Now that Apple’s iOS platform has had a few years to mature, it has become a major source of revenue for the company, having recently announced that they’ve paid out $2 Billion to developers. But is that enough? There’s certainly amazing potential in terms of revenue for certain apps — those that have a wide appeal, can reach a global audience and are novel concepts. But unless you’ve got a blockbuster app like the wildly popular game ‘Angry Birds’, the reality is that the practical costs of app design and development will probably outweigh the revenue potential for most developers.

There’s been a certain amount of novelty to being able to say your company ‘has an app’, but many have started to question how much it actually costs to create a native app. The most realistic estimate I’ve seen sits at around $30,000 for an entry-level app — iOS apps are quite sophisticated and, when executed well, require great care in design and development. For a $0.99 app, after Apple and the government takes their cut of each sale, you’ll end up with about $0.50 per app, so you’ll need to sell at least 60,000 copies just to break even. Want to also offer an Android or BlackBerry app as well? Some design use cases could possibly be reused, but expect around the same costs of development since the platforms don’t share any technological commonalities.

App Pricing

The major impediment to having more app developers realizing a profit on their apps is the glass ceiling that exists in terms of app pricing. You can spend six months and write tens of thousands of lines of code paired with the most beautiful design assets, but ultimately you won’t be able to price your app for much more than the hundreds of fart apps that took week and zero imagination to put together.

Why? Users are unwilling to spend more than a few dollars on apps because their perceived value is much lower than the actual value of the app. While people may not take much issue with paying $5 for a coffee, they’re unwilling to pay the same for an app that might bring them much more value.

The value of a mobile app is intangible unless it’s coming from a developer that the user trusts or has been recommended by their friends. Apple may boast that they have hundreds of thousands of apps available, but the fact of the matter is that the large majority of these apps are terrible. The end result of intangible goods in a saturated market is that developers are undercutting each other on price, trying to make up the difference in volume.

Trials and Returns

Users have to take a pretty big gamble on buying an app today. Apple’s App Store offers nothing more than a text description and up to five screenshots of the app in action as a sample of its functionality. With rich interactions and experiences left completely up to the user’s imagination, Apple recommends developers create separate microsites that show off video of the app in action, like the demo site for the app Camera+ that provides video of the app in action and an overview of its features. The issue is that these are all hands-off demonstrations of the app in action — videos can’t convey the actual interactions a user will make and the resultant performance and experience of the app. These sites also burden developers with additional creation and maintenance costs.

One of the brilliant features of Google’s Android Market is that they allow users to get a full refund within 30 days of purchase. All they have to do is give the developer a reason, and Google automatically refunds the transaction. This allows users to buy an app, and keep it if they decide it provides value, or return it if it doesn’t. The developer in turn receives valuable feedback from unsatisfied customers. The end result (theoretically) is that valuable apps will rise to the top of the charts while those that don’t deliver on their promised functionality will have to go back to the drawing boards. Empowering the users in this way could allow developers could try to charge more for their apps since users won’t have to gamble on its value. Amazon’s “Look Inside” feature works in a very similar way, allowing users to immediately get a sense of value from intangible goods, mimicking a customer’s action of leafing through a book in a brick & mortar store before purchase.

As Apple begins to think about removing software for sale from its retail stores, they need to consider how they can improve the quality and value of their platform’s apps. They have a sophisticated DRM-equipped rental system already available for TV shows and movies that automatically deletes media from a user’s devices after a certain number of days, and there’s no reason why this couldn’t be applied to app trials as well.

The Value of a Platform

One would hope that Google and Apple could boast about the quality of experience that their apps deliver rather than merely the hundreds of thousands of apps sold. As the native app market becomes more saturated, it’s becoming increasingly difficult for users to separate the good from the bad. For developers and companies assessing the mobile market, the cost of entry to native apps, as well as the fragmentation of devices available is forcing them to start to rethink their approach to mobile, with many taking the Web app road. Mobile web browsers continue to become more sophisticated to support much of the same functionality that native apps support today, making it difficult to justify investment in a single platform.

To ensure native mobile apps are a viable and attractive market to talented developers, Apple needs to take responsibility for the amount of value those developers are deriving from the platform.

Update: Geoff points out that you can, in fact, return a purchased iOS app through iTunes, but they sure don’t make it easy to find.

The primary thing to keep in mind here is that designing for a device like an iPhone, especially one with a retina display, using only a computer monitor leads to a good deal of guess work due to the differences in pixel density. We hate unnecessary guess work. Sure, you can export flats and look at them on the end device but you’re probably not going to do that as often as you’d need to – and it’s a waste of time given that tools like LiveView Screencaster are available. It’s a free app (Nicholas, we’d gladly pay) that let’s you view your Photoshop canvas in real time on your iOS device. It’s the best addition to our toolkit since Photoshop added layers and multiple undos.

Set up Photoshop with a new blank document (640×960 in this case) and make a second instance of it (this is key). It’s done by selecting Window>Arrange>New Window for… in Photoshop. See the screenshot above for reference. Assuming you have 2 monitors, drag one of the instances over to the secondary monitor making sure the entire canvas is viewable at 100%. Leave the other instance on the main monitor. Get LiveView Screencaster running on both devices and line up the LiveView frame to fit perfectly over the canvas on the secondary monitor (use the arrow keys for fine-grain adjustments). You’ll now want to work solely off of the main monitor instance leaving the secondary one alone. This allows you to freely zoom or move the canvas as much as you want for pixel perfection, while simultaneously watching how your actions are affecting the design on the actual device at 100%. Without the second instance, any canvas movement or zooming is mirrored in the iPod, and that’s not a good thing.

Here’s a quick snap of the sample set up:

Based on the recent 4.2.1 update, it includes all the elements you need to design proof-of-concepts or production ready assets. The last version of this file was riddled with issues like blurry edged buttons and incorrect “bevels”. These issues have been addressed as best they can using Photoshop’s shape layers and layer styles. If you’re modifying any of the vector elements be sure the shapes are sitting on full pixels or your assets will begin to look blurry.

Pay whatcha’ like

We’ve always just created this file for ourselves and shared it freely. It takes a good deal of time to create and maintain but it saves us a lot of effort on projects and pitches – we hope it does the same for you. So, this time around we’re asking anyone who actually gets some use out of it to pay whatcha’ like. Hate it? Don’t pay anything.

Download The iPad GUI PSD Here

License: This file may ONLY be used for mocking up iPad apps. No, can’t be used in a theme to sell or go in ads for your new app or use it to build your Web site. It is a tool for designers, that is it.

You can follow Geoff and Teehan+Lax on Twitter.

The iPad GUI PSD has been very helpful for designers / developers in mocking up their apps, although in some cases it’s proved a little too high-fidelity. For rapid prototyping we found we needed a more malleable approach. This is when we turn to the iPad Sketch Elements AI. This collection of common iPad elements in a sketch – like style allows us to easily and quickly mock up flows of custom wireframe screens.

Below is a full shot of all assets included in this release.

If you like it or use it, help us out by retweeting it.

Download The iPad Sketch Elements AI Here

Looking for an iPhone version of this file? View iPhone Sketch Elements AI

(Font Requirement: To fully achieve the sketch style, you’ll need Tekton Bold — Found here)

Now that we’ve had a few weeks to put the iPad through its paces, it’s moved from being a novel new gadget to something that I use every day. The number one question I get when people find out I have an iPad is – what do you actually use it for?

It’s difficult to describe to people why I’d choose an iPad over my MacBook Pro while around the house. The MacBook is easier to type on, it’s more powerful, and it comes with all the latest plug-ins/extensions to make for a pretty good experience, but it also weighs almost 10 pounds and the battery now lasts a measly couple hours on a good day.

After a few days, I found myself bringing the iPad all over the house. It’s so trivial just to pick it up and throw it on the couch, have it in front of you while you’re eating a meal, or watching a TV show or movie in bed.

So what am I actually using it for?

Reading

It’s been a few months since I started using Marco Arment’s Instapaper for iPhone. Since then, I’ve moved all my medium to long-form reading from my desktop to a mobile device. Simply put, reading while sitting at your desk sucks. I can never get comfortable, and it doesn’t lend itself well enough to a comfortable reading position.

Instapaper works by providing you with a simple ‘Read Later’ link you place in your browser’s bookmark bar. Whenever you come across something you’d rather not read, or a site so riddled with ads the content is hard to process, just click the link and off it goes to Instapaper. The next time you launch the app on your phone, you’re greeted with a highly readable, stripped back version of the articles you’ve saved.

It’s a glorious reading experience, not having to be distracted by navigation, advertisements, or other distractions, and the iPad makes it even better. The latest version received a spectacular visual refresh and now includes three of the new system fonts that are included on the iPhone: Hoefler, Baskerville and Palatino. I don’t have to say much more to those of you who are typography nerds, but to the rest of you: it looks damn good and I don’t think I’ll read any blog posts on my Mac again.

Gaming

Gaming on the iPad is still an evolving landscape. While Apple likes to heavily feature the driving games where you have to tilt the device to steer, what you’ll quickly realize is that this is a lousy way to control a game, and you’ll probably just end up with sore arms. Too many iPhone OS games seem to needlessly employ the accelerometer hoping that it will elevate the level of immersion a gamer experiences while playing, but more often than not it just acts as a frustrating barrier to being able to properly play the game.

The types of games that shine on the iPad are generally pretty casual, making use of clever gestural input with little-to-no instructions required. So far, the best of the bunch seem to be those that take advantage of the larger screen on the iPad to give the player a larger area to interact with, like Scrabble or Pinball.

Godfinger is one such game that really shines on the iPad. The mechanics of the game are nearly identical to Farmville, the Facebook-based farming game with a massive user-base. In Godfinger, you’re the All Powerful One, and you’re given a world to preside over with several followers. You can build up cash by having your followers farm for gold, but need to maintain their levels of happiness in doing so.

The graphics are beautiful, and it takes advantage of a few very simple gestures to interact with the world. The game will continue to run even after you’ve quit, and will send you push notifications if anything needs your attention. You can add other friends that are playing in-game and visit each others’ worlds to help out. You can also run it on the iPhone, playing with the same world you created on your iPad.

If it wasn’t already clear, I’ll warn you outright: this game is addictive. I’ve got countless friends and a some folks at T+L hooked on it, but it’s a great example of a simple game done right on this device.

Utilities

The iPad’s screen size gives designers the opportunity to develop some pretty information-dense applications. At over four times the pixel count as an iPhone, there’s a temptation to cram a lot more on the screen at a given time. However, just like the Web, the best experiences on the iPad seem to be from the apps that show restraint and care in their information design.

I get a lot of flack around the office for my purchase of the $0.99 Weather HD, the highly (and perhaps overly) visualized weather app, but it has become one of my most frequently used apps. Why? I could easily one of the many weather apps that provide the time for sunset, sundown, the atmospheric pressure, precipitation pattern and weather radar, but who really needs any of those things?

When I’m walking out the door in the morning, all I really care about is the day’s forecast, the temperature and maybe how windy it is. The designers of this app recognized that, and deliver this information in a beautiful, visually compelling way. It’s not for everyone, but I’d sooner buy an app that does something simple really well than one that tries to do everything and ends up delivering a mediocre experience.

What’s Next?

There’s still a lot of gaps in the iPad experience and a lack of high-quality, functional apps, but developers are surely working away as we speak on many of them. Most notably, Facebook is way late to the game in delivering an iPad-friendly application (usually being first to the plate on new devices). It’s going to be an exciting year for the iPad owners as many of these apps come to fruition, and just like the iPhone’s app ecosystem, it’s surely going to take some time to flourish.

Apple has just announced iAd, their new mobile advertising platform and needless to say, everyone here at Teehan+Lax is very very excited. Details are sparse at the moment, but Apple has described iAd as an intersection between Emotion + Interactivity… Which happens to be a fairly suitable description of Teehan+Lax as well.

Advertising on the iPhone was been atrocious at best, and it’s even worse on the iPad. Uninteresting, static and unemotional ads have littered the mobile experience, and Apple aims to change that with iAd. Ads served up will be HTML5 only (sorry, no Flash), but the platform appears to be incredibly flexible. Animation, video & rich interactions are all possible — this really gives new meaning to “microsite”.

The big selling feature for advertisers is having their experiences stay inside of the applications — consumers can dip into the ad to find out more, without leaving the application at all. My assumption is that iAds will take advantage of the newly announced multitasking features, which will essentially pause the app while you explore the ad.

They only demonstrated ads running on an iPhone, so I’m curious to see how they’ll be handled on an iPad… my assumption is that advertisers will need to develop platform-specific ads for trafficking. Regardless, judging from the ads that are currently being displayed within iPad apps, I think iAd’s will really shine here.

We’ll be discussing more as additional details become available. In the meantime, here’s what Apple has to say about it:

“Apple’s new mobile advertising platform, combines the emotion of TV ads with the interactivity of web ads. When users click on mobile ads they are almost always taken out of their app to a web browser, which loads the advertiser’s webpage. Users must then navigate back to their app, and it is often difficult or impossible to return to exactly where they left. iAd solves this problem by displaying full-screen video and interactive ad content without ever leaving the app, and letting users return to their app anytime they choose. iPhone OS 4 lets developers easily embed iAd opportunities within their apps, and the ads are dynamically and wirelessly delivered to the device. Apple will sell and serve the ads, and developers will receive 60 percent of iAd revenue.”

Since its announcement and subsequent release, the general consensus appears to be a) the battery life / speed & industrial design is unparalleled, and b) the software is somewhat limiting. I’ll definitely echo these observations, however I’ve noticed much of the criticism has been focused on issues which will undoubtable be addressed in future OS updates. Everyone is busy looking at their feet, complaining about the immediate and obvious shortcomings, when they should be focused on where Apple is going with the iPad. Make no mistake about it, the iPad really is Apple’s reconception of personal computing, however they’ve only taken the first of many steps in that direction.

“It’s just a big iPod Touch”

When Apple first announced the iPad, an audible groan echoed across the Internet. It’s just a big iPod Touch appears to be the most common reaction upon seeing the iPad for the first time, and while there is definitely some validity to that observation, it’s not exactly true. Yes, the iPad looks and feels very similar to an iPod Touch, and yes they share the same operating system (which really makes them fraternal twins). However, the iPad currently sits uncomfortably between the iPod Touch and the MacBook; Born from a smartphone and wanting to be laptop replacement, but unable to reach its full stride. It wants to run—and starts to pickup pace— but then trips over it’s own feet.

Coming from an iPod Touch or iPhone, you’ll feel right at home. Sure, the screen is roughly 4x the size, but it looks and functions more or less the same. You’ve got the singular home button on the face, the same dock along the bottom, and the same lock screen (now with 4x the unused space) . However, once you start using iPad-optimized Apps, it becomes clear that this is a different ballgame. The larger screen affords a completely unique experience, and the developer community is taking full advantage of this. It’s actually quite amazing how quickly the operating system disappears once you launch an App. The App fills the entire screen and you immediately feel like you’re holding an entirely different device. But then you try to delete something and a tiny blue dialog window appears, drowning in a sea of pixels. It feels odd and out of place, like a relic from a different era. There are all sorts of little details like this that reflect the iPads smaller-screen lineage.

You get the same feeling when you turn the iPad on for the first time, and you’re forced to tether with your computer and authorize via iTunes. Arguably, you shouldn’t have to do this with an iPhone/iPod either, but it feels even worse with the iPad. This isn’t a device that should require a separate computer. You should be able to give it your Apple ID and have everything automatically sync. Apps, email contacts, calendars… files. And this is where the iPad begins to move towards the MacBook and then stumbles. I want to save & edit files on the go, but there’s no meaningful way of managing them. While I believe Dropbox is vastly superior, Apple’s iDisk should really be the “exposed” filesystem on the iPad. It shouldn’t be an App like it is on the iPod, but a home directory that’s accessible by all Apps and sync’d across all your devices. But what happens if you’re sharing the iPad with other family members?

“The First Real Family Computer”

I’ve seen a number of people describe the iPad as the first real family computer, and I would agree that this is an apt description. My iPad will live in the kitchen and will be shared by my wife and I. However, when I started setting up my email and calendars and contacts, I realized that this wasn’t really going to work. We may want to share the device itself, however we don’t want to share applications. The iPad really needs unique user accounts, complete with independent setups. Of course, this adds a magnitude of complexity and I’m unsure if the platform can really support it. Fundamentally, the iPhone and iPod Touch were designed as single-user devices, but the iPad clearly has multi-user intentions. Being that the share the same OS underpinnings, I can see how the iPad could be weighed down by it’s resolution-deprived siblings.

I’m incredibly excited about how much potential the iPad has. I’m sure Apple will address the multitasking issues that plague it and the iPhone. I’m sure they’ll correct the odd interface holdovers its smaller siblings. And I’m hopeful they’ll introduce some sort of cloud-based solution for the file management issues. The only question is if Apple will allow for multiple users per iPad, or if they’re expecting 1 iPad per person. I have a feeling it’s the latter.

Now that Apple has officially released the iPad we want to start designing for it. While Apple’s interface builder is great, it doesn’t really allow us to create custom UI elements on the fly. We decided to take a page from our iPhone GUI PSD and create one for the iPad.

The PSD was constructed using vectors, so it’s fully editable and scalable. You’ll notice there are a few new UI elements as compared to the iPhone interface. The workable screen design is formatted to 768 x 1024 so anything you design in the Photoshop file can easily be brought over to the SDK.

It’s 1.0 so I’m sure we’ll notice missing elements as we begin to use it. We’ll perodically update it to include new elements as we notice them or as they become available through any SDK updates.

If you like it or use it, help us out by retweeting it.

UPDATED: A new version of this file available here

License: This file may ONLY be used for mocking up iPhone apps. No, it can’t be used in a theme to sell or go in ads for your new app or use it to build your Web site. It is a tool for designers, that is it.

You can follow Geoff and Teehan+Lax on Twitter

(Thanks to Finn O’Hara for the photo)