlackBerry, and an incredible $2 in the App Store. So how can this little App Store, itself a subsection of the iTunes store, squeeze so many developers to the point of near-suffocation?

Update: The BlackBerry Weatherbug app boasts a few extra features over the iPhone app, including push notifications. This accounts for some of the price difference

The Economy

Some of this is pure Econ 101: The store serves a massive, captive audience that’s pre-trained to spend money in iTunes. The promise of higher volume makes it easier for developers to lower prices, which they use, along with interesting features and clever marketing, to set themselves apart from the competition.

If things work out just right, the App Store can move a lot of software for you. Spread your lower margins over tens of thousands of sales, and your $2 app could make just as much, if not more, than your old, slower-selling $30 app did. The App Store recently passed the 2-billion-download mark, and there are likely well over 50 million App-Store-ready devices in peoples’ hands right now. A vast majority of these downloads—averaging an insane 35 per device—will likely have been free. Only Apple knows just how many. But even if just 5% of the 2 billion downloads were paid for, that’s one hell of a market.

It’s true that prices are falling as more and more iPhone and iPod Touch owners enter the market. But prices won’t stop falling. And more and more developers from all over the world are submitting apps, too, so fewer devs are guaranteed visibility. Not all of the people investing time and money in their products are reaping the return they (reasonably!) expected.

Newsweek’s exposé on the end of easy money at the App Store goes a long way toward making the case against going all-in as an iPhone dev. Not only are development costs high, while success appears to be basically randomized. But the story doesn’t explain exactly what happened to make the situation so grim.

The Culture

Giz stories rage about app prices all the time, and in your own private way, so do most of you. Buying $1 songs and $2 TV shows has given us an expectation that apps should be cheap, no matter what their use. The glut of free apps you see filling out the app charts every day doesn’t help either. Software is worth less to us now, even though we use it more.

I spoke with Steve Andler of Networks In Motion, the company that makes Gokivo. It’s an app that we savaged for its introductory price of $10 a month, which then dropped to $5 a month a few weeks ago.

Andler explained reaching the unrealistically low costs with one thing: diminished features. Their app pulls up-to-date map, traffic and POI data from NIM’s servers in real time, meaning that—beyond developer costs—they have to constantly pay for new, fresh data to pass on to their customers. But even at $5 a month, it’s just about impossible for Gokivo to compete with an app like MotionX GPS Drive, which is $3 a month, or $25 per year.

Andler says there are subtle differences in services offered, which is true—MotionX, for example, doesn’t yet read street names aloud when it gives you directions—but your average user probably doesn’t know this, and there’s a good chance MotionX might add it in an update later on, as their market share and revenues grow. But the damage is done. The app-buying customer is spoiled: As far as we are concerned, turn-by-turn GPS apps should now cost no more than $3 a month, period. This is the new retail, and it’s weird.

Loren Brichter, father of Tweetie, is used to getting yelled at by jaded app shoppers. He’s charging $3 for Tweetie 2, an update—but a whole new version, really—of his well-established Twitter app. Offering the software as a free upgrade isn’t realistic for him:

I priced Tweetie at $2.99 not based on how much work I put into it (it would have been more), or to try and undercut other apps (it would have been less), but simply because I felt like $2.99 was a reasonable price to pay for a Twitter client. Impulse purchase, but not bargain-basement. I never liked playing pricing games either—a popular pastime of other App Store devs. It’s always been $2.99, and will probably always be $2.99.

His decision wasn’t easy. And even though his app is the darling of the tech press, and has hundreds of great user reviews, he’s being lambasted for charging three measly dollars for a high-quality app that people will use again and again and again. Before the App Store, a complaint this petty wouldn’t have even made sense.

Apple

From the outside, it appears that Apple is encouraging a race to the bottom. The top 10 lists in each App Store category—one of the only ways for an app to get any meaningful amount of iTunes visibility—are almost exclusively the territory of low-priced impulse buys, and are hard to cling onto for more than a few weeks at time. Flexer, of Duck Duck Moose, says she’s experienced it firsthand:

The ranking by volume (as opposed to revenue) on the App Store seems to drive the prices of apps down. Aside from being featured by Apple, exposure of an app is dependent on its ranking in the top lists, so developers lower prices to obtain a higher ranking.

This is echoed and amplified by the makers of Twitterific, an app that, in a bid to stay competitive, saw its price fall from $10 to $4, despite active development and a growing featureset:

While these changes represent perks for users, it also means that sustaining profitability for a given piece of software in the App Store is nearly impossible unless you have a break-away hit.

And if things don’t change?

Myself and others like me will have no choice but to focus our development efforts elsewhere.

With yesterday’s announcement that Apple is allowing free apps to include in-app purchases, things just got even more tumultuous. Depending on how this is handled, the top “free” apps could all be paid apps in disguise. Either that or the paid app rankings will be dominated by free-on-a-trial-basis teasers. In either case, the rankings open themselves up for opportunistic abuse, and the highest goal for any honest, talented app developer—to just crack that list—just became more uncertain.

This is disastrous for developers, even if it’s mostly incidental, and a function of Apple trying to sell apps like they’ve been selling music for years, despite a totally different set of product types and customer needs. But Apple’s effect on pricing goes well beyond incidental. At least in some cases, Apple calls the shots.

A high-profile dev team that has sold a number of apps in the store since the earliest of days, and who accordingly wishes to stay anonymous, told us as much. When they approached Apple with their first app, they had a price in mind. Apple told them it was too high, and that they’d need to cut it to succeed. They chopped it in half. Even then, Apple told them to “be careful.”

This company made out fine, since they were in a position to adapt. However, to play the volume game, they had to restructure their entire philosophy around a pricing structure that, just months before, would’ve seemed ridiculous.

With over 2 billion data points to graph and filter to their heart’s content, Apple understands the App Store climate better than anyone else possibly can. As such, their advice is probably golden. Which is okay if you’re a relatively nimble, single-purpose company, and you can afford to risk restructuring everything you do around their store, and your costs can be covered at whatever price you evidently need to set to sell at a certain volume. But you’ll just want to keep in mind that their advice is self-interested. Apple wants cheap apps, to keep people buying them, and to keep other stores firmly in the second tier—and they’re not afraid to say it. From Apple’s last quarterly report to investors, a line they’ve been echoing since the store opened:

[Apple] also expects competition to intensify as competitors attempt to imitate the Company’s approach to providing [digital app distribution] seamlessly within their individual offerings or work collaboratively to offer integrated solutions…While the Company is widely recognized as a leading innovator in the personal computer and consumer electronics markets as well as a leader in the emerging market for distribution of third-party digital content and applications, these markets are highly competitive and subject to aggressive pricing.

You don’t need to look back any further than the launch of the iTunes music store to see an Apple that will do everything it can to push other peoples’ prices down for their benefit. Of course, they can’t really fix prices for apps—they’re not songs or movies, and each one does something different—but they can nudge like hell.

What Happens Now

So what does the App Store Effect mean, right now? In the short term, we’ll get lower prices. This is great. But in the long term, it might not be sustainable.

The promise that sales volume will make up for the rock-bottom prices you need to charge just to be seen in your app category seems increasingly hollow, and to put it bluntly, if developers don’t have a chance in hell of recouping their fees, they’ll stop trying. And I’m not talking about 99-cent iFart app spammers here—I’m talking about big players who already make money selling software. If the navigation companies, the big game studios and the premium content providers can’t thrive in the App Store, they’ll have to leave; even playing in Apple’s sandbox threatens and undercut their (sometimes much more crucial) product lines elsewhere.

And don’t forget, Palm and Android fans, this App Store Effect sends ripples well beyond the App Store. Customers expect to see functionally identical apps priced the same way across platforms, because to us, that’s what makes sense. Can devs really afford to port an app to the webOS to sell to the tens of thousands of Pre owners, when they’re expected to tag it with iPhone prices, calculated for a base of millions? Whether by Apple’s design or totally by accident, everyone who doesn’t own an iPhone will suffer for it.

The App Store Effect illustrates a new kind of economy, and it’s not going to go away. In fact, it’s going to get worse. Developers will either adapt, die or leave. But where will they go? Until there are 50 million Android handsets and 50 million Pre offspring out there, the rest of the mobile software world is pretty much screwed.

The Times Online had a sit-down with Sony Computer Entertainment boss, Kaz Hirai, after the big Gamescom show last week in Cologne. You remember, the event that saw the official launch of the PS3 Slim. The Q&A is an interesting read in whole, but the answer that stands out comes in response to a question about whether the lower-priced $299 PS3 Slim will be sold at a loss relative to its cost to manufacture. “Yes,” was the quick answer from Kaz. That’s a surprise for two reasons. First, the PS3 Slim benefits from more efficient 45-nm manufacturing processes used on its smaller, less power-hungry Cell processor. Also, just last month Sony’s CFO told investors that manufacturing costs of the PS3 had dropped by “about 70%, roughly speaking” — that comes to about $240 based on original manufacturing estimates of $800 when the PS3 launched back in 2006. Regardless, a console being sold as a loss-leader is nothing new in the gaming industry and, as Kaz points out, will almost certainly be offset by looking at the PS3 as a platform that includes the hardware, software, peripherals, and services.

[Via GamesIndustry.biz]

Filed under: Gaming

PS3 Slim hardware still losing money originally appeared on Engadget on Tue, 25 Aug 2009 05:23:00 EST. Please see our terms for use of feeds.

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Looks like Hitachi has made some serious headway on the biometric payment system we first heard about way back in the halcyon days of 2007. According to the Mainichi Daily News, the company is currently testing its Finger Vein Authentication System internally, with the device serving as a method of payment for vending machines and the like. Once it’s proven that employees are able to get their Koala’s March and Hi-Chew without incident, the plan is to up the ante, with high precision ID systems that combine finger vein and finger print authentication systems for military use.

Filed under: Science

Hitachi develops biometric payment system, uses it to sell junk food originally appeared on Engadget on Wed, 22 Jul 2009 13:13:00 EST. Please see our terms for use of feeds.

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