Shockingly, It’s Hard to Make Money in Apps!

Newsflash: the age of “I’m gonna write an app and make a billion dollars!” is over. While it hasn’t hit dot-com collapse levels of obvious (my grandma isn’t developing an app yet), we’re close. Someone finally tipped the New York Times off to the slowing of the app gold rush, and they’ve managed to dig up some fascinating examples of people who took “if you build it, they will come” a bit too seriously.

Here’s one app developer’s experience, according to the New York Times:

With direct employment out of reach, he decided to work independently by writing apps. He had no illusion that he was likely to become rich. Mostly, he hoped to find satisfying work that paid enough to provide a middle-class living and some shelter from a shifting economy.

But with hundreds of new apps introduced every day in Apple’s store, the field is overcrowded — something the Grimeses learned quickly and painfully.

Ms. Grimes, 32, quit her job teaching kindergartners to join the couple’s new venture, Campfire Apps. They downsized to a two-bedroom apartment. “We either succeed and it’s awesome, or we fail and it was awesome while it lasted,” she said.

They worked steadily on apps that revolved around children. Henry’s Smart Headlamp was a learning game for preschoolers, a hunt for hidden objects that the Grimeses hoped iPhone-wielding parents would think was worth $2 for a moment of distraction. A free version called Henry’s Spooky Headlamp got 5,409 downloads during Halloween 2011.

The couple aimed for one new app a month, but progress was slow and sales were slower. In March, with the apps bringing in only about $20 a day, they cashed in Mr. Grimes’s 401(k), which yielded $30,000 after taxes and penalties. They had already spent the severance from his job at Legg Mason.

One thing they never scrimped on was technology, especially Apple technology. At one point they owned a 24-inch iMac, a Mac Mini, a 24-inch cinema display screen, two 13-inch MacBook Airs, a 15-inch MacBook Pro, two iPad 2s, two Apple TVs, two iPhone 4s and an iPhone 3GS. “We justify buying new models by saying we need them to test out the apps,” Mr. Grimes said.

Soon, though, it got to the point where Mr. Grimes needed to take on freelance work, which brought in crucial income but took time away from Campfire Apps. By the beginning of summer, troubled by several persistent health care issues, he surrendered to the need for a full-time job.

Look, it’s not that there aren’t winners in the app economy. But come on…quitting your full-time job to start an app company BEFORE you have a successful app is an awful idea. This is akin to moving to Alaska with a map locating the common gold mines, or attempting to drill for oil in Texas by randomly poking the ground with a Black and Decker drill you bought at Home Depot.

What I found most interesting is that the New York Times also followed up on the developers of iShoot, an early successful iOS app. The developer point-blank says he was in the right place at the right time, and has since moved on from casual gaming to apps designed for the medical community. In other words, he’s aiming for a specific niche that has a need for specialized apps, and he’s no longer relying on people stumbling on a cool game in the App Store.

For those of us who closely follow technology, it isn’t a shocker that it’s hard to be a full-time mobile app developer. But when that concept makes its way to mainstream media, and even the early leaders are jumping ship, it’s finally time to say the bubble has officially burst!



Categories: Gear Bits

Tags: ,

1 reply

  1. Like anything else you need a business model … WHY is it that with everything new we see a couple of people get rich who are lucky, but hundreds or thousands of people fail? Failure is the most common outcome of ANY new business – even when there already is an established business model pattern to follow.
    But really, when your model is:
    1. Apps
    2. …
    3. Profit?
    Are you honestly surprised at failure?