If that's the case, then the market is unsustainable. Players will fail, causing scarcity, raising the value of applications, and conditioning users to expect to pay more.
I seriously doubt that will happen. People have stopped buying $30 software for their computer, why would they buy it for their phone?
Do you have statistics on that? My wife just bought Balsamiq for her computer without blinking, and that was $79.
Anecdotally, I know quite a few indie and larger commercial developers paying their salary and more on $30+ desktop software. I know that Balsamiq sure isn't hurting.
It's primarily the webset that can afford to subsidize free product on the back of VC.
The iPhone is a platform for cheap apps, mostly entertainment related and games.
Games (even small ones) take a surprising amount of resources to create, from art assets to developer time. Unless your game is a lucky iPhone hit, you just can't cover development costs.
If you want to make a go at an iPhone business, you optimize around that fact. You don't try to drag your existing business model to the iPhone and hope that the market drastically changes.
If your existing business model is "pay the rent", much less "cover payroll", then yes, you're quite right -- you can't drag your existing business model to the iPhone.
We do bespoke development for iPhone customers. They lose money, we make payroll, and we wait for the market to mature. Until it does, the iPhone is a total wash, and don't be surprised when the smaller shops that can't eat the loss start dropping out. It's a gold rush.
$1.99 is less than the cost of a movie rental, but movies have massive leverage across an incredibly large market. This idea that software should only cost $1.99 is remarkably poisonous, but fortunately, the market will correct that.
I'm familiar with game development. I make games for the iPhone in my spare time and I make more money than I ever have in my life, and my apps aren't even popular compared to things like Ocarina or Tweetie or Pocket God.
I'm truly, genuinely surprised, as most indie game developers I know have been lucky to recoup their costs, and fewer have seen any sustained revenue to speak of. Some got lucky, most have not.
What games do you develop, if you don't mind shedding the mask of anonymity? (I understand if not, I'm anonymous here because it allows me to actually speak freely).
At this date in time, I am the model for an iPhone business. A single guy making indie games. It might morph into something different in the future. I imagine there will be a separate path for business applications. Perhaps $30 CRM apps will be sellable in a bundle with enterprise software to large companies. But I don't think end users will ever pay $30 for iPhone apps except for very niche cases. Most people view their phone as an entertainment device, apps are on the same level as ringtones. The market may correct itself by flushing out all the players who can't make a profit on a $1.99 game, but it's not going to correct itself by suddenly having mostly $30 apps on the app store.
Maybe you're right, but I hope not. I'd be curious how you can afford rent on $1.99 game sales, what sort of revenue "more money than I ever have in my life" means, and whether you've seen more than one of your released applications succeed.
