Michael Mace published a very interesting and in depth article at his blog Mobile Opportunity about the decline of the mobile software industry. Mace is former Chief Competitive Officer and VP of Product Planning at Palm, VP of Strategic Marketing at PalmSource, and director of Mac Platform Marketing at Apple. In Mace's article, he talks about how the mobile software market was booming back in 1999 when he joined Palm. He said that in a 22-month period, the number of registered Palm developers increased from 3,000 to over 130,000. Developers were making all kinds of native apps for Palm devices, and the installed base of devices was doubling every year.

But the energy and momentum eventually drained out of the mobile applications market. Mace stated:

The problem wasn't just limited to Palm; the level of developer activity and creativity that we saw in the glory days of Palm OS hasn't reappeared on any mobile platform since. In fact, as the market shifted from handhelds to smartphones, the situation for mobile app developers has become substantially worse.

Mace gives an example of the dire situation for native app developers. He talks about how his friend Elia Freedman, CEO of Infinity Softworks, and one of the leaders of the Palm software market, with a ten year history in mobile applications, can't make money in mobile applications any more. Mace summarizes his friend's explanation of the problems that have caused a decline in the mobile apps business, plus he gives a link to where you can read more of Elia's commentary.

It all seems to boil down to there being so many platforms out there today, whereas it used to just be Palm OS and Pocket PC, with Symbian lurking on the sidelines in Europe. Now there are at least ten platforms. Another issue mentioned is OS and carrier certifications costing so much, forcing the developers to pay more to sell less. And marketing costs also played a part.

I heard today about PDA Performance terminating all business operations beginning March 1, 2008. PDA Performance made the very cool apps LineUp (read TreoCentral review) and Saguaro. Below is the open letter they have put on their website:

Dear Customer,

This was an extremely difficult decision for us, but certainly a critical one that we had to make. Our most recent development efforts, namely LineUp and Saguaro, relied primarily on the success of Palm. You’ve most likely heard about the struggling Palm OS economy. Unfortunately, it’s affecting us as well in ways we never could have predicted.

We’ve poured our hearts into making both LineUp and Saguaro and agonized over every last detail in both the code and design. During development, if a portion of our code wasn’t exactly right, we’d redo it to perfection. We’re that fanatical about our software. But when it comes right down to it - we’re a team of entrepreneurs, programmers and designers that have to eat, too.

Many thanks go to all of our fans and customers who have supported us throughout our development. We’re sorry to say that after 6 successful years, we have to go. We’re sure there are many more opportunities that will present themselves in the future. So don’t worry about us. We’ll be fine. Chances are, someday you might find each of us out in unique industries doing what we love most – innovating.

Best Regards, The Team @ PDA Performance

That is very sad as is Elia's story in Michael Mace's article. I always hate to hear about companies having to fold. I wish all those at PDA Performance and Elia the very best of luck in their future endeavors.

Regarding Elia's story and the mobile app developer industry, Mace says:

Although it's a very sad situation, if Elia's experience were an isolated story I'd probably just chalk it up to bad luck on the part of a single developer. But it mirrors what I've been hearing from a lot of mobile app developers on a lot of different operating systems for some time now. The combination of splintering platforms, shrinking distribution channels, and rising costs is making it harder and harder for a mobile application developer to succeed. Rather than getting better, the situation is getting worse.

Mace says that he thinks developers lost sight of an even more fundamental law that applies to any computing platform:

A platform that is technically flawed but has a good business model will always beat a platform that is elegant but has a poor business model.

He gives Windows as an example, saying that Windows is technically flawed but has the right business model.

With the decline of development for native apps for mobile devices comes the increase of web applications. So many people use the Web now and the numbers of people surfing the Web on their smartphones is also growing. Mobile web browsers are improving today, especially since Apple put Safari on their iPhone. Now others are following suit and are trying to put full web browsers on their devices as well. Mace says that he believes that Web applications are going to destroy most native app development for mobiles. And he says that it's not because the Web is a better technology for mobile, but because it has a better business model.

If you haven't listened to this week's TreoCentral TreoCast, go tune in because Dieter and Mike talk about Michael Mace's article and they both have some very interesting things to say on the subject of the decline of mobile software industry.

You can read Michael Mace's full article here.