Web or iPhone OS applications to make money?

If you are a developer who’s interested in starting a new business or even just earning extra cash on the side, you have a few options that can lead to scalable profits and passive income. The most popular choices these days are SaaS (Software as a Service) and iPhone/iPad development.

Choosing web application or iPhone OS development is a matter of personal taste, skills, goals, technical requirements, and so on. If we are looking at things solely from an economical perspective though, it’s interesting to consider for a moment which of the two is most likely to be profitable all things being equal.

In my opinion, despite the horror stories, it is far easier to make money with iPhone/iPad development than with charging for a service provided by a web application. The reason for this is very simple. Users don’t expect to pay for websites. They occasionally do for the useful ones, but it’s a relatively new approach and people are still adjusting to it.

Due to the hosted nature of SaaS offerings, they often require a monthly or yearly subscription as well, which is harder to sell than a single one time purchase. $9.99 here, $19.99 there, all adds up very quickly to an uncomfortable monthly bill.

iPhone and iPad applications on the other hand have a major advantage. Apple created an incredible ecosystem where millions of users are ready to pay for tiny applications that solve one small problem or are amusing enough to install. Low prices without the need for a subscription encourage impulse buyers to purchase applications without giving it a second thought.

You’ve probably been on the web for many years now, yet how many web applications do you pay for? However if you have an iPod Touch, an iPhone, or an iPad, how many applications have you bought? I own an iPod Touch and rarely use it, yet even I’ve paid for some applications.

It’s a matter of expectations and Apple did a marvelous job in that respect. When you buy an iPhone, you are almost expected to get cool apps for it. That, along with web access, is the whole point of having an advanced smart phone device. There are no such expectations for web applications.

Take a look at this list of applications and their sales. Most of them could be easily ported to the web, yet their limited scope and functionality wouldn’t even justify calling the resulting sites web applications. Few people would pay for them, even if one were to price them at $0.99. (And I’m not talking about apps for which being on a phone is the key feature). Conversely, porting a free Flash game from the web to the iPhone, for example, would almost certainly lead to sales.

Android is an option too, but I feel that Google has done a much poorer job at setting expectations. Furthermore their marketplace is a lackluster version of the App Store, users from several countries are unable to purchase applications or have to jump through hoops to do so, and developers from countries such as Canada, cannot publish and sell their apps on the Android Market.

The question is, will Google do a better job with the Chrome Web Store that was announced yesterday at Google I/O? If so, it may become a good extra channel through which to sell web applications; an App Store for the web if you will. The distinction between web apps and offline mobile apps may even fade away at some point. That would be a great thing for developers. For the time being however, it is my opinion that developing for the iPhone OS is a safer bet in terms of achieving profitability.