Here is a recently published editorial (8/16/2004 BargainPDA.com - http://www.bargainpda.com/default.asp?newsID=2185) that I wrote concerning developers and electronic sale distributors for mobile software.
Most of us have at some point or another have looked at the software on our handhelds and wondered if there were better versions of what we use most. Maybe a better calendar or word processor would appeal better than the ones that came with your device. Sure, there are many free programs out there, but it is a bit of a pleasure to find a piece of software that, for a low fee, can make owning a mobile device (PalmOS, PocketPC, or Smartphone) a better experience. To that end, electronic software distributors (ESDs) have been created to be portals to these programs of note. Some of the more popular portals (Handango, PalmGear, PocketGear, MobileGround, and Pdassi) see many visitors every day who are looking to download the latest version of a current program, or that diamond in the rough program that can probably change the way one looks that a PDA.
For a budding (or even well-established) developer, just the fact that your application will have a chance for hundreds of thousands of views a day means that the chance to make a number of sales is good. Really good in fact. Some of the larger ESD websites can get over 1 million unique page views per day. That is a whole lot of people that are checking out software. For developers, that could be hundreds to thousands of people downloading software they may eventually purchase. A developer could do well going through a portal to sell their software. The portal, in turn, could also do well if they provide a good user experience to the consumer (repeat customers are always the best customers). The developer would be free of the need to maintain an ESD; and the portal would be paid a portion of each sale (that way they can maintain the hosting, credit card processing fees, etc. that go into keeping a portal going).
In the world of mobile computing, portals have become the shopping malls for many programs. Handango and Power By Hand (the people behind PalmGear, Smartphone.net, and PocketGear) have even gone as far as having mini-stores on many of the PDA news and fan websites. For a developer, this means more profit and for the consumer, more support and (possible) functionality. The problem comes if a program is too expensive compared to similar software; or, if the commission rates of the ESDs prevent the developer from wanting to do business via the ESD. The lack of monetary compensation will drive some developers to not creating new software, or supporting older software. Therefore, the portal becomes a powerful device to both the developer and the consumer. If a portal can allow for a developer to sell his or her software at a competitive rate, compared to similar software, the chance for making a sale is greater. On the other hand, if the commission rates are too high, a developer will not want to support their software for the reason of that developer feeling that he or she was being cheated out of a fair sale. This former reason is why the ESD Union (www.esd-union.com) was formed.
ESD Union?
What is the ESD Union and why should it concern you? The ESD Union is a common voice mechanism made up of many developers of the popular software that is sold at ESD portals. These developers have a common goal of establishing the right for the developers’ margin on software sales (75% for the developer, 25% for the ESD). The ESD Union was established to give developers a larger voice in speaking to the companies that are charging more than 25% per sale. It concerns the consumer because like any union, the ESD Union exists to make sure that consumers are treated fairly in price and availability of software. Most have heard of unions being established for everything, from transportation workers to secretaries to teachers. This union seeks in similar, a just cost to do just business.
The Issue
Since 1999 (when the commission rates were at about 20%), ESDs have taken a larger slice of the pie when it comes to the purchase price. According to the ESD Union website, that number is 40% or higher with some websites. The ESD Union wants to know the reason for this increase, as well as what happens to their monies in the time between sale and the date of monthly payment. This affects the consumer in that a product that a developer pulls from an ESD due to not being paid effectively falls off the map. People are pretty much simple. If we can go to one place and find all that we need, we go there. But if that product is no longer there, we are inclined to believe that there was a problem with the product, not the distributor.
What Does This Mean?
Right now, this does not mean that one needs to stop shopping for applications at PalmGear, Handango, and other ESDs. It does mean, however, that you should have an understanding of where your funds are going. I was always under the impression that a developer got 65-75% of the purchase price of an application. If it is less than that, then I would expect to see a different price when I would go to the developer’s website. As a consumer, I have a right to support with my money whom I want to. If ESDs are prohibiting this free(er) marketplace; then I will have to get along without some applications.
One thing that has been happening, on the side of the ESDs, is that there is a consolidation of who is out there. Power by Hand (PalmGear, PocketGear, and Smartphone.net) and Handango make up the bulk of where I see applications being sold. When I first started with handhelds, I didn’t know anything but PalmGear and Handango. As I started downloading and learning about more programs, I found that there were more ESDs. But, slowly over time, they have been disappearing, being bought out by the larger two. I know that there is this law of duality that says that for any given industry, that competition always boils down to two major players, with smaller companies fighting it out for the small percentage of sales that are left. It seems for the ESDs that this is also happening. PDAGreen has been bought out by Power by Hand, and according to marketing conditions, this may happen with others. Fewer places to advertise for developers mean fewer opportunities for making a sale, and fewer places for consumers to purchase software. Having the ESD Union in place will not prevent the consolidation of the ESD websites, but it will ensure that with consolidation, all developers within the ESD Union will be heard.
What Can You Do?
Personally, I would not tell a person to not shop at Handango or other ESDs, as they have some of the best selection of applications for mobile computer platforms. I would encourage that you email the respective companies about their support for the ESD Union. If they do not support the ESD Union, you may want to either look to purchase directly from the developer, or search for other ESDs via Google and other search engines.
If you are a developer, you may want to look into being a part of the ESD Union (www.esd-union.com). Having a unified voice in the sales community will enable all developers to gain a fair share of all sales. From my conversations with some members of the ESD Union, not all developers can be named amongst ESD Union members due to pressure from some ESD companies. I do not agree that they should be prohibited to join the ESD Union.
If you are an ESD company, you may want to look at having a contract with each developer that will indicate how they will be charged over time per sale. From my point of view, it seems that there has been no indication given to developers as to when rate increases will occur, and what those increases were for. Clear communication between the ESD companies and the developers will keep this kind of issue from occurring on a public scale. My recommendation would be for a sliding scale: 25% for those newer developers, or those that do not have above a certain amount of sales; up to 40% for established developers with more than a set number of programs (more than 12-15), or for programs that bring in a certain amount each month. This would make it fair on the part of the developers as well as makes sure that ESD companies are compensated for their services.
Conclusion and Comments
I believe that this issue has come from missteps in communication by ESD companies as to why they are charging what they are charging. Insurance companies and consultant agencies have the same problem when they charge something other than what had been agreed upon. The difference here is that this is a totally electronic matter that occurs in online space more than offline. If Wal-Mart stops selling a particular item because they are charging too much to the manufacturer, then the manufacturer should have a chance to negotiate something different before they lose that avenue of sale. Many mobile program developers do not have the pull to just jump from one ESD to another. Supporting the ESD Union is a means to make sure they get a fair slice of their program’s pie.
I took the opportunity to write this editorial because I believe that everyone should be fairly represented when they are doing something that they love to make a living. Groups like the ESD Union should be supported, as they are not looking to bash or steal, just to make sure that they are getting a fair share of profits from their programs. I do not speak for BargainPDA, or any other website. This article is purely done on my own, and via my own research. If there are any comments about the content of this article, please feel free to email me at pda@antoinerjwright.com or post a message in the forums. I will be more than happy to answer what questions that I can. In the meantime, be an educated consumer with PDAs just as much as you are with other purchases. Here is a list of some of the more popular ESDs:
* http://www.palmgear.com
* http://www.handango.com/
* http://www.pocketgear.com/
* http://www.smartphone.net/
* http://www.pdassi.de/
* http://www.pdassi.nl/
* http://www.pdassi.it/
* http://www.pdapointer.com/
* http://www.mobileground.com
* http://www.clickgamer.com
Check them out and see if any may offer different prices or service quality than what you may usually use. Exercise your right to getting a good price and quality service, I am sure that developers will see where you put your money and place their resources there as well.
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