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September 11, 2009

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I agree with your numbers but not your conclusion. The big changes that the new operating systems have brought is access for the small software developer. A small team can build a application that now has prominent "shelf space" and sell to the masses. A small team can create a niche application that takes advantage of open APIs and sell for high price. You are correct the pricing will not be the same as MS Office, but be honest only microsoft has that massive revenue. That market was closed long ago.

The economics are different but I believe it is getting better not tougher. More at http://bit.ly/BZDsZ

The long tail does indeed create profitable niches - unfortunately the mobile market fragmentation breaks the economics too. If you can create a "long tail" book that you can sell on amazon in English, then you can be confident that everyone will be able to read it. In the mobile market in 2010 you'll have to write the book 6 times - this cost impact limits the scale of the overall market opportunities.

I do agree it's possible for niche businesses to be profitable - but the market scale limits the number and size of these, and there are few very profitable mobile application businesses.

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