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June 7, 2011 5:44 pm

App developers caught in iCloud storm

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Steve Jobs

New rival: Steve Jobs, Apple chief executive

Several of the hundreds of new software features announced by Apple this week threaten the existence of many independent developers, whose App Store creations are set to be built into the Mac and iPhone operating systems.

Apple’s iCloud suite of services, as well as new apps such as iMessage and improvements to its Safari web browser, brings it into competition with companies large and small, from Google’s online office suite, Docs, and Research in Motion’s BlackBerry Messenger app, down to start-ups such as Dropbox, an internet-storage service, and Instapaper, which allows users to save long web articles for later offline reading in a clean, text-only format.

The clash demonstrates the risks of relying on a technology platform such as Microsoft’s Windows, Apple’s App Store or Facebook, where a distribution partner can become a direct competitor overnight.

“Third-party developers can become a free R&D resource for Apple,” said Mark Mulligan, an independent media and technology analyst. Apple watches independent developers to see what is successful and then builds some of the ideas into its own software, he said.

Marco Arment, developer of Instapaper, an app which will be challenged by Safari’s new Reading List feature, said that he had been preparing for such a move, but it had happened sooner than he had expected.

“Today, fewer than 1 per cent of iPhone, iPad, and iPod Touch owners are Instapaper customers,” he wrote. “The potential market is massive, but most people don’t know that they need it yet.”

Apple will help to educate millions more people on how to use offline-reading services, he suggested, and a small portion of those will want to upgrade to a “dedicated, deluxe” app with extra features, such as sharing via social networks.

“So I’m tentatively optimistic,” Mr Arment said. “Our world changes quickly, especially on the cutting edge, and I really don’t know what’s going to happen.”

The argument that a larger competitor will educate rather than consume a market is one commonly employed by start-up companies, many of whom will have been left scrambling by Apple’s announcements.

Dropbox in particular has been singled out by commentators as being among the casualties, as its capabilities for synchronising documents across several devices over the internet will be mimicked by iCloud. Dropbox is free for casual users but charges up to $19.99 a month for extra storage.

But others said that iCloud’s limitation to Apple products left scope for Dropbox to thrive in a world where Macs and iPhones are outsold by Windows PCs and Android smartphones.

“Not sure about the other services Apple ‘killed’ today, but I’ll still be using Dropbox,” Sitar Teli, a venture capital investor at Doughty Hanson, said on Twitter. “I have more than one non-Mac device to sync to.”

Improvements to the iPhone’s camera software included several features found in independent applications, including using the volume button to take a photograph – something Camera+ was blocked from the App Store for attempting.

Tap Tap Tap, makers of Camera+, tweeted sarcastically: “Volume button to snap a pic ... What an awesome idea, Apple!” Fortunately, another of its iPhone apps, puzzle game The Heist, is currently selling well, topping the App Store for several days since its launch a fortnight ago and generating hundreds of thousands of dollars in revenues.

As well as diversifying their apps, some companies will look to focus on business customers, rather than the consumers that Apple is primarily targeting.

“[Apple’s] announcement will no doubt leave a few consumer-focused backup / sync / storage start-ups cursing their luck and wondering what their next pivot might look like,” wrote Andy McLoughlin, co-founder of Huddle, which provides online collaboration tools, on the company blog. Huddle is betting that extra features such as advanced security will provide differentiation for corporates in need of a cloud-based service.

“Whilst iCloud might rain on some of our fellow start-ups’ parades, we’re happily sitting underneath the umbrella of true business software,” Mr McLoughlin said.

Many start-ups, however, will be caught in the storm without protection, left scrambling for cover, as Apple attacks their niche.

“It is something that you always have to keep in mind,” said Gonçalo Catarino, a Portuguese iPhone developer who designed Weddar, a weather-reporting app. “Big players sometimes can be informed about what you are doing and decide it’s a good thing for them to do [themselves]. I think you have to be prepared – but not be scared. The main lesson here is always to have a back-up plan.”

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