Two Lessons from iPhone Piracy

Well, exactly as I predicted, piracy has become rampant for iPhone applications. If people can steal with no chance of getting caught then most people will.

Ngmoco VP Alan Yu now says that iPhone piracy is 50 to 90%. Absolutely no surprise here because Apple (AAPL) put no anti-piracy protection in the AppStore when they easily could have. This reflects their initial belief that the AppStore would not make money for them, they only did it as a service for users.

There are two lessons here. One for the many other companies who are going down the application store route. They must put technical protection into the store, otherwise thieves will destroy the business model. The second lesson is for Apple and their upcoming home console. If they do it with exactly the same mechanism as they have done iPhone applications, it won’t work commercially. They need to be far closer to Xbox Live in what they do.

And, to finish off, Ngmoco are going to in-game payments on iPhone to beat the thieves. Doing this they would probably be best giving the game away.

Comments

[FreeRange:]

I'm sorry but what is the verifiable substantiation for such an outrageous claim? This is simply horrible reporting without reliable substantiation both on the stats and the technical issues. Bad bad bad "journalism".

Oct 15 10:12 AM

[FreeRange:]

BTW - the fact that this "article" states 50 - 90% substantiates the fact that someone is just pulling numbers out of their arse.

Oct 15 10:15 AM

[Stuff and N...:]

Piracy is 50 to 90%??? What's he smoking? I direct you to the following article, at:
www.ipodnn.com/article.../

which says, in part: "Regionally the largest ratio of pirated apps, over 37 percent, is said to be found in China. Almost 25 percent of Russian apps are pirated, and in Brazil the figure is approximately 22 percent. Japan, Great Britain and the US are said to exhibit the smallest piracy rates, no higher than 5 percent and closer to 3 percent in Japan. Piracy is believed to be roughly correlated to the poverty of a country, as rates are higher in countries with lower per capita gross domestic product."

Your conclusion is pretty far off, as well; your assertion that Apple needs to emulate Xbox Live would be comical if I didn't think you were serious. The App Store works because it makes it easy and inexpensive to be honest. It works because it trusts the user. If you don't like Apple's model, buy yourself an Xbox; but don't suggest that Apple needs to inflict pain on the rest of us.

Oct 15 10:19 AM

[waf76:]

Understand the author always writes about the greatness of xbox live...i agree its great but no app store...

Oct 15 10:24 AM

[JWCinNC:]

Agree with other posters - this article and the link to the NGmoco article - are not well written or insightful. What is meant by piracy? Is there some other way to load these apps on devices other than iPhones or iPod Touch? Is this limited to jailbroken phones (less than 10% of all devices? How is piracy tracked - 50 -90% quote is a big margin. If I own three devices, and play the same game I bought on on ITMS on all three are they considering 2 of those games pirated? Not according to my SLA with Apple.

What's odd is your reference to a May blog post where you suggest the games will fail. and then to your recent blog post where you suggest they are doing wonderfully.

Also if you drill into some of those links, you will see a lively debate between developers discussing whether the pirated copies were lost sales at all - some suggesting they were, others suggesting that the pirated copies were not going to bought anyway.

Can you write a more constructive article about his topic - particularly answering the questions above,

Oct 15 10:47 AM

[Gaboose:]

Poorly researched article - you can tell from the screenshots and the spoken instructions that this only works on a jailbroken phone.

Oct 15 12:28 PM

[Neurotic Nomad:]

Software Piracy sells hardware. Guess what Apple, Inc. makes most of their money on.

The honest people will take the easiest route (iTunes Store), and the dishonest people will steal. Both will listen to their music on an iPod. Apple wins either way.

Oct 15 09:16 PM

[jack dee:]

Bang on. THis is exactly how MSFT has made windows a worldwide hit.
Let them steal until they can pay and then you have your installed base at no real cost.

Lets face it, it is the fastest way to spread a product.

On Oct 15 09:16 PM Neurotic Nomad wrote:

> Software Piracy sells hardware. Guess what Apple, Inc. makes most
> of their money on.
>
> The honest people will take the easiest route (iTunes Store), and
> the dishonest people will steal. Both will listen to their music
> on an iPod. Apple wins either way.

Oct 16 02:57 PM

[scottg:]

He needs to find someone who will give him unjustified whack job numbers so he can start his column with, "as i predicted."

Nov 03 09:39 AM