There's a moment in the film The Social Network, which now seems almost quaint, where Mark Zuckerberg and his staff joyously celebrate Facebook (NASDAQ:FB) attracting its first one million members. If a similar scene took place inside Apple's (NASDAQ:AAPL) headquarters last week, no one in the firm is talking about it.
Analysis and discovery firm Appsfire announced that Apple has approved more than 1 million apps for the App Store, and it was treated by most commentators as a sign that the industry is really coming of age. Developers might take a more pessimistic view, knowing how difficult it is to get their apps noticed (and installed) among a sea of so much competition. I'd suggest that first million, assuming Appsfire is accurate, is less an arrival at the app economy's maturity than a sort of early adolescence. We only have to look at similar points in technology history to understand why.
There was no big celebration for the first million websites (not that anyone seemed to track such things back then), but there was a growing sense of euphoria in the late 1990s when so many firms jumped on what they hoped was a race to become dot-com millionaires. With little more than an inventive idea and a domain name, they attracted considerable venture capital but not always much of an audience, and even more rarely an audience that would pay for anything. This scenario no doubt sounds more than a little familiar to mobile developers.
We all know what happened next. The bubble burst, the venture capitalists pulled back, and the crazy valuations gave way to more modest stock prices that reflected a reasonable return for investors. E-commerce did develop eventually, though much of online content is still free. Entrepreneurs realized they need more thought-through go-to-market strategies than merely setting up a site and hoping for the best. That early critical mass that propelled the dot-com bubble was really just the beginning.
We all know there are thousands of apps in that first million that Apple has approved (not to mention those approved by Google (NASDAQ:GOOG) or others) that are no more viable than some of the early dot-com firms. They will disappear as they should. There will likely be some fallout from the inflated expectations among venture capitalists created by the success of Angry Birds and Draw Something. They'll start asking tougher questions about why a game or app will or won't gain traction. And developers who approach apps today as a sideline or hobby will start to identify heroes who demonstrate the best practices around entrepreneurialism, and they'll start writing a business plan along with their code.
Perhaps developers should thank the dot-com pioneers for crashing and burning because they lowered the tolerance for risk, created a more accepting climate for experimenting with free models and proved that industries can survive when the bubble bursts. The first wave of anything can be really exciting, but it's the most likely time you'll fall head-first into the water. It's the second wave and third wave when you find your footing and learn how to support yourself. That's where app developers are as we approach 2013, and it's much more exciting than the milestone Apple may or may not have just reached.--Shane