Microsoft Still Struggling With App Shortage

by Brad Moon | March 21, 2013 2:18 pm

Microsoft (NASDAQ:MSFT[1]) has a pretty simple problem with Windows 8 that it’s desperate to solve: a lack of apps.

See, without a robust app market, it’s an uphill battle to sell hardware. And without strong hardware sales, it’s an uphill battle to bring app developers on board.

It’s a chicken-and-egg issue that’s likely holding back sales of Microsoft’s Windows 8 tablets, impacting Windows 8 PC sales and is certainly part of the disappointing progress at Microsoft’s Windows Store, where the company fell far short of its goal of having 100,000 apps within 90 days of launch[2].

Trying to track down exactly how many apps are available for a given platform at any time is pretty much impossible, given the fact that developers are submitting new ones every day. But it’s a lot easier for Windows where the counters flip at a much more sedate pace than it is for iOS and Android.

This should give you a good idea of the current state of affairs:

Heck, even Amazon’s (NASDAQ:AMZN[10]) App Store for Android — a storefront that serves up apps tweaked specifically for its Kindle devices — topped 50,000 apps last year. In other words, Microsoft is having trouble catching an app store that’s tailored to a specific device, even though its own app store is applicable to an entire platform.

As a result, Microsoft is taking a page from BlackBerry’s  playbook (in an attempt to avoid the fate of BlackBerry’s PlayBook[11]) by offering a bounty of $100 for apps[12] submitted to the Windows Store before June 30.

Of course, in a way, the sheer number of apps being offered by a platform is … well … just a number. There can be dozens of variations and copycats of popular apps, while there’s nothing to stop developers from releasing apps that are of limited value — shovelware, as it’s called.

But that number matters to consumers. In a 2012 survey of 6,000 U.S. tablet owners, the availability of apps[13] tied with price as being the most important factor in choosing which device to buy.

So there’s definitely a case to be made for throwing some cash at bumping those numbers in the theory that enough apps will ignite consumer interest in the platform … at which point the power balance shifts and developers start lining up for the opportunity to release apps.

How many apps does it take, though? Despite the strides it’s made, BlackBerry World still isn’t mentioned in the same breath as iTunes or Google Play … and none of these competitors will be sitting still during Microsoft’s campaign.

Plus, incentives don’t always work either. Microsoft already offers developers a cut of up to 80%[14] on their Windows Store apps (Google and Apple both offer a maximum of 70%), but that premium in the app maker’s revenue split has obviously had little effect.

And there’s also the gorilla in the room — or more accurately, the gorilla(s) not in the room: the big apps. When you get past the optics of sheer numbers, there are certain key apps that everyone takes for granted. If these apps aren’t available on your platform, it costs credibility and customers.

No $100 reward is going to convince Facebook (NASDAQ:FB[15]) to release an official Windows 8 app. Facebook will support Windows 8 when it feels the platform warrants the development effort. Sure, Twitter released an official app (only a week ago[16]), but Microsoft still has to convince other top-tier apps that are conspicuously absent from the party to embrace the platform.

To get to BlackBerry World’s 100,000 apps at $100 each, Microsoft would have to shell out $6 million — chump change compared to the $1.5 billion+ the company is estimated to have dropped on Windows 8 marketing[17].

Until the Windows Store is seen as being competitive, Microsoft is likely to continue seeing disappointing Windows tablet sales[18], while the hoped for Windows 8 PC sales boost[19] will remain elusive.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.

Endnotes:
  1. MSFT: http://studio-5.financialcontent.com/investplace/quote?Symbol=MSFT
  2. 100,000 apps within 90 days of launch: http://www.techrepublic.com/blog/window-on-windows/the-countdown-to-100000-windows-8-apps-falls-short/7199
  3. AAPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AAPL
  4. App Store had 775,000+: http://www.apple.com/pr/library/2013/01/07App-Store-Tops-40-Billion-Downloads-with-Almost-Half-in-2012.html
  5. GOOG: http://studio-5.financialcontent.com/investplace/quote?Symbol=GOOG
  6. hit 800,000 in January: http://venturebeat.com/2013/01/04/google-play-will-hit-a-million-apps-in-2013-probably-sooner-than-the-ios-app-store/
  7. BBRY: http://studio-5.financialcontent.com/investplace/quote?Symbol=BBRY
  8. just hit the 100,000 app mark: http://www.slashgear.com/blackberry-world-app-store-reaches-100000-apps-21274859/
  9. hitting 40,000 at the end of January: http://www.pcworld.com/article/2027738/windows-8-app-releases-grind-to-a-near-complete-halt.html
  10. AMZN: http://studio-5.financialcontent.com/investplace/quote?Symbol=AMZN
  11. fate of BlackBerry’s PlayBook: http://www.techvibes.com/blog/rim-shares-tank-as-company-loses-500-million-from-blackberry-playbook-discounts-2011-12-02
  12. bounty of $100 for apps: http://www.informationweek.com/software/windows8/microsoft-seeks-windows-8-app-wave/240151314
  13. availability of apps: http://www.computerworld.com/s/article/9230044/Survey_Tablet_buyers_rate_apps_availability_price_the_highest
  14. a cut of up to 80%: http://www.windowsstore.com/the-opportunity
  15. FB: http://studio-5.financialcontent.com/investplace/quote?Symbol=FB
  16. only a week ago: http://www.pcworld.com/article/2030846/hands-on-with-twitter-for-windows-8.html
  17. dropped on Windows 8 marketing: http://www.wired.com/gadgetlab/2012/10/microsoft-estimated-to-spend-1-5-billion-on-windows-8-marketing/
  18. disappointing Windows tablet sales: http://www.zdnet.com/microsoft-surface-with-windows-rt-tablet-sales-disappoint-in-fourth-quarter-7000010688/
  19. Windows 8 PC sales boost: http://www.zdnet.com/gartner-windows-8-failed-to-kick-start-pc-market-7000009762/

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