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Apple (Nasdaq: AAPL) on Thursday revised its app store policy to let developers include for-pay features in free apps.
This could save developers time in the long run, as they will only have to put out one version of their applications, rather than a free version and a paid-for version.
In the short term, however, it could cause developers some grief.
Apple's New Policy
Apple notified developers about its new policy by e-mail 
, Nick Dalton, chief technology officer of enterprise and mobile app developers Pervasent, told MacNewsWorld. He received an e-mail from Cupertino Thursday.
The policy is in effect immediately, Dalton said.
It lets developers include for-pay features in free apps. That means developers might no longer have to develop both a free and a paid version of their applications.
Developers can choose whether or not to adopt the new policy. "Apple is just offering this as a new way to submit and deliver apps," Dalton explained. "For some developers, it will make sense to jump on this, for others it will not."
Apple did not respond to requests for comment by press time.
Effects of the New Policy
Both Apple and customers might benefit if developers adopt the new policy because it could streamline the App Store, which now has more than 85,000 applications. "This will eliminate a lot of clutter," Carl Howe, director of anywhere research at the Yankee Group, told MacNewsWorld. "Maybe half those 85,000 apps are light versions and the rest paid versions. One of the things people are struggling with is that finding an app is a major chore."
For developers, not having to develop two versions of an app is a mixed blessing. "Long-term, it should be beneficial since the number of app submissions should decrease, as you only need to submit one app instead of one light version and one paid version," Dalton said.
In the short term, though, the new policy could cause developers some pain. "Moving to the new model will actually require more work since you need to implement in-app purchasing in the app," said Dalton, who was previously the technical architect behind the OEM Web sites for major automotive brands including Lexus and Nissan. "This is not trivial to do."
Also, there could be a logjam which will further slow down the app store's sometimes opaque approval process. "There will probably be an initial flood of re-submissions of existing apps, which will jam up the approval process," Dalton said. "I expect that some developers are submitting their new builds today."
These might include e-book and comic book reader apps that already have in-app purchasing, Dalton said. He pointed out that one app developer -- iVerse Comics -- has already taken advantage of the new policy.
"Applications with in-app purchase can now be free," reads a message on iVerse Comics' Web site. "We've been able to offer over 35 free comics, but to no longer have to charge 99 (US) cents for the app allows us to open the experience up to anyone who wants to give it a try." Under the old policy, developers of apps with in-app purchasing features used to have to charge customers at least 99 cents for the app.
Another problem that might come up under the new policy is the possibility of scams. "People could set up bait-and-switch apps," warned Yankee Group's Howe. "You get a free app, but every time you click on it you might get charged, say 50 cents," he explained. Apple will probably figure out a way to deal with that issue, he said.
Playing Nice With Devs
Since the App Store was launched over a year ago, Apple has sometimes left developers confused and even angry about its application approval process. In loosening up its in-app charging policy, Apple isn't being nice just because it can -- it wants to hang on to a fast-growing source of income.
The demand for smartphone apps is insatiable, the Yankee Group's Howe wrote in a September report titled "Forecasting the U.S. Mobile App Gold Rush." This year, the U.S. smartphone app market is worth US$342 million, the report states. That will grow to $4.2 billion by 2013. App store owners -- Apple's plus the various storefronts for other mobile platforms that have popped up over the last several months -- will get $1.3 billion of this, and developers the other $2.9 billion.
Apple, the market leader, is under tremendous pressure to stay on top at a time when other mobile phone manufacturers and wireless carriers such as Verizon are opening up their own app stores. "Eric Schmidt just said last night that there's going to be an explosion of Android phones in the market, and Apple's trying to make sure it remains the No. 1 app store," Howe said.
Android's adoption will explode, Schmidt said during Google's (Nasdaq: GOOG) earnings call on Thursday.
Apple has other problems in addition to competition. One is that very few iPhone app developers make much money. The average price of iPhone apps has tanked, with three out of four now priced at 99 cents or less, according to Newsweek.
Also, some developers remain dissatisfied with Apple's approval process. Take Cerulean Studios, for example. Cerulean developed Trillian, an instant messaging client. On Tuesday, it complained on its company blog that it had been waiting 60 days since submitting its app to the App Store and that Apple has not, in essence, been very responsive.
However, this new policy may signal a change in Apple's approach. "Apple is taking the best practices from the PC/Web/desktop-based environment, where customers get offered a free app with a select feature set and have to pay to get access to the full feature set," Julien Blin, CEO and principal analyst at JBB Research, told MacNewsWorld. "It's a proven model, so Apple is trying to replicate the model in the mobile environment."
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