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Sunday, November 28, 2021

Apple to sell developers on building new apps amid pushback

The third-party developers fuel a services business that generated more than $46 billion for Apple in its last fiscal year, almost 18 per cent of the iPhone maker’s total revenue.

By: Bloomberg |
June 22, 2020 6:15:52 pm
Some of the group’s anger was sparked by the rejection this week of a popular email app. (Image: Bloomberg)

Apple Inc will walk into its annual development conference facing one of the biggest backlashes from its giant community of creators since the App Store started almost 12 years ago.

The third-party developers fuel a services business that generated more than $46 billion for Apple in its last fiscal year, almost 18 per cent of the iPhone maker’s total revenue. Some of the group’s anger was sparked by the rejection this week of a popular email app, and comes as Apple needs to sell developers on building apps for the company’s latest platforms, including a wholesale shift of the underpinnings of the Mac.

Hanging over the Worldwide Development Conference, which begins Monday, is the recent announcement by European regulators of an investigation that could fundamentally change the way Apple and developers make money from the App Store.

The past week started with the Cupertino, California-based company touting that the App Store generated $519 billion in revenue for the global economy last year. It ended with the rejection of the Hey email app, in part, because the developer won’t give Apple a cut of the subscription revenue.

“We thought Apple realized that developers made the platform, but this incident has explicitly made clear that Apple sees developers as a source of revenue only,” said Aaron Vegh, a longtime software developer. “And that’s a difficult pill to swallow.” He noted that the action of the past week would be front of mind at the conference.

In a letter rejecting the latest software for the email app, Apple said the developer, Basecamp, hadn’t created revenue for the App Store in eight years. “It reads as ‘you have no value to us unless you’re earning us tons of cash,’” Marc Edwards, an experienced App Store developer, wrote on Twitter. Apple generally requires developers to use its App Store payment service, which takes a cut of 15% to 30% of most app subscriptions and in-app purchases.

Also read | Apple WWDC 2020 tonight: Event timings, announcements to expect

Other developers said that Apple’s slice of their revenue is the cost of doing business and they are happy to let the company handle app promotion and credit card processing. Some said the past week’s events wouldn’t affect their relationship. “I’ve had Apple capriciously reject my apps for over a decade now,” David Barnard, developer advocate at RevenueCat, said. “At some point you just come to accept the fact that Apple is a for-profit company doing everything they can to maximize shareholder value.”

In a statement, Apple said it “developed the App Store with two goals in mind: that it be a safe and trusted place for customers to discover and download apps, and a great business opportunity for entrepreneurs and developers. We’re deeply proud of the countless developers who’ve innovated and found success through our platform.” The company added that 84% of apps are free and don’t provide Apple a share of revenue.

Apple’s dealings with developers also are under scrutiny from U.S. lawmakers. In an interview Friday on Bloomberg Television, Representative David Cicilline, a Democrat from Rhode Island and chairman of the House Antitrust Subcommittee, called the App Store policies “highway robbery” and said the company demands a “ransom” from developers, referring to the 30% revenue share. He said the chief executive officers of the major technology companies including Apple would be asked to testify before Congress. Thus far, Apple has declined to make CEO Tim Cook available.

Still, Apple needs the backing of the developer community for the changes expected to be unveiled at the conference.

The company plans to announce a transition from Macs based on Intel Corp. chips to computers running its own processors. The shift will force developers to update their apps to support the hardware, which could be a lengthy process. Apple also wants the latest iPhone, Apple Watch and iPad software features to excite developers into building fresh apps for the devices.

While the App Store generates revenue, its almost 2 million apps also give consumers reasons to buy Apple’s hardware, which still make the company the vast majority of its money.

Besides the major Mac chip transition, look for an update to the macOS operating system that improves porting iOS updates to the computers. Last year, the company started letting users move iPad apps to Macs, and earlier this year, let developers begin selling merged iPad and Mac apps while only charging consumers once.

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Apple plans minor upgrades for the Apple TV set-top box’s software with a new version of the hardware in the works for as soon as later this year, while the Apple Watch is expected to get new faces, a mode for kids and, most notably, a new sleep tracking app. Bloomberg News reported in 2019 that Apple expected to add sleep tracking to the Apple Watch this year.

The company also plans updates to the HomePod speaker, including adding the ability to use third-party music services such as those offered by Spotify Technologies SA. And it is working on a new smaller HomePod for later this year.

For the iPhone and iPad, Apple is expected to announce several new features, including the ability for the iPhone to serve as a car key, a new feature that works like Google Translate, upgraded tools for the developers to build augmented reality apps and updates to the Podcast service. Apple has also weighed opening up iOS further to third-party apps, letting users change their default mail app and web browser.

Perhaps most important to iPhone and iPad users who quickly upgraded to iOS 13 last year, Apple has revamped its software testing process with plans to improve software quality and reduce bugs.

The software updates will set the stage for a range of new hardware devices also launching this year, including a new Apple Watch, four redesigned iPhones, the new HomePod and Apple TV box, as well as updates to the iMac and MacBook Pro. The company also plans its first pair of over-ear headphones as well as an accessory for finding physical objects, which will integrate with the new software.

For Apple engineers, putting together this coming week’s conference has been a challenge. Covid-19 related precautions have made the event Apple’s first to be held wholly online and most engineers developed their products and planned the gathering from their homes.

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