$1,000 iPhone app actually not a good thing

Mobile operators are smiling through clenched teeth as the mobile industry moves toward “openness.” And “I Am Rich” is a good example of why some of their fears are well-placed.
In case you missed it, Apple last week got a little egg on its face thanks to I Am Rich, an App Store offering that does nothing but insert a glowing garnet on the phone’s screen – for a cool $999.99. The application reportedly lured eight suckers (netting German developer Armin Heinrich nearly $5,600) including one sap who claimed he thought the offering was “a joke.”
An outcry from bloggers and techies forced Apple to quietly pull the virtual equivalent of a Hermes bag before any more fools parted with their money. But the move to drop the offering infuriated other observers, one of whom asked “if Apple should be playing nanny to iPhone owners who make $1,000 jokes.”
The answer to that question is: Yes, it should, if it cares about its reputation. While “caveat emptor” is a good rule of thumb for consumers, it makes for rotten corporate policy. And the last thing Apple needed in the wake the problematic launches of the iPhone 3G and MobileMe was more trouble on the PR front.
Critics have argued that I Am Rich only underscores the need for Apple to truly open its gates and allow developers and publishers to sell their wares directly to consumers – and they may have a point. But wireless carriers – who are sure to face these kinds of challenges as the garden walls continue to crumble – don’t have that option. For now, at least, most consumers see their carrier as the face of the wireless industry, and will hold the operator responsible for any bad experience. An exorbitantly priced download or glitchy game purchased from any storefront other than iTunes is more likely to result in an irate phone call to the operator, not to the vendor.
The industry’s move toward open is real, it’s happening, and it’s a good thing. And carriers should move more aggressively in allowing their subscribers to access a host of offerings from third parties. (I’m looking at you, Verizon Wireless.) But an operator who offers a free-for-all where any vendor can approach users with any device or app doesn’t just risk being left out of the revenue stream. It risks the kind of PR nightmares that infuriate consumers and boost churn. And that’s not just bad for the carrier, it’s bad for the industry.