Who's Minding the App Store?

A stylish product that's easy to use is just part of the equation, however. A problem-free launch of a product is perhaps almost as important to a its success as its actual quality.

This is why companies spend months planning every detail of a product launch. Blogs and Internet news can give a slip-up unwanted attention within hours, and sometimes that reputation can be awfully hard to wash off. Just ask Microsoft (Nasdaq: MSFT) .

Bruised Apple

It's a lesson Apple has learned over the past few weeks as its mobile product launches have suffered a series of missteps. First, a glut of new iPhone 3G users brought down activation servers on the first day of sales, preventing new owners from kick-starting their new phones in the stores where they were bought.

Then there was the ongoing problem with its MobileMe Internet service. Following several days of outages, Apple finally admitted that the launch was not up to its standards and even put up a MobileMe status page to keep users up to date on the status of the subscription service.

Ars Technica published what was apparently an e-mail to Apple employees from CEO Steve Jobs in which Jobs essentially conceded that the company had bitten off more than it could chew in launching MobileMe, the iPhone 3G, the iPhone 2.0 software update and the App Store at the same time. MobileMe, he added, could have been delayed without any negative consequences. Apple did not respond to requests for comment for this story.

Though MobileMe appears to have drawn a great deal of anger from dissatisfied users, the handling of the App Store has also managed to raise some eyebrows. Apple has removed at least three applications: Box Office, a movie listing application; NetShare, which turns the iPhone into a modem; and I Am Rich, a US$1,000 app that's little more than a screensaver.

Developers whose applications have been removed have said they've received little to no communication from Apple. Consumers have also been scratching their heads as to why applications would be made available on the App Store one day and then disappear the next, given the company's total power to test, vet and approve any program before it's placed on the shelf.

Great Developer Expectations

In the long run, Apple could open the door for competing products such as Google's (Nasdaq: GOOG) Android platform, according to Joshua Martin, a Yankee Group analyst.

"Apple is a market leader. By creating a fervor for the iPhone, iPods and Macs it has become one of the most cutting-edge companies in the digital world," he wrote in a post on the Yankee Group blog.

Poor communication with developers, difficulty in releasing software updates, pulling applications at will, and a refusal to offer applications that directly compete with iTunes could frustrate developers and compel them to leave the platform rather than put up with the company's inconsistent behavior, he continued.

Competitors such as LG, Nokia (NYSE: NOK) and Motorola (NYSE: MOT) are "desperate to offer differentiation" and would welcome a development community. While the applications are what will make the iPhone a mega-hit with long-term sustainability, the same applications could also move other platforms forward, according to Martin. Apple should work with these individuals and companies and make their policies more transparent instead of alienating them, he wrote.

"Ultimately, I think Apple is a bit overwhelmed, and I hope they realize that the lack of communication will hurt them in the long run," Martin told MacNewsWorld.

However, the problem may be rooted more in unrealistic expectations than sub-par delivery. The attention on Apple's recent spate of issues is overblown, according to David Chamberlain, an analyst at In-Stat, and are simply par for the course for a company moving more and more into the mobile realm.

"I don't think there's been a misstep at all. I think the problem has been with the expectations compared with what any company in that position will choose to [do] and how they'll act," Chamberlain told MacNewsWorld.

"The problem isn't with what Apple has done. The only real problem is the difference between what Apple actually does and what people expect them to do. Expecting a benevolent, wide-open, unrestricted market for absolutely every application developer in the world was naive. Those of us from the wireless world -- instead of the computing world -- certainly saw this as being completely predictable," Chamberlain continued.

Central Authority

The Apple App Store is a walled garden, no different than any of the traditional mobile operator decks from Verizon Wireless , AT&T (NYSE: T) and others, Chamberlain pointed out.

"Why is anybody in the world surprised by this? Of course there will be limits on the applications that are available. Of course there will be stifled development. Of course there will be things that don't suit the powers that be and will vanish. We've come to expect that from the telcos, but somehow the benevolent Apple would provide us with an environment that was wide open, without limits and without controls," he explained.

The App Store's structure is nearly identical to Qualcomm's (Nasdaq: QCOM) BREW (Binary Runtime Environment for Wireless), according to Chamberlain, with developers writing to a specific application environment. First, they submit the app to a central company that ensures it doesn't violate any rules, that it works, and that it doesn't cause havoc anywhere in the device or network. After approval, that company is the sole marketer.

Finally, when and if there is a sale, that company collects the money, keeping some for itself and distributing some to the developer. Apple and BREW's way of doing business are the same in that the central power keeps the control, he told MacNewsWorld.

Growing Into Mobile

Companies expanding into the mobile market often find that the demands that come with mobility are very different than what they're accustomed to.

"Welcome to the world of mobility," said Shiv Bakhshi, an IDC analyst.

"They are not as easily structured and governed," he told MacNewsWorld. "The behavior is somewhat chaotic and ungoverned because there are a lot of people trying to do a lot of things. And sometimes when you succeed so fast and so well, the expectations rise a lot. The big challenge becomes, how do you meet those expectations? This is what is happening at Apple, that they are dealing with a huge success -- [the iPhone] has become iconic overnight. So they are dealing with a huge uptake of stuff, and this is moving so fast and chaotic in the sense that everyone wants to have their application on it."

Things were fine as long as Apple was controlling things and they had the lead time to test everything, Bakhshi noted.

"Mobility is a different ballgame, and their sudden and tremendous success has invited a lot of players to market wanting to exploit their platform to sell their applications and services. Processing that, you need a different level of engagement. This is teething trouble, nothing more and nothing else. And it could actually get a little worse before it gets better," he concluded.