With the advent of so many electronic devices and platforms, we find ourselves in a rich primordial soup of possibilities for software development. Operating systems such as Symbian, WebOS, iPhone OS, Blackberry OS, Android, and Windows Mobile have bestowed unto the developer's communities powerful SDK's and development kits to create applications for their software market. Naturally, developers saw a gold-mine in these opportunities, and they were right to. Apple's own iPhone App store alone sold to date 1.8 billion applications (1). With numbers like these, it is no mystery why the amount of developers have grown exponentially in the last three years. This is the modern day gold rush.
However, open-sourced programming is not a new idea whatsoever. Anybody who had the Texas Intruments Graphing Calculator series would have had experience with MirageOS, the third-party program written by a college student named Dan Englender. Back then, his programs were free to the public, and his motivations were purely experimental. "They're kind of fun to play with as they come from the factory, but they're even more fun when you make them do stuff they weren't designed to do" (2) he quoted saying.
Nowadays, development for mobile devices have gone mainstream, and they are raking in a great deal of money. Apple held a developer's conference last spring highlighting stories of people who went from "rags to riches" by software development. The dream is all too surreal. Companies are not investing in these developers to launch their own apps. This can be seen through Starbucks (3) and Pizza Hut's (4) new iPhone apps, which allow users to create their own orders. Seems like everyone is jumping on the bandwagon.
As I mention these statistics to you, can you feel a sense of familiarity about this scenario? Let me paint a better picture: Entrepreneurs and Private ventures putting a lot of money into a technology phenomenon to earn a buck. If you though of the .COM boom of the early 2000's then pat yourself on the back. This is where thesis my blog comes to completion. I believe that we are slowly forming this "bubble." The same type of bubble as the ".COM bubble" and the "subprime mortgage bubble." If we are not careful, we could end up with another burst.
In fact, there has been a start of a plateau effect with Apple's app store. Many developers are starting to report that they are "failing to turn a profit" on their apps. Apps that take about 6 months of full time hours to develop, and costing around $20,000 to $30,000 each (4). So what happens now? There has been too much supply, and not enough demand. I'm sure that a good portion of this money is from small business loans. What happens when more and more developers fail and default on loans? Has this bubble gotten too big for its own good? When is it going to pop?
-Ben Khuc
Sources Cited:
1. http://mashable.com/2009/09/09/app-store-1-8-billion/
2. http://news.cnet.com/8301-30685_3-10375239-264.html?tag=newsCategoryArea.4
3. http://www.techcrunch.com/2009/08/01/pizza-huts-delicious-iphone-app-tops-100000-downloads-in-two-weeks/
4. http://www.ipodnn.com/articles/09/10/07/initial.success.stories.overhyped/