The market was highly profitable when it was small supply / big demand and you had good odds that Apple would hand you tons of visibility. Now it's big supply with a terrible signal to noise ratio.
To succeed, it seems that you now either need a mountain of luck, or a killer marketing engine and a fair amount of luck. Mathematically, it seems unattractive compared to other ways of applying the same time and skills unless you have something you're obsessed with building and want to produce irrespective of the outcome probabilities.
E.g. a $1.99 app pays at $1.393, so you need to move 34893.75 paid copies in order to clear a $50,000 gross. For SaaS and the same target, you only need 208.33 customers at $20/mo. The capture difficulty is not identical between cases - but if you have good marketing and are assuming serendipity on either side, it's quite feasible to hit 208 customers. Furthermore, it's often easier to grow once you get there, and it's quite possible to charge at much more than $20/mo/customer.
Mobile apps are great, but not a "for profit" activity for me. I'm all for doing them for fun or ad hoc, and if that takes off - great. But it seems to be a very difficult business model compared to applying similar resources elsewhere.
I mostly agree, but take it from voice of experience, having web application available does not magically lead to two hundred people giving you their CCs and sticking around for a year. You have to roll up your sleeves and market. This is often much, much harder than making the actual application.
(I think the App Store gets a lot of ink because people have this notion that Apple does the marketing for devs like you. Which is true, in approximately the same sense that the MBA does marketing for basketball players like Shaq.)
Magically, no. But given the same marketing resources behind either, the SaaS case seems to be more reliably attainable. Or stand-alone software. Or contract work.
For SaaS, it's also important to model things like trial conversions, turnover, etc. which don't appear in a single-sale case. There are a lot of differences. But the odds still seem better there.
And of course I am completely overlooking the "what about ads" question, mainly because you need a ton of installs before that starts being a significant amount of money. Better than not, helps feed conversions, but doesn't change the equation for me.
This may be true for mass-market apps, but we have had a lot of success selling high quality, useful, niche-market apps priced $5 and up. The App Store makes it insanely easy for people to buy something that seems useful to them, whereas they would at least think twice before paying for a webapp subscription.
Somewhat in the same vein... a friend of mine teaches ESL classes for foreign US university students. He made a pretty basic app - it's not polished but it's perfectly functional - to help his students study vocab/tenses/etc. I forget now if it was free or $0.99, either way he didn't actually have that many downloads since it was only designed for his class.
That said, the students loved it. And, he could also update the app as the course went along. Finally, although he only made enough through App Store sales to maybe go out for a nice meal, it translated into promotions, bonuses and the like. So ultimately, it paid off.
My main point is: in addition to selling niche apps at a premium, there's also the opportunity to develop cheap/free apps that otherwise help you move ahead within a niche market.
To succeed, it seems that you now either need a mountain of luck, or a killer marketing engine and a fair amount of luck. Mathematically, it seems unattractive compared to other ways of applying the same time and skills unless you have something you're obsessed with building and want to produce irrespective of the outcome probabilities.
E.g. a $1.99 app pays at $1.393, so you need to move 34893.75 paid copies in order to clear a $50,000 gross. For SaaS and the same target, you only need 208.33 customers at $20/mo. The capture difficulty is not identical between cases - but if you have good marketing and are assuming serendipity on either side, it's quite feasible to hit 208 customers. Furthermore, it's often easier to grow once you get there, and it's quite possible to charge at much more than $20/mo/customer.
Mobile apps are great, but not a "for profit" activity for me. I'm all for doing them for fun or ad hoc, and if that takes off - great. But it seems to be a very difficult business model compared to applying similar resources elsewhere.