Tuesday, July 13, 2010

The App Economy--Blades to Apple's Razor


So many apps, so little time. Kraft just announced an iPad app for 20-something parents interested in a healthy diet for their youngsters. Glasgow has a shopping iPhone app to help residents and visitors find stores and attractions in and around the downtown area. The list of apps (for iPhone, for iPad, for iTouch) goes on and on, from the very practical to the wildly improbable.

InformationWeek points out that the App Store's offerings range from free to $899.99. According to an analysis by Piper Jaffery, the App Store isn't super-profitable . . . but of course that's not the major purpose. This is a blades-and-razor strategy, with the apps being innovative blades for the nifty iPhone/iPad/iTouch razor. Customers who want the apps have to have the iWhatever. That's the App economy at work.

It's worth pointing out that the App Store, like Amazon's Marketplace and eBay's auction offerings, carries no inventory cost to Apple. Every time a customer buys an app, Apple gets a hefty cut of the price. The app profit margin is gigantic for Apple, so every sale sweetens the bottom line.

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