Saturday, March 13, 2010

iPhone app economics: HTML5 vs native

I don't develop iPhone apps, but I found Peter-Paul Koch's article so ridiculous that I decided to respond. He tries to make the case that there is no money in developing native apps for the iPhone, and he recommends making HTML5 apps instead.

In the article, he suggests that iPhone app developers fall into 3 buckets:

  1. paid by clients
  2. don't care about the money
  3. lone guns expecting to get rich

But this is an artificial division, it's not about the developers, it's about the economics of the apps -- what matters is how much money the app makes, not the developer. An app that doesn't make enough money to pay for the development (and ongoing costs) is a failure, or a hobby. Whether you are a lone developer or paid by someone else, making apps that lose money is bad business. The real question is...

If the goal is to make money selling an iPhone app, which one will have better profit margins: a native app or an HTML5 app?

The thing that Apple has done exceedingly well is to make the process of finding, purchasing, and installing an app dead simple. This is in stark contrast to an HTML5 app -- as Peter-Paul says:

The counter-argument is that the HTML5 app route doesn't allow developers to get paid. That's true -- for now.

He makes some wild guesstimates on the economics of the app store -- numbers that don't agree with what other people have found -- to show that there isn't much money in distributing apps through the App Store...but compared to what?!? He says that an HTML5 app is a better option a fait accompli, but he makes no attempt to calculate the economics of it. Even if he could successfully discredit the idea of making money on native iPhone apps, that doesn't automatically make HTML5 apps a better option.

If you ever wondered what confirmation bias looks like, this quote is from the start of his article (emphais mine):

In response to my HTML5 apps argument a few people came back to how the payment thingy is missing from my idea, and how it will (apparently) be worthless because of that. I've been thinking about that a lot in the past few days, and I'm increasingly of the opinion that the payment argument is nonsense.

I'm a proponent of open standards and platforms, and I hope a day will come when developers can make money without making native iPhone apps. But that idealism is tempered by the reality of the present, and Mr Koch has given no compelling evidence that HTML5 apps would make a better profit than a native iPhone app. At best, he's made the case that iPhone app development might not make enough money for the lone developer, and that is a risk for any type of software development.

HTML5 apps have tough competition on the iPhone, because in general, native apps:

  • are more performant
  • work better offline
  • leverage iPhone capabilities (camera, gps, etc)
  • are easy to find, buy, and install

The internet has a culture of freedom, and with such a variety of free services, consumers don't often need to pay for online applications -- most are supported by advertising dollars or hoping for the big buyout. However, like most iPhone/iPod Touch users, I have no problem dropping a few bucks in the App Store jar from time to time. Apple has created an environment where it is easy to buy apps, and when it is easy and inexpensive, people don't mind paying -- the same lesson that iTunes taught us about music. If purchasing apps online was as simple as the App Store, people would be more willing to pay, and services would be more willing to charge.

So, if someone wants to make the case for HTML5 apps, develop an app both ways (HTML5 and native), track the costs and revenue, and let's compare some real numbers.