Appcelerator Expand Into Europe: Does This Prove the Freemium Model Works?
Since I started out on mobile app development, I've been a big fan of Appcelerator. Just today they've announced an expansion into Europe, as well as adding to their management team. Appcelerator have shown themselves to be one of the shining examples of how to utilize the freemium model successfully.
I spoke the Jeff Haynie about the platform's success, and what draws developers to Appcelerator. It seems there are two big attractions for developers and companies:
- Some want to get into app development without learning Java or Objective-C. For some, it saves them learning "the other platform" (Android / iOS), others don't need to learn either
- Initially developers focussed on one platform. The single source aspect of Appcelerator, writing in JavaScript and compiling for Android and iOS, means that you don't necessarily need two development teams to hit both platforms at the same time.
For me, using Appcelerator saved me from having to learn Objective-C. Once you get used to the platform, you can turn an application out in a weekend.
The community has been steadily growing at a rate of 50K to 60K developers per quarter, currently at 250,000 registered developers. 50% of that number is outside of the US, so it makes sense to set up operations in Europe. The EMEA HQ will be in UK, starting with sales and building up a core team for engineering too.
The freemium model could be the secret to Appcelerator's success. It costs nothing to get started wth the platform - I've deployed apps on the App Store without purchasing anything from Appcelerator. You can pay for extra features, such as additional modules, more support and debugging. The Indie developer plan (the next one up from free) costs $49 per month, while you'll need to contact Appcelerator to find out about the Enterprise plan. As you move up the ladder, more APIs are made available through Titanium.
The recently opened marketplace is another way for both developers and Appcelerator to make money. The idea is simple - provide modules for other developers to use in their apps. Appcelerator provided the initial 40 modules, and since then the store has grown to 180 modules, with all of these organic from the community.
The freemium model might not be ground-breaking - companies like 37signals have shown it can really work. What's different here is that you can work with the product for free - you don't ever need to pay if it doesn't suit you. It's a risky strategy, but it seems to be working for Appcelerator.
Comments
Piotr Kochanski replied on Fri, 2012/01/20 - 3:47am
No, freemium model is not working. Unfortunately if you give something for free, you can't expect income (surprise?). 37signals is charging for anything close to usable - the free account is more like online demo, so they prove exactly the opposite.
In fact, one of the 37signals founder, Jason Fried is very clear about charging for software, not giving for free (http://www.inc.com/magazine/20110301/making-money-small-business-advice-from-jason-fried_pagen_2.html, advice #3).
So why Appcelerator is able to function? Simple as hell - they get a lot of money from Venture Capital investors, who cannot care less if the Appcelerator model makes sens - after all they are not spending their own money, they invest in hundreds of companies counting on one or two of them to be next Facebook. The rest might disappear, nobody would cry after them (apart from users who invested time and money).
This is unfortunate pathology of today IT reality. A lot of stupid ideas are getting founding (color.com with $41 millions). As a result people's (sometimes clever people) energy and talent is wasted for useless activity. Those, who start bussines are not thinking about creating something good and useful, but about something that VC company would like to finance. Sad.
As far as Appcelerator is concerned my company was considering Appcelerator as a solution, that might cut costs, but the risk of vendor lock-in (Appcelerator might bankrupt, might start charging a lot of money for Titanium) was too big. In addition it is not so easy to create good user experience with Titanium on varius Android devices.
The point is that Appcelerator cuts (if it really does) only development costs, which are only a part of all project expenses (preparing graphics, marketing, working on a idea, testing, etc.), so even if development is 50% cheaper, the project costs would be cut by ~ 20%.