John Herrman published a fascinating story at Gizmodo over the weekend looking at the effect that Apple’s App Store is having on the economic realities of mobile software. There is no way to deny that, at least in the US, the App Store is the Mecca of mobile software. Sure I can complain endlessly about all the iFart apps and useless programs, but nothing even comes into the same galaxy as the App Store in terms of applications sold and money made. That is a simple fact, like it or no.

The fact that the App Store is in a class by itself is beginning to have a profound and possibly destructive effect on software developers, according to Herrman. He has tracked the prices of the same applications across multiple platforms, and has discovered that consistently the same applications are priced at least 50 percent cheaper for the iPhone then they are for other platforms. While one could say this is supported due to the economy of scale (you sell more through the App Store, you can charge less), what the rush to succeed in the App Store is doing is driving prices for applications continually lower, with Apple’s encouragement.

That may look great for users on the surface…but is it really?

Here is what Herrman says about the long term effect of the race to the bottom in the App Store.

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 entire article is available HERE and is an excellent read, for both iPhone users and those who continue to struggle on with other phones.