So Has Apple Become Your Enemy?

May 5th, 2010

Look at the picture some members of the media have painted about Apple. A company once regarded as “beleaguered” has now become a multinational colossus, with a market share third behind Exxon and Microsoft. With record sales and profits, it’s a sure thing that the company and its employees and shareholders are happy, but is the public interest being served?

Understand that it’s hard to justify the claim that Apple holds a stranglehold on the smartphone industry, since the company is in third place way behind Nokia and RIM. Even assuming steady growth on the part of the iPhone ahead of the rest of the industry, it would take years for that situation to change, even it ever happens. We’re not taking about a Microsoft situation, where Apple was summarily trounced when it came to OS market share.

Yes, some might complain about unfair dominance because the App Store is far and away the most successful online software repository for smartphones, but nobody is stopping Google and other competitors from succeeding with their own download services. Yes, there is that controversial provision in the iPhone 4.0 SDK that apparently blocks use of third-party intermediary compilers from being used to build iPhone apps. But how different is that from the way game console makers manage development for their proprietary platforms? Besides, if another application vendor provides a good marketplace for developers, they will come even if they have to build totally separate versions of their products.

It may well be that the real target of any government inquiry will be Apple’s iAd feature, and the decision to block access of customer data to third parties. Apple’s position is that they are primarily protecting your privacy. Forgetting the obvious competitive issues, that may be to your benefit. I mean, how many of you want your information to be at the mercy of different vendors, with different levels of ethical concerns? Aren’t you inundated with enough online advertising already?

Yes, I grant that we depend on online advertising to, in part, finance this company. But I hope it’s not in your face. There are no popups, pop-unders or intermediate banner-laden pages when you want to read our content. The ads are in clearly defined places, and you can view them or ignore them as you wish.

It’s also clear that the government isn’t just checking into Apple’s affairs willy-nilly. They have to have complaints to go on, unless there’s evidence of blatant misbehavior, and that’s highly debatable. There are published reports, for example, that Adobe has complained because of Apple’s decision to not just block Flash on their mobile platform, but prevent you from porting iPhone apps from Flash using Adobe’s software.

When one multibillion dollar multinational corporation files complaints against another, you can bet it will draw serious attention, even of the claims end up being unproven. At least it keeps lots of lawyers employed.

In the end, though, the real question is whether Apple is somehow working against you by having what many regard as overly restricted integrated ecosystems attached to their products. The problem, however, is that you do not need to buy a Mac to own a personal computer, nor do you have to buy an iPhone to acquire a smartphone. If Apple’s closed platforms don’t appeal to your needs or ethics, then go ahead and buy the products that do.

When you buy into Apple’s lifestyle, you can depend on flashy, easy-to-use products that are generally secure and reliable. When you download software from the App Store, it’s a sure thing that these apps will probably work as advertised and not present a security hazard nor, if you observe the product labeling, provide unsavory content. Maybe it is a Disneyland concept, but there’s nothing wrong with that, since most parents would prefer family-friendly fare in a world where rampant social networking has loads of nasty consequences.

At the same time, don’t feel too warm and fuzzy about Apple. While Steve Jobs may want to change the world when it comes to building sexy gadgets that are environmentally friendly, first and foremost Apple exists to make a profit. No profits, they go out of business. If a product or service doesn’t demonstrate its ability to contribute to the bottom line, it will be discontinued. That’s why there’s no more Apple Cube, but the Apple TV, although not a best-selling gadget, still makes a decent profit and so it remains “a hobby” for which Apple still seeks an ultimate end game.

In contrast, if Microsoft built a computer similar to the Cube, they would probably never give it up. They’d change the form factor, change the name, and alter the marketing approach to induce it to succeed, even if they lose hundreds of millions of billions of dollars in the process. That’s why there’s still a Zune music player even though sales simply don’t justify its existence.

When you buy into Apple, you know what you’re getting. It’s up to you to decide if that’s your cup of tea, or you’d prefer to buy the competitor’s product instead. Since there’s no way for Apple to stop you from making your own informed decision about what gear to purchase, I continue to think the government really has nothing to complain about.

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7 Responses to “So Has Apple Become Your Enemy?”

  1. dfs says:

    I doubt this particular effort will come to much of anything. But it is a sign of things to come. In the past, the Feds have been very gentle with Apple. They could have gone after Apple for controlling prices at the retail level before that was made legal, and for concealing the true facts of Steve’s health (since that was a so-called “material fact” that could affect the price of Apple’s stock). But they didn’t. Why? In all probability because the Feds were primarily interested in going after Microsoft for unfair business practices and primarily regarded Apple as a useful counterbalance. So Apple’s relative smallness and “David-versus-Goliath”image pretty much bought it a free ride. But Apple’s emergence as a major player in telephony, media distribution, and even its increasing market share in computing, comes with a price tag, that in the future it is bound to be an object of closer governmental scrutiny.

  2. Tom B says:

    Apple has many enemies. Adobe, Google, MSFT, PC-makers, handset makers. And enemies of convenience– pundits who want to drive the stock price down so they can buy more.

    Apple has many friends: millions of consumers/businessmen/academics who expect a computer to help; not hinder their work. Developers who understand that Apple’s NeXTSTEP-based dev tools are way out ahead of anything Google or MSFT has.

    On the web, the honking geese attract a lot of attention.

    Apple is now a HUGE company. I’m delighted with that, as long as they keep innovating.

  3. Peter says:

    “[…] the App Store is far and away the most successful online software repository for smartphones.”

    When all the software is in one place, it’s easier to count. When the software is scattered among hundreds of thousands of web sites, it’s harder to find.

    Apple’s benefit, so they will tell you, is that by putting everything in one place, they’ve made it easier for the consumer to find everything. Wal-Mart has a similar strategy. Buy Tires, Groceries, And Baby clothes all in one place.

    “But how different is that from the way game console makers manage development for their proprietary platforms?”

    Somewhat different.

    First, game console makers approve/disapprove your game at early stages. You don’t spend time developing a game only to have Nintendo nix it. It’s much more interactive than Apple’s system where you do everything in advance and hope that Apple lets you sell it.

    Second, game console makers make it worth your while to work with them. But you have the choice to not do so–or, more accurately, they have the choice to not work with you.

    Go to Japan and you can find smutty games for Nintendo. These do not carry the Nintendo seal of approval. But you don’t have to “jailbreak” your Nintendo machine to play them–merely stick the CD in the slot like any other game. Of course, you won’t find these games at a “reputable” Game Store.

    It works similarly with Microsoft and Sony. You don’t have to work with them, but it is certainly in your interest to do so. Much the same with Apple. Even if Apple did allow people to install software “from the Internet” with appropriate warnings (a la Android), a company developing an App without Apple’s help would probably have a much harder time without that Apple seal of approval.

    “In the end, though, the real question is whether Apple is somehow working against you by having what many regard as overly restricted integrated ecosystems attached to their products.”

    That depends on your definition of “You.”

    As a customer, you could argue “no.” Of course, ignorance is bliss. If the walls in the garden are high enough, you can’t see what’s going on outside.

    How many iPhone users have actually seen or used Google’s Navigation System? Probably not that many. It’s pretty slick, compared with the ones on the iPhone. One of my co-workers has an Android phone with a great 5 mega-pixel camera. The pictures look much better than the ones taken on my iPhone 3GS. But most iPhone users don’t know anything about it.

    But as long as you stay in the garden, you’ll never see what’s available outside. Everyone in the garden is telling you not to look out there–there’s nothing better than what you have in here. And, besides, anything that’s really great out there will eventually show up in here so don’t worry.

    I’d also have you read up on cognitive dissonance. You made a choice to enter the garden. By admitting that some things may be nicer outside the garden is to admit that you possibly made a mistake. That bit of introspection is not for most people.

    As a developer, that depends.

    There are taxes that go along with developing for iPhone. There’s the $99 fee. There’s the $99 to put something into the iTunes Store, plus 30% of whatever you make. Okay, fine, other platforms have fees which are similar. But it starts to go further…

    There’s the fact that you need to buy a Macintosh to do it–that’s one thing that has gone unsaid in all of the hubbub over “third-party developer tools” is that these tools would run on a Windows or Linux PC. Apple wouldn’t get money from developers buying machines (and developers tend to buy high-end machines with larger profit margins).

    Because of developer agreements, you must use Apple’s advertising service. Or, more precisely, you will have a hard time providing information that other services want and sticking with Apple’s agreement. Only Apple can pull the information that advertisers want. Now Apple’s service may pay developers rates that are “about the same” as other services. But this prevents you from finding someone who’ll pay better. Your choice is go with iAds and get what Apple decides you’ll get or don’t do advertising.

    Distribution is only through the iTunes Store, which can limit your ability to find and influence customers. Way back when, I brought up an example of a “Fart App”–excuse me, “Digital Whoopie Cushion.” The iTunes Store is full of them. What I would like to do is rather than try to fight with all those people in the iTunes Store for attention, I’d go around the iTunes Store and sell my App in Joke Shops. I might sell it through I might package it onto a CD and sell it through neighborhood shops. That might be a better venue for selling my “Digital Whoopie Cushion” than the overcrowded iTunes Store.

    Promotion can be tricky. How many times have you gone to a trade show and gotten a deal on some software? How do you do that in the iTunes Store? How about free demo versions that have limited functionality or expire on a certain date? Can’t do that on the iTunes Store. Heck, how about give-aways in general? Perhaps I want to promote my “Digital Whoopie Cushion” by donating 200 copies to “Australians Against Flatuphobia” (and receive a ‘charitable donation’ deduction on my company taxes). Sorry–Apple will only let me distribute 100 copies. And if I give them all to Anti-Flatuphobic Australians, I won’t have any to give to the press or beta testers. Apple controls the distribution of my work.

    On the other hand, Apple has arguably positioned the environment to help developers. By having one central repository for software, potential customers can find you much easier than a Google search. By promoting applications in general, Apple helps developers by getting people to look in the store and see what’s available. Mobile Phone applications are nothing new–they’ve been around for years. But a few thousand small companies quietly hawking their wares via the Internet wasn’t creating much of buzz. Apple changed that. Apple is providing the monetization and installation support. You submit your App to Apple and sit back and wait for the money to roll in. You don’t have to devote the time and effort (or hire a consultant) to finding an “online storefront” that will support the iPhone, handle credit cards, etc. Finally, depending on how good your App is, you might find even more Apple marketing support such as advertising your App via the Store’s “Staff Favorites” or–the holy grail–making it into an Apple TV Commercial.

    This is perfect for a small developer who wants to develop a great App and not have to worry about any of the rest of the stuff involved in running a business. But for those who want to run a business selling great Apps, you have no choice but to depend on the vagaries of Apple.

  4. HammerOfTruth says:

    I think that we are dealing with a different Apple. It’s a double edged sword. For one thing, we have more to choose from when it comes to applications, from the Mac to the iPhone/iPod/iPad, this is something we haven’t seen since the renaissance of the desktop Mac. We as Apple users have the attention of most of the major manufacturers of peripherals. This is something we have never seen before. The new popularity is nice, but it comes with a price.

    That price is now, we veteran Apple users and supporters are pushed to the back of the bus, if you will, in terms of listening to our needs. Apple is now officially “cool” and people are flocking to get product just to be seen with them. This is one of the reasons why I see a lot of “no problems” when I go see an Apple Genius. Most of the problems I have seen are due to user ignorance which is something I haven’t seen during the early days of the Apple store. So now we see that Apple wants to put more effort in their mobile devices than on the Mac and OSX, depending on who you talk to. Doing away with design awards and pushing more engineers towards evolving the iPhone OS (they have to change that name) instead of creating the next gen OSX.

    All we can do is remind Apple that we are the ones that have helped them get to this state, and they can take a good long look at Microsoft to see what happens when you loose sight of your core customers and their needs.

    Gene, you have been around longer than a lot of us as far as being an Apple supporter goes. What do you see?

  5. dfs says:

    From press reports that have surfaced since Gene posted this piece, it has become increasingly clear that the Feds are looking into Apple’s so-called monopoly (if indeed they are) at the specific request of Adobe. This is becoming an ugly trend in the world of electronics and computing: the losers who can’t compete with Apple in the marketplace try to hamstring it with nuisance lawsuits, claims of unfair business practises, etc. etc. (think Nokia). Somehow I think DOJ will look into this for about ten minutes and decide that pursuing Adobe’s complaint would be a waste of time.

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