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Apple has a problem.
Making it worse is the fact that its problem happens to be one of its most important businesses–the App Store.
When you think about it, the App Store really is one of the most interesting inventions of the past 25 years. Tim Cook called it an “economic miracle.” Setting aside the hyperbole, it’s actually kind of true.
It’s hard to remember that before the App Store existed, your iPhone came pre-loaded with 16 apps, and that was it. For anything else, you had to access it on a website.
But, the App Store’s sphere of influence isn’t limited to the iPhone. Buying software of any kind was very different. There was a time it meant you would go to a store like CompUSA or BestBuy, and find a box on a shelf. The box would be full of disks, and when you got home, you’d load those disks onto your computer on at a time.
Then came the internet, which meant you could order those boxes to be delivered to your front door. Or, even better, you could download software directly to your computer.
Except, for a long time–for most people, anyway–the internet was slow (for many it still is, but that’s an entirely different problem). Downloading software took a long time, and it wasn’t a great experience. You had to type in your credit card information into a website, which was a problem of its own.
You kind of had to really want the software to get out your credit card and type the numbers into the website of a company you may have never heard of. Sure, if it was Microsoft or Adobe, no big deal. But what about for a game your kid wanted you to buy from some new developer?
That’s really where the “economic miracle” comes in.
The problem Apple solved with the App Store was to introduce simplicity and trust to the process of downloading apps. I think you could argue Apple actually solved this problem earlier with the iTunes Store, which allowed you to download music, and later Movies and TV Shows. It was that platform that really made the App Store possible, if not in a technical sense, then at least conceptually.
Apple, with the iTunes Store, had hundreds of millions of customers’ payment information stored, allowing each of them to download music with a simple tap.
In that sense, the App Store solved the problem of distribution. It eliminated basically all of the friction of distributing apps, it just did it for software developed for a device you carry in your pocket.
There were millions of people with iPhones, most of whom already had an iTunes account with their payment information on file. Pair that with developers eager to build things that users would be willing to pay a few dollars for, and you can see what Cook was talking about.
It’s easy to get side-tracked anytime someone calls something they built a “miracle.” In this case, I don’t know if it’s a miracle, or just an ordinary juggernaut. The App Store now represents $500 billion worth of annual economic benefit for developers, for which Apple takes a 15 or 30% cut.
And that, my friends, is where the real problem starts–at least for Apple. The App Store is no longer a “miracle.” Yet, Apple continues to look at it as if it were just born and should be seen for the transformational platform that it was when Steve Jobs introduced it in 2008.
Developers, however, don’t see it that way. It’s simply business as usual. And, it’s a very big business with lots of stakeholders.
When you create a platform that creates incredible economic opportunity for people, there will inevitably come a point when those same people will start to want more. They’ll also start to question whether the level of control you exert is reasonable or justified.
Clearly, Apple and its developer community don’t agree on that point, and that’s a problem.