I named Instapaper a killer app in my review of the first-gen iPad last year, and I was but one of many. So how did its developer Marco Arment feel when the Instapaper-inspired Reading List function in iOS 5 was announced at WWDC? This one word tweet says it all.
So why did Apple, with its near $70 billion in the bank, not buy Instapaper and hire its solo developer Marco Arment? What kind of message does it send to developers when you take 30% of their revenue by default, and then build the functionality of the very best apps into your platform without rewarding the trailblazers?
Arment is not alone - many other companies with apps on the App Store will be in strategy meetings today due to new found competition with the functionality in iCloud and iOS 5. It's not just developers either - I can't imagine Apple's partner carriers or RIM being thrilled about the free messaging of iMessage, nor Facebook being thrilled about the Twitter integration.
This post from Joel Spolksy in 2009 shows that this is far from a new problem for Apple developers, and argues that if you build a feature that's useful to everyone on a platform, it's just a matter of time until you're toast. If you want to build a long-term business on the App Store, stay vertical.
There's over 200 million iOS devices out there, and there's plenty of success stories from people who've managed to sell apps to very small percentages of that user base - but don't forget you're playing with Apple's ball, and they decide if, how and for how long you get to play.