September 22, 2012

Why the amount of apps will break Apple's dominance

We currently live in a world where everyone believes that more apps are the future. When you browse through the internet with your iPad, every Internet site will tell you that you should download their special app. But, did you know that 400,000 of the 650,000 available apps in the iTunes App Store have never once been downloaded? I'm not sure how many of these 250,000 apps that have been download actually makes money since 9 out of 10 apps downloaded are apps that can be downloaded for free. We know that famous apps like Angry Birds are making millions, but how many app developers are actually making money? I myself have only 4 apps installed on my iPad, and that's enough for me. Many people have many more apps on their devices - but how many of those apps are they using regularly?

Apps like Angry Birds or iBooks should be apps in the App Store, but why do we need a special search app from Google? The problem with apps is that they are not free to create, you need expensive developers, and when the app is finished, you need to update it in the future. The new iPhone 5 has a new larger screen, how many of the old apps need a new update? You also need to create one app to each device, one for the Apple devices, one for the Android devices, and another app for the Windows devices. Each app requires its own programming language and probably its own human programmer. Most web sites should instead use a responsive web design:

This is the regular version of Trejdify when using a computer:

The iPad version:

The iPhone version:

So, should Trejdify also make an App? No! Why do we need that? Now, what could this mean for the future of Apple? The reason to why many people today are purchasing products from Apple is not because the products from Apple are always the best, but because you have 650,000 apps to download. If you purchase an Android device, you will have much fewer apps available to choose from. This is what Warren Buffett called a "moat".
"The moat is the something that gives a company a clear advantage over others and protects it against incursions from the competition." 
In other words, you can't find enough money to build your own moat to compete with the company you want to compete with. One example is Coca Cola. It is possible to make a Coca drink that is more tastier compared with the original Coca Cola, but you will never find enough money in the world to be able to compete with Coca Cola. How can Nokia today make a better phone that can also compete with 650,000 apps? But, what if more and more people are moving away from the App Store to other hardware systems such as Android devices, because the apps are not being downloaded from the App Store? The moat will now disappear, and this will break the current Apple dominance.

Source: phoneArena, HD, Investopedia