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The App Economy

As Apple prepares to celebrate a billion downloads from its iPhone App Store, I’ve been talking to some of those making a living from building mobile applications - and trying to work out whether the UK is developing an app economy.

We set out to track down solo developers who were making enough from their applications to live on - and found three. But none of them was really sure that the app economy was going to provide them with a long-term living.

Malcolm Barclay has created Tube Deluxe, which helps Londoners find their way across the capital’s underground system. He built this paid application after starting with a free app, Tube Status, which has been downloaded more than 100,000 times. Right now, he’s getting around 11,000 downloads a month for Tube Deluxe, earning him about £4,000.

Malcolm is a freelance software developer who usually works for major corporations but has taken a couple of months out to see if he can make it as a phone developer. He’s put many hours into building his application in the kitchen of his London flat, which has become a temporary development studio.

From his home in Edinburgh, Matt Farrugia, has created Slideshow Builder, which gives iPhone users a better way to display their photos. He’s another freelance developer who decided last autumn that the market for enterprise software was looking pretty ropy and he needed to try something new:”The only market that wasn’t shut down was the iPhone,” he explains.

Unlike Malcolm Barclay, he began with a paid option, but business was slow until he launched a free “lite” version three weeks ago. That, along with promotion in the iTunes store, appears to have worked the trick. He reckons that at times he’s now earning at a rate of £100,000 from Slideshow Builder, though that’s only on the best days.

But Michael McNeela has perhaps the best success story. He is a 17-year-old schoolboy from Harrow in London, who’s so far made something like £15,000 from one very simple iPhone app. He realised that 02 customers on monthly contracts needed a simple way to find out how many of their minutes they’d used. So he came up with Mobile Allowance, which tells you exactly that. So far, 40,000 people have downloaded the app at 59p a time, of which Michael gets 36p. He’s now planning to buy himself a very expensive laptop.

So a new breed of young software developers are finding ways to make a living from the iPhone. And this is a market that is going to get much bigger, with Google’s Android app store beginning to take off, and Blackberry and Nokia also getting their app acts together. With the sales of new handsets falling off a cliff, no wonder the industry is excited about this new source of revenue.

But our three UK solo developers seem unconvinced that they will be doing this in a year’s time. Matt Farrugia told me that apps had settled down at a price which was just not sustainable. “People have it in their heads that 99 cents - 59p - is the right price. The price point makes it difficut to make a living.When I tot up all the hours I’ve put in, I’m working for less than minimum wage.”

He says the only developers that are likely to make serious money in the longer term are games businesses - and a look at the top sellers in the App Store seems to prove his point.

Malcolm Barclay is working away at a number of other transport-related applications, but thinks he’ll probably be looking for another contract as a developer with a major company soon. “It’s halfway between a business and a hobby,” he told me.

And Michael McNeela is enjoying a windfall that might turn any teenager’s head, but is realistic: “I think it’s a one-off - a lot of the applications that are big hits are also short-lived. I doubt I will be making another.”

Just as in the early days of any gold-rush, there are some fantstic stories emerging of lone prospectors striking it rich. But in the longer term, it will be the bigger established software houses who really stand to profit from the app economy.

[Thanks: http://www.bbc.co.uk]

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