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Of Apps and Men December 18, 2014

Posted by Peter Varhol in Software development, Software platforms, Software tools.
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Fair warning – I am eventually going to say more about Uber. The apps business is an interesting one, and some historical context is necessary to understand just why. In the PC era, we typically paid hundreds of dollars for individual applications. As a result, we would buy only a few of them. And we would use those applications only when we were seated in front of our computers. The software business was the application, and selling it made the business.

In the smartphone/tablet era, however, apps are essentially free, or at worst cost only a few bucks. People are using more apps, and using them for longer periods of time than we ever did on the PC.

But that still doesn’t quite make the bottom line sing. I mention Uber above because of its recent valuation of $41 billion, at a time when the entire annual taxi revenue of the US is $11 billion. The standard line by the VCs is that it will transform all of surface transportation as more and more people use Uber, even rather than their own cars.

I don’t buy that argument, but that is a tale for another day. But the message, I think, is fundamentally correct. The message is that you don’t build a business on an app. You will never make money, at least not sustainable money, from the app. Rather, the app is the connection to your business. You use the app simply as another connection to your products or services, or as a connection to an entirely new type of business.

But today, you are not going to use and app to build a business that was the standard fare of the software industry only a few years ago.

The corollary, of course, is that almost every business will need its own app, sooner or later.  That represents a boon for developers.

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