Is App Store pricing hindering app development?

The growing proliferation of bargain-priced iPhone applications is inhibiting product development according to Craig Hockenberry, principal and engineer with The Iconfactory, the software firm behind top-selling App Store downloads Frenzic and Twitterific. In an open letter to Apple CEO Steve Jobs posted on his blog furbo.org, Hockenberry writes "As an iPhone developer who's been in the App Store since its launch, I'm starting to see a trend that concerns me: developers are lowering prices to the lowest possible level in order to get favorable placement in iTunes. This proliferation of 99¢ ringtone apps is affecting our product development... We have a lot of great ideas for iPhone applications. Unfortunately, we're not working on the cooler (and more complex) ideas. Instead, we're working on 99¢ titles that have a limited lifespan and broad appeal. Market conditions make ringtone apps most appealing." Hockenberry goes on to crunch the numbers, concluding that at an average developer ... (link)