Friday, March 7, 2008

iPhone Revenue Sharing: Is 30% a good deal?

In one word, "Yes!".

A 30% revenue sharing deal is great. Yesterday, Steve Ballmer implied that it was too much at Mix 2008 in Las Vegas.

Today, if you develop a mobile application which you want delivered over-the-air (OTA) to a mobile handset your only choice is premium SMS (PSMS). For example, if you buy a game or a ring tone the charge will show up on your cell phone bill.

Here's the part no one knows unless you've dealt with wireless carriers and PSMS: the wireless carrier and the SMS aggrogator, which is the middleman between you and the wireless carrier, will keep 50%-60% of the revenue collected.

Yes, that's right - the developer collects less than half of the revenue. Not to mention the fact that the company selling their apps and media must pay for the short code (five or six digit phone number) which typically runs about $15K-$30K/year ($500 or $1000/month to lease the short code, which is akin to buying a domain name, then another $1000/month to host the short code with an SMS aggregator plus the developer has to pay for each text message they send, too.).

The current OTA solutions are not cheap which makes Apple's 30% solution extremely appealing to mobile handset developers.

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