Free apps are everywhere and it's easy to download as many as you want. I've probably downloaded a dozen or more free apps that I haven't even opened. Ever. There's also a huge difference between a free app and a 99-cent one. I've bought 2 apps (99-cents each) and I've downloaded 30+ free apps. What's the mix on your iPhone?
I bring this up because app developers are trying to figure out the right model for the iPhone. We had some related data we shared at our recent TOC conference. Our CEO, Tim O'Reilly, mentioned that we introduced our iPhone: The Missing Manual as an iPhone app priced at $4.99. The app sold phenomenally well, but we wondered whether we were leaving money on the table, so we raised the price to $9.99.
Guess what happened? Tim noted that by doubling the price, we cut the sales to a quarter of their earlier levels. Yikes.
The lessons learned: First, there's definitely a good deal of price sensitivity in the App Store, even (especially?!) below the $10 point. Secondly, and perhaps more importantly, the convenience of always having your book with you is nice, but there's a point somewhere below $10 where the smaller screen's limits trump the convenience factor.
As a book publisher we'll continue experimenting on this front. Rather than just playing with price points and form factors though, I tend to think we need to focus more on the content. Instead of simply porting the print product to an app, what functionality can we add to create a richer reading experience that takes advantage of the iPhone's capabilities? IOW, forget about the limits inherent in a print book...build the app so that it fully leverages the device!
Speaking of which, Amazon's new "Text-to-Speech" feature in Kindle 2 would be awesome on the iPhone, don't you think? See my Publishing 2020 blog post for more about this opportunity.