Admittedly, the iPhone wouldn’t be as successful today if it weren’t for the App Store and vice versa. With a wide variety of apps to choose from that are priced well within the reach of most, if not all, individuals, it’s hard not to see why its such a huge hit, but is the App Store slowly driving away developers? More competition has definitely helped drive down prices, but as developers still need to earn a buck or two from what they make, has the recent flooding of the App Store made it an unhealthy environment for which developers can make a living? Gizmodo seems to think so, and they pose a really sound argument to back this theory up.

Develops need to sell their apps and, in order to do so, they need to get noticed. One way is by reaching the top 10, and a great way to achieve this is to offer it up with an ultra-low price. However, as new iPhone apps come along with ridiculously lower prices, they’ll get bumped off the list forcing them to lower their prices even further. This maybe good for consumers but it certainly doesn’t favor developers. They’ll have to either contend with selling their apps at unreasonably cheap prices or pack their bags and leave. On the good side though (or not), the App Store effect, as Giz coins it, will have very little effect on the immediate future, and its impact will be felt down the road.

I don’t exactly agree with the entire argument proposed here, but I do see the App Store getting saturated at some point in time with only a small percentage of developers reaping the benefits from it. How about you guys? What’s your take on this whole App Store effect theory?