Apps to Eclipse Desktop Web if They Follow the Internet’s Lead

With 2010 app sales at $5.2 billion and Gartner’s predictions for 2011’s sales tripling to $15.1 billion, it is impossible to deny that apps are a big business with tremendous momentum. In fact, I expect mobile app usage to eclipse the desktop Web within the next five years.

To fulfill this prediction, however, major app players will be forced to loosen their restrictions to match consumer expectations. The app world must adapt to the three tenants that have made the Internet the powerhouse that it is today: openness, neutrality and tax-free distribution.

Launching an app often requires a daunting process of approvals from app distributors. Apps have been known to get rejected from the Apple App Store for reasons ranging from “inappropriate sexual content” to duplicating “features that come with the iPhone.”

Just as app developers are wary of these strict rules, so are consumers. In fact, they base their expectations for apps on the Web’s freedom of speech, so it’s likely that users are finding objectionable apps, despite the distributors’ best efforts.

Internet companies and users operate in a landscape of neutrality. Whether they opt for Flash, PayPal or GoogleMaps, they have the equal opportunity to choose the technologies that work best for them.

However, app development and distribution require heavy consideration of each distributor’s approved technologies or processes. The App Store, for instance, will no longer allow Amazon’s Kindle app to direct consumers online for purchases, despite the fact that Amazon has been a major player for more than a decade. Apple dictates that in-app purchases must be made, instead, via the App Store.

Not only is Apple telling Amazon that it can’t use the methods of payment it has established over its many years of existence, but it also is demanding a 30% cut of all purchases made within apps, such as the Kindle. It remains to be seen how Amazon will respond to this mandate. It is not hard to imagine that the giant e-retailer will eventually take Apple to task.

This brings us to another point regarding the freedom of the Web vs. the rigidity of the world of apps: tax-free distribution.

Just as it took years for the Internet to develop into the phenomenon it is today, a true Internet-like flexibility isn’t immediately possible in the app world.

Owners of websites pay no fee or relatively low fees to exist online (the cost of hosting, domain names, and the like). In contrast, app developers seeking exposure often must pay Apple a 30% fee to distribute subscriptions via the Apple App Store, in addition to the 30% cut it demands of any in-app purchases.

In addition, app developers are not allowed to reimburse the cost of the tax because Apple prohibits publishers from charging higher prices on the App Store than they do elsewhere on the Internet. In response, app publishers Readibility and Tiny Grab have removed their products from the App Store and are selling products via their own websites or app stores.

The Internet hasn’t always functioned according to the tenants of openness, neutrality, and tax-free distribution. Anyone who used the Internet in its earlier years will remember when Prodigy and America Online were online services as opposed to open ISPs. They required subscriptions, severely limited the content subscribers could access, and were not always compatible with differing operating systems.

The thought of such an Internet experience today is laughable, but it’s not too far away from the current state of the app world.

Just as it took years for the Internet to develop into the phenomenon it is today, a true Internet-like flexibility isn’t immediately possible in the app world. However, several key players’ actions reveal that they are taking clues from the expectations of Web users and the conflicts between app distributors and major Web players.

Among those moving in right direction are cross-platform app stores, which do not approve or disapprove apps out of favoritism for one platform or make mandates for in-app purchases.

Ilja Laurs is CEO and founder of GetJar. He can be reached at ilja@getjar.com.