In the iOS world, there is only one place to buy apps: the App Store. Because there is only one place to buy apps, everyone goes there to find them. Because everyone goes there to find them and the contents are exactly the same for every app (a description, some keywords and a few pictures), it is nearly impossible to differentiate your product.
I’ve long held that the downward price pressure in the App Store was caused more by competition than any other single factor. I think Elia puts forth a very solid case that lack of differentiation may be more to blame.