I am happy that ZAGG is getting into the Apps market. The company never generated any cash flow and now they are going to be investing in an area that in my opinion will only lose them money.
Their first attempt at Apps was a failure. Trains probably only sold several thousand copies(probably most to shareholders) even with marketing to their hundreds of thousand of unique visitors and now has disappeared never to be heard from again. Companies like ZAGG always have the next story to tell so now shareholders will hear that their are other, better apps under development and also that it doesn't matter because the real money is in marketing other peoples' apps.
So let's look at the apps marketplace business model. It is really hard to pin them down on how it is different, but as far as I can gather the most credible and believable potential is the affiliate business model(going to be way tough to break iTunes monopoly on selling apps, others have tried and failed). So they will make 5% commission as an affiliate pointing consumers to iTunes to buy specific apps. That is 5% of maybe a 2 buck average sale or 10 cents. I don't see how that comes close to covering the cost of maintaining a great site(programer, designers, bandwidth...). I mean forget about the hype for a second and just think about 10 cents per sale economics. If even ridiculously bullish assumption (that in my opinion will never come close to panning out) of 50% of each zagg.com visitor ends up buying an app that gives us 10 cents x 3mm = $300k in sales! Think of all the work ZAGG needs to do to get this 300k. They need to constantly work to keep up a great site. They need to promote great content. They need to be viewed as an expert on apps which will take a ton of man hours.
In the final analysis the economics just don't make sense. It made for a great story and got the stock to go through the roof in the short term, but now the facts are coming in about their first attempt at the apps space and that IMHO was a train wreck.
You're analysis of website traffic, which is key to your whole argument, is completely wrong.
You are saying that appspace.com will sell apps to 50% at best of the users from zagg.com, but they are two entirely different websites generating traffic from two entirely different angles, and the real power behind this combination is the referring of traffic between the sites to boost each others exposure. Some people are going to type 'iphone apps' into google, stumble upon appspace.com, click a ZAGG ad, and end up buying a shield. Some people are going to buy a shield at ZAGG, then click on an appspace.com ad, and buy an app. Now try to calculate how much traffic appspace.com will generate on its own, how much zagg.com currently generates, add the referral traffic between the two sites, then with a more realistic rate per app (5%, I don't think so...), and tell me how much you might estimate could be made from the site. And be sure to include the additional revenue it will bring to the zagg.com store. I'm not interested in your model that you pulled of your ass, that's just ridiculous.
They aren't my estimates. They came from ZAGG investor presentation. Affiliate business model is the only thing that has any chance at all in my opinion.
Listen, I think this is fun. You and TopTick are fuming mad. I guess I touched a nerve with you guys. That is good, it means that I am on to something.
Listen I am not married to my opinion that ZAGG will go down. If you guys can come up with some factual data about why ZAGG will be successful I will be a cheerleader too.
Until then 5% x 2 bucks x 3mm = $300k that is the math. Sorry if it upsets you.
Wish I could hold your hand some more but you will obviously never understand the model. Check back in several months. I have no idea how much revenue ZAGG can generate from appspace but I am absolutely certain that they will generate more like 35% of all apps they promote than your comical 5% estimate. Best of luck to you.
So Mr. Riddle me this Riddle me that, people are going to going to sell their Apps through Zagg on iTunes? Based on what, the hugely successful launch of trains? That just has to be the dumbest thing that I have ever heard. Thanks for making my day!
This whole thing just gets funnier and funnier!
I asked you to be specific and tell me how you get to 35%. Admit that you don't have any facts to back up your claim and we can move on.
You guys are unbelievable hypsters, it is just incredible. Rah rah rah. Go ZAGG!
Nice work. Answer a question with another question. Why not just start posting exclusively in riddles. Maybe that will work.
Please be specific and tell me how you get to 35%. If it has to do with downloading directly to consumers and not going through iTunes then it is never going to happen.