Of course, it's bound to be more fun if you're on the receiving end of the money transfer, but even so—just bumping two iPhones together and entering the transaction amount sounds almost dangerous. A few other features have been added to the upgraded app, including a tip calculator for working out how much to money to give, plus a bill splitter for those who don't want to pay a cent more than they have to.

It's a free download, available now. [iTunes via TechCrunch]

It was a finalist in the Android Developer Challenge, finishing in the top 20 for arcade and action games, but under a different name. It's essentially a racing game in a never-ending tunnel (sounds like most of my bad dreams, if I'm honest), but if you do well, there's a chance you can win some actual money from the developers.

They haven't said exactly how much will be on the table, but the first competition will start on April the 1st (maybe it's all a big April Fool's joke?), with the app hitting the Market on March 20th so you've got a few days of practice up your sleeve. [Door-6 via AndroidandMe]

Oscar Wilde was right about cynics: they know the cost of everything and the value of nothing. On your next trip to the App Store, don't be cynical. Be smart—even if it means spending a little money.

The App Store Effect Is Real. Use It.

Last fall, John pondered the App Store Effect, which holds that Apple's model results in price deflation so severe that it's unsustainable... in the long term. In the short term, though, it's your ticket to apps that cost far less than their analog (or web-only) counterparts. And sometimes, they'll include even more functionality.

Examples? Certainly! Here's a range of apps, from professional to gaming to reference to navigation, that'll save you anywhere from a few bucks to a few thousand:

It's probably most helpful to think of these in terms of the broad categories where you're most likely to find a cheaper app alternative.

Hobbyist: If it's an activity that at least a few thousand people enjoy, there's likely an app catering to it. GuitarToolkit's a perfect—if extreme—example. For $10, you get a library of over 500,000 chords, a chromatic tuner, and a metronome. Purchasing all those items individually gets expensive and, more importantly, bulky. An app? A fifth (or less) of the cost, all stored in your phone. Frequent traveler? Download HearPlanet's collection of over 250,000 audio guides instead of shelling out around $8 for one at each location. If you have a common passion, someone's developing for it.

Professional: BarMax costs as much as an App Store product is allowed to, but the law exam prep app is still $2,000 less than an in-classroom service like BarBri. In fact, shortly after BarMax was released, BarBri retooled its pricing structure to be more competitive. It wasn't a coincidence. And other professionals—including pilots and nurses—have a bevy of targeted apps to choose from as well.

Cannibalistic: Companies are so eager to be represented in the App Store that they'll undercut themselves to be players there. An online subscription to Zagat.com costs $25 per year. The Zagat to Go app costs just $10, and includes location services and an offline mode that the Zagat website doesn't. You can play Grand Theft Auto: Chinatown Wars for $30 on the PSP, but it's only $10 on your iPhone. And Major League Baseball's MLB.com at Bat app lets you stream games for $1 a pop, while MLB.TV charges $99 for a yearly subscription. Sure, if you watch a hundred or more baseball games a year on your iPod Touch's tiny screen you'll want to go with the latter, but the pay as you go option is ideal for the casual fan with a vested interest in his eyesight.

Remember: with so many developers targeting the App Store, it's more than likely that there really is an app for that. But wait... what if there are several apps for that? How do you choose the right one?

App Overlap

Because the App Store is such a big ecosystem, it's inevitable that there are redundant applications. Some categories see more overlap than others, but in general it's common to find multiple apps that do the same thing. So where does the cost difference come from?

Functionality: The most basic—and most obvious—reason for an app to be more expensive is that it can flat-out do more. A casual Twitter user might be happy using Echofon for free, but if you need support for multiple accounts and the cleanest UI around, you're going to be happy coughing up three bucks for Tweetie 2. Make sure to read up on the full feature set of what you're buying. If you're about to pay for something with more firepower than you need, there's likely a free (or cheaper) version that'll suit your purposes. The paid app will still be there if you decide you need more functionality down the road.

Ad Support: Often, and particularly with casual games, the only difference between the free and paid versions of an app is whether you'll be saddled with advertisements as you use it. It really depends on your threshold: is it worth three dollars to play Words With Friends unfettered, or are you willing to endure the between-turn sales pitches that accompany Words With Friends Free? Each app integrates ads differently, so it's worth trying out the free version first. Too many banners cluttering your screen? You're only a click away from an upgrade.

Ripoffs: It might be helpful to think of the App Store as a giant, unruly bazaar, with thousands of vendors peddling their wares. There's some oversight when things get out of hand, but even the $999 "I Am Rich" app was downloaded eight times before it got shut down. Like in any sales environment, it's important to remember that what something costs usually has very little to do with what it's worth. Don't just go by the star system; read through the reviews to make sure that the app lives up to the developer's description.

Easier Said Than Done?

There's no question that a little research should go into whatever app you buy—starting with our Essential iPhone Apps Directory. Beyond that, here are a few common App Store categories with stand-out expensive, cheap, and free apps, along with our recommendations of when it's worth it to pay up:

Cooking

Expensive: 20 Minute Meals - Jamie Oliver ($8)
Verdict: Don't Download

Cheaper: Martha's Everyday Food ($1)
Verdict: Don't Download

Free: Epicurious
Verdict: Download
Jamie Oliver and Martha Stewart are powerful brands, but that's pretty much all you're paying for. Epicurious has thousands of recipes—including from famous chefs featured in Gourmet and Bon Appetit—a shopping list feature, and will suggest meals based on the ingredients you have handy. It's really the only cooking app you'll ever need.

File Storage

Expensive: Air Sharing Pro ($10)
Verdict: Don't Download

Cheaper: Air Sharing ($3)
Verdict: Download

Free: Dropbox
Verdict: It Depends
While Air Sharing Pro includes printing and emailing, the regular version should get the job done for most people: you can transfer your files to your iPhone's flash memory via Wi-Fi for storage and transport. The trouble with the "free" option, Dropbox, is that it's not a standalone app. However, when you link it to your Dropbox account you can share and sync up to 2GB of files for free. It's good if you already have an account, but if you don't, you probably should skip it.

Messaging

Expensive: BeejiveIM ($10)
Verdict: Download

Cheaper: AIM ($3)
Verdict: Don't Download

Free: Meebo
Verdict: Download
It might sound crazy to pay ten dollars for a messaging app, and for a lot of people it would be. But if messaging is your primary mode of communication, BeejiveIM's multi-account management, intuitive interface, and seamless push implementation are well worth it. For more casual IMers, it's hard to beat Meebo's multiprotocol support and push notifications. They even log your conversations on their servers. Another solid free option is Fring, which includes Skype support. What you don't want is to pay $3 for a messaging app like AIM, which only supports services on the AIM network and Facebook and is missing some features—like blocking contacts—found on the desktop version.

Navigation

Personal Finance

Expensive: PocketMoney ($5)
Verdict: Don't Download

Cheaper: MoneyBook ($3)
Verdict: Don't Download

Free: Mint.com
Verdict: Download
The first rule of money management: don't pay for something you can get for free. Apps like PocketMoney and MoneyBook aren't bad at what they do, they just look a bit hypocritical with Mint.com Personal Finance around. Mint automatically syncs to your online accounts to help you keep track your budget and investments. It's the best personal finance app out there, and not just because it's free.

RSS Reader

Expensive: NewsRack ($5)
Verdict: Download

Cheaper: Reeder ($3)
Verdict: Don't Download

Free: NetNewsWire
Verdict: Download
You can get by with a free RSS reader, and NetNewsWire's a great option that syncs with Google Reader. Like the majority of free options, though, it can be a bit sluggish and prone to crashing, especially if you're loaded up on feeds. Among the paid apps, NewsRack (formerly Newsstand) shines for its reliability and speed. In-between options like Reeder? Well, if the developer's best troubleshooting suggestion is to limit the number of items you have to sync, you're not getting what you paid for.

Twitter

Expensive: Twitterrific ($5)
Verdict: Don't Download

Cheaper: Tweetie 2 ($3)
Verdict: Download

Free: Echofon
Verdict: Download
Tweetie 2 is our favorite Twitter app : it's fast, intuitive, and loaded with features. I can understand if you'd rather not pay to use Twitter on your phone, and Echofon's a more than capable free alternative. But only a twit would pay $5 for Twitterrific when the class of the field is just $3.

The Value and the Cost

Remember that the App Effect is working for you, at least for now, and that we're in an age of unprecedented deals on app content and services. Try not even looking at the price at first. Start with the feature set, see what's comparable. If it's free? Great! But even if it's $10 or $20, it still might be a steal.

We've gotten to a point where it feels almost perverse to pay for an app. But think of it in a larger context: you're buying software. On your desktop, that used to—and often still does—command exorbitant sums. Even on mobile platforms, Windows Mobile and Blackberry apps used to cost 10 or 20 times the average App Store paid download. Comparatively, App store downloads are peanuts.

And remember, too, that by paying for apps that are actually worth the money, you end up supporting the developers that are delivering innovative content and services. That means a better app experience down the road for all of us. Even the cynics.

Prof. Dealzmodo is a regular section dedicated to helping budget-minded consumers learn how to shop smarter and get the best deals on their favorite gadgets. If you have any topics you would like to see covered, send your idea to tips@gizmodo.com, with "Professor Dealzmodo" in the subject line.

Microsoft's most visible products that aren't Windows and Office fall under two divisions: Entertainment and Devices, and Online Services. Xbox, Zune (both services and devices), cellphone software and to some extend Media Center all fall under E&D, which has been skipping from minor profit to minor loss for years. Online services, like Bing and Hotmail, have a more consistent track record, steadily bleeding money from the company month after month, with only the slightest hints of stopping.

Granted, Silicon Alley Insider's chart only covers of Operating Profit, so it doesn't reflect how much revenue each division accounts for, or in a broader sense, how important and large each of these products is within Microsoft. (you can obviously assume that, even if its division isn't making much money, the Xbox is considered a major product.) But still, it's hard not to see a trend: exciting, risky products—some of the ones we spend the most time talking about—don't make money. [SAI]

Here's how Intel describes the settlement:

Intel Corporation and Advanced Micro Devices today announced a comprehensive agreement to end all outstanding legal disputes between the companies, including antitrust litigation and patent cross license disputes.

So, they're not fighting directly anymore, and the mountains of patent and antitrust disputes are resolved: Intel will pay this ridiculously large sum of money to AMD, and agree to not engage in anything even resembling monopolistic behavior, and both companies will live in harmony, cross-licensing technologies and competing, but softly! Great. Well, sort of: Intel's biggest problems right now don't come from other companies, but from governments: complaints from AMD no doubt helped spur investigations by the European Commission and New York Attorney General into Intel's business practices, and as part of the agreement AMD is withdrawing their complaints with both agencies, but the EC issued their $1bn+ fine quite a while ago, and from the looks of it, the AG's office is eager to move forward with their investigation too. In other words, this probably isn't the end of the pain for Intel.

That, kids, is why you don't engage in anticompetetive practices in a two-company industry. [WSJ Law Blog]

The App Store is a strange new place for developers. Veterans and newcomers engage in bareknuckle combat, driving prices down to levels people wouldn't have imagined charging just a few years ago. Margins drop to razor-thin levels while customers expect apps to get cheaper and cheaper, but with ever increasing quality and depth.

For developers, for other software platforms and potentially for the increasingly fickle customers themselves, it's uncharted, and treacherous, territory. But the most bizarre thing of all is—in an effort to keep people in the App Store, and to prevent competitors from getting a toehold in the mobile app business—Apple's charting a course straight into it.

"The App Store is a very competitive environment," says Caroline Hu Flexer, co-founder of Duck Duck Moose, an indie developer of children's edutainment apps like Itsy Bitsy Spider. "As an independent developer without a large PR budget or well-known brands, it can be very challenging, and you're pretty much at the mercy of Apple."

The Problem

Most iPhone apps had no life before the App Store, and currently have no life outside it. But with those that did, you start to see a pattern. App prices could reasonably be expected to fall over time—an older game is worth less to customers than a newer game, and with other types of software, a late-stage price drop is a great way to scoop up late adopters. What's strange, though, is how prices dramatically collapse after hitting Apple's store.

Two weeks ago we flagged some bizarre differences in pricing between equivalent PSP and iPhone games. Big titles, like Tetris and Fieldrunners, were inexplicably cheaper on the iPhone, even in cases where it was executed better. This didn't make a whole lot of sense. As it turns out, it had nothing to do with Sony and the PSP, and everything to do with the App Store.

As you can see in the chart above, many apps and services take a price dip in the App Store. Zagat's premium To Go guides cost a healthy $4/month for Windows Mobile phones, but sell for just $10/year on the iPhone. CoPilot 7, a navigation app, used to set you back a full $200 on a Microsoft-badged device (later lowered to $100); the much-improved version 8 sells in the App Store for a measly $35 today. The premium version of WeatherBug runs $5 for people who happened to buy BlackBerry's touchscreen phone, but just $1 for anyone who bought Apple's. VR+ voice recorder, a full-featured dictaphone app, runs $30 on BlackBerry, and an incredible $2 in the App Store. So how can this little App Store, itself a subsection of the iTunes store, squeeze so many developers to the point of near-suffocation?

Update: The BlackBerry Weatherbug app boasts a few extra features over the iPhone app, including push notifications. This accounts for some of the price difference

The Economy

Some of this is pure Econ 101: The store serves a massive, captive audience that's pre-trained to spend money in iTunes. The promise of higher volume makes it easier for developers to lower prices, which they use, along with interesting features and clever marketing, to set themselves apart from the competition.

If things work out just right, the App Store can move a lot of software for you. Spread your lower margins over tens of thousands of sales, and your $2 app could make just as much, if not more, than your old, slower-selling $30 app did. The App Store recently passed the 2-billion-download mark, and there are likely well over 50 million App-Store-ready devices in peoples' hands right now. A vast majority of these downloads—averaging an insane 35 per device—will likely have been free. Only Apple knows just how many. But even if just 5% of the 2 billion downloads were paid for, that's one hell of a market.

It's true that prices are falling as more and more iPhone and iPod Touch owners enter the market. But prices won't stop falling. And more and more developers from all over the world are submitting apps, too, so fewer devs are guaranteed visibility. Not all of the people investing time and money in their products are reaping the return they (reasonably!) expected.

Newsweek's exposé on the end of easy money at the App Store goes a long way toward making the case against going all-in as an iPhone dev. Not only are development costs high, while success appears to be basically randomized. But the story doesn't explain exactly what happened to make the situation so grim.

The Culture

Giz stories rage about app prices all the time, and in your own private way, so do most of you. Buying $1 songs and $2 TV shows has given us an expectation that apps should be cheap, no matter what their use. The glut of free apps you see filling out the app charts every day doesn't help either. Software is worth less to us now, even though we use it more.

I spoke with Steve Andler of Networks In Motion, the company that makes Gokivo. It's an app that we savaged for its introductory price of $10 a month, which then dropped to $5 a month a few weeks ago.

Andler explained reaching the unrealistically low costs with one thing: diminished features. Their app pulls up-to-date map, traffic and POI data from NIM's servers in real time, meaning that—beyond developer costs—they have to constantly pay for new, fresh data to pass on to their customers. But even at $5 a month, it's just about impossible for Gokivo to compete with an app like MotionX GPS Drive, which is $3 a month, or $25 per year.

Andler says there are subtle differences in services offered, which is true—MotionX, for example, doesn't yet read street names aloud when it gives you directions—but your average user probably doesn't know this, and there's a good chance MotionX might add it in an update later on, as their market share and revenues grow. But the damage is done. The app-buying customer is spoiled: As far as we are concerned, turn-by-turn GPS apps should now cost no more than $3 a month, period. This is the new retail, and it's weird.

Loren Brichter, father of Tweetie, is used to getting yelled at by jaded app shoppers. He's charging $3 for Tweetie 2, an update—but a whole new version, really—of his well-established Twitter app. Offering the software as a free upgrade isn't realistic for him:

I priced Tweetie at $2.99 not based on how much work I put into it (it would have been more), or to try and undercut other apps (it would have been less), but simply because I felt like $2.99 was a reasonable price to pay for a Twitter client. Impulse purchase, but not bargain-basement. I never liked playing pricing games either—a popular pastime of other App Store devs. It's always been $2.99, and will probably always be $2.99.

His decision wasn't easy. And even though his app is the darling of the tech press, and has hundreds of great user reviews, he's being lambasted for charging three measly dollars for a high-quality app that people will use again and again and again. Before the App Store, a complaint this petty wouldn't have even made sense.

Apple

From the outside, it appears that Apple is encouraging a race to the bottom. The top 10 lists in each App Store category—one of the only ways for an app to get any meaningful amount of iTunes visibility—are almost exclusively the territory of low-priced impulse buys, and are hard to cling onto for more than a few weeks at time. Flexer, of Duck Duck Moose, says she's experienced it firsthand:

The ranking by volume (as opposed to revenue) on the App Store seems to drive the prices of apps down. Aside from being featured by Apple, exposure of an app is dependent on its ranking in the top lists, so developers lower prices to obtain a higher ranking.

This is echoed and amplified by the makers of Twitterific, an app that, in a bid to stay competitive, saw its price fall from $10 to $4, despite active development and a growing featureset:

While these changes represent perks for users, it also means that sustaining profitability for a given piece of software in the App Store is nearly impossible unless you have a break-away hit.

And if things don't change?

Myself and others like me will have no choice but to focus our development efforts elsewhere.

With yesterday's announcement that Apple is allowing free apps to include in-app purchases, things just got even more tumultuous. Depending on how this is handled, the top "free" apps could all be paid apps in disguise. Either that or the paid app rankings will be dominated by free-on-a-trial-basis teasers. In either case, the rankings open themselves up for opportunistic abuse, and the highest goal for any honest, talented app developer—to just crack that list—just became more uncertain.

This is disastrous for developers, even if it's mostly incidental, and a function of Apple trying to sell apps like they've been selling music for years, despite a totally different set of product types and customer needs. But Apple's effect on pricing goes well beyond incidental. At least in some cases, Apple calls the shots.

A high-profile dev team that has sold a number of apps in the store since the earliest of days, and who accordingly wishes to stay anonymous, told us as much. When they approached Apple with their first app, they had a price in mind. Apple told them it was too high, and that they'd need to cut it to succeed. They chopped it in half. Even then, Apple told them to "be careful."

This company made out fine, since they were in a position to adapt. However, to play the volume game, they had to restructure their entire philosophy around a pricing structure that, just months before, would've seemed ridiculous.

With over 2 billion data points to graph and filter to their heart's content, Apple understands the App Store climate better than anyone else possibly can. As such, their advice is probably golden. Which is okay if you're a relatively nimble, single-purpose company, and you can afford to risk restructuring everything you do around their store, and your costs can be covered at whatever price you evidently need to set to sell at a certain volume. But you'll just want to keep in mind that their advice is self-interested. Apple wants cheap apps, to keep people buying them, and to keep other stores firmly in the second tier—and they're not afraid to say it. From Apple's last quarterly report to investors, a line they've been echoing since the store opened:

[Apple] also expects competition to intensify as competitors attempt to imitate the Company's approach to providing [digital app distribution] seamlessly within their individual offerings or work collaboratively to offer integrated solutions...While the Company is widely recognized as a leading innovator in the personal computer and consumer electronics markets as well as a leader in the emerging market for distribution of third-party digital content and applications, these markets are highly competitive and subject to aggressive pricing.

You don't need to look back any further than the launch of the iTunes music store to see an Apple that will do everything it can to push other peoples' prices down for their benefit. Of course, they can't really fix prices for apps—they're not songs or movies, and each one does something different—but they can nudge like hell.

What Happens Now

So what does the App Store Effect mean, right now? In the short term, we'll get lower prices. This is great. But in the long term, it might not be sustainable.

The promise that sales volume will make up for the rock-bottom prices you need to charge just to be seen in your app category seems increasingly hollow, and to put it bluntly, if developers don't have a chance in hell of recouping their fees, they'll stop trying. And I'm not talking about 99-cent iFart app spammers here—I'm talking about big players who already make money selling software. If the navigation companies, the big game studios and the premium content providers can't thrive in the App Store, they'll have to leave; even playing in Apple's sandbox threatens and undercut their (sometimes much more crucial) product lines elsewhere.

And don't forget, Palm and Android fans, this App Store Effect sends ripples well beyond the App Store. Customers expect to see functionally identical apps priced the same way across platforms, because to us, that's what makes sense. Can devs really afford to port an app to the webOS to sell to the tens of thousands of Pre owners, when they're expected to tag it with iPhone prices, calculated for a base of millions? Whether by Apple's design or totally by accident, everyone who doesn't own an iPhone will suffer for it.

The App Store Effect illustrates a new kind of economy, and it's not going to go away. In fact, it's going to get worse. Developers will either adapt, die or leave. But where will they go? Until there are 50 million Android handsets and 50 million Pre offspring out there, the rest of the mobile software world is pretty much screwed.

Don't worry! He's still the richest man on the planet, but he's less richer than everybody else than last year. Other losers on this year's Forbes 400 include Paul Allen, who lost $4.5 billion, Michael Dell, who lost $2.8 billion, and Steve Ballmer, who lost $1.7 billion.

Amazon's Jeff Bezos, unlike all the other tech mavens on the list who lost money, actually made $100 million this year, bringing his value up to $8.8 billion. Good for him! I'm sure that made a fucking difference. [Forbes via Fortune]

What does this mean for Dell? Well first of all that they just spent a crapload of money to expand its enterprise expertise. They are banking heavily on forging head first into IT services. Not only does this give them an added IT package but it means they will be able to sell more and more computers (maybe even that soon to be announced Latitude Z) to Perot Systems' global customers and thus compete to take back the crown of the number one computer manufacturer (HP knocked them off years ago). [Dell]

Sony's suffered through management shakeups and a lack of vision lately, and while this specific news is a little industry-insider, it will definitely have an effect on the juggernaut's product lineup. Sony may well leave certain sections of the industry behind, most probably their Sony Ericsson imprint, but Sony's pretty much getting kicked around on all fronts. They're a legendary company and they're not going anywhere, but we really hope they change their ways and start busting out some exciting, groundbreaking new products like back in the glory days. [New York Times]

The technology relies heavily on our cellphone being used to transfer data and payments—a philosophy that has already taken hold in countries like Japan and even in some major US airports. That's all well and good, but I'm looking for machines that automatically ring-up everything in my grocery cart. Seriously, it's the 21st century. I shouldn't have to wait for a cashier to slowly scan countless items for an old lady writing a check. [FastCompany]

This particular rendering was made through Google SketchUp, Google's 3D modeling software. Measurements were taken of a $10,000 stack of $100 bills (just half an inch thick!) and pretty much multiplied from there using simple geometry. In that trillion dollar shot, each pallet holds $100 million...and the pallets are double stacked.

As for that red blob on the left? It's a human. [PageTutor via BoingBoing]

Even though service would have likely continued uninterrupted had the freshly-merged company actually filed for bankruptcy, Sirius XM's days of luring in top radio jock talent on big contracts would have likely been over. Now, thankfully, we can carry on without skimping on the Howard Stern. [NY Times]

The $1 iPhone app has 50 different dollar bill origamis to choose from and each has its own step-by-step instructions. The origamis range from animals, clothing, rings, structures, Yoda, and more. There's a few extra features like a self timer for testing your speediness and a sequence builder for creating your own origamis. But I was unable to really utilize this app to its full potential for one simple reason, I'm horrible at making origamis.


I started off pretty ambitious and jumped right into the cool looking TIE Fighter. After 15 minutes and many sighs of frustration I gave up. Here's what my Dollar Bill TIE Fighter looks like, yea I know it's pretty pathetic.


Even though the TIE Fighter killed my dreams of becoming a professional Dollar Origamist I decided to try my luck at folding a T-shirt. Well the sleeves aren't exactly perfect but I guess I did it?

[Dollar Origami]

Some of the pirates have drown while trying to escape with their booty.
[NYT]

Siddiqui's downfall came when another exec found a spreadsheet with backroom deals for contracts (he was a buyer for Fry's). He'd then get vendors to sell stuff at an inflated price, pocketing the difference. Ausaf was able to do this because he convinced other execs that HE would be the one to deal with vendors, eliminating sales reps and saving the company money. Or so he claimed.

Then, he had vendors pay kickbacks of up to 31%. Which made him $65M in three years.

A formal charge is coming, but what I want to know is how this will affect Fry's itself (one of my favorite stops for electronics here in the Bay Area). Hopefully, it brings down prices overall, even though Fry's itself is denying any pricing problems were passed onto the consumer. [CBS13 - Thanks Bryan Adams!]

Image Credit

Its handset division led sales for the whole company, selling almost 52 million phones, and pulling in roughly a third of its $13.4 billion revenue. Interestingly, they're using the Nokia strategy, with big pushes at the high- and low-end of the mobile market. If Samsung's any indicator of the rest of the electronics industry—it's probably a better one than Sony—times are tough, but the storm is weatherable. [RCR]