This post was originally posted to FourStarters.com on the 12th of March 2008

I was talking and thinking about the recently released Apple iPhone SDK today, and realized that while I like the major idea of a controlled application platform I did have my doubts about some of the more intricate details. Selling an application for your price through the Apple controlled store sounds like solid business model for both Apple and developers, but quickly shows an contrast with how developers really build a community around their products.

Uniform Price Model

As far as I can understand, Apple let’s you set your own price, which at first sounds very cool, but is eventually very limiting in real life. Inherently this model will force anyone into a uniform price plan, which isn’t the same uniform price plan that is set in the iTunes music store where every song is either £0.79 or £0.99, but it does force every developer to stick to the same price for every customer. This poses an intricate problem for developers that might want to perform some kind of price discrimination.

Price Discrimination

Price discrimination like discounts, prize draws and beta programs is a very common tool for companies, and especially very powerful to small independent developers. Although price “discrimination” might sound like a “bad” thing it is often considered a good thing for business and customers, allowing the developers to bootstrap a community around their products, and enabling customers to get a financial incentive to try out the product in the first place.

The unique distribution model posed by Apple makes me wonder if these things would still be possible. I did a quick dig on the Apple iPhone Developer Centre website and couldn’t find much more info besides “you set the price, and we take 30%”. How would a developer give away a limited amount of his application for a discounted price? How would a software house be able to give away a free copy of their software to a “price draw winner”? How would one give special discount to their own employees? Most of all, I think these potential problems would disable any initiatives like MacHeist unless they were initiated by Apple themselves.

Beta Testing and Custom Build Software

Some of the above questions involve “limited distribution” to certain people. This might sound very uncommon but is in fact a very common practice. One of the most popular ones is possibly the idea of giving out Beta copies to a selected few. This doesn’t seem possible at the moment with the iPhone SDK, making development much more boring. A second thing is custom build applications for business to business. Imagine a small software house wanting to build a custom version of their own software for their business customers, enabling full integration with their existing software. In the current iPhone deployment model, any software becomes instantly “public”.

It seems there are some unanswered questions about the iPhone application distribution model and its implications and we will have to wait for the iPhone2.0 software to ship in June to know the answers. Still, it is wise to keep in mind that you might want to change your development cycle accordingly to fit Apple’s needs.