Re: Apple--the new Microsoft
- From: "Willy Wankalot" <willywankalot@xxxxxxxxxxxxx>
- Date: Sat, 8 Sep 2007 19:56:50 -0400
Resistance is futile
"Elmo P. Shagnasty" <elmop@xxxxxxxxxxxxxxxx> wrote in message
news:elmop-7CFD3A.16174808092007@xxxxxxxxxxxxxxxxxxxxxxxxx
Is Apple the New Microsoft?
Don't look now, but the role of the industry's biggest bully is
increasingly played by Apple, not Microsoft.
Mike Elgan, Computerworld
Friday, September 07, 2007 8:00 AM PDT
Ten years ago, Microsoft was the company everyone loved to hate.
The most vociferous Microsoft haters slammed the company for being a
greedy industry bully that used its monopolistic, clunky, copycat
operating system to force software on users and coerce partners into
unfair licensing deals.
Don't look now, but the role of the industry's biggest bully is
increasingly played by Apple, not Microsoft. Here's a look at how Apple
has shoved Microsoft aside as the company with the worst reputation as a
monopolist, copycat and a bully.
Apple the monopolist
The core complaint about Microsoft in the 1990s was that its Windows
market share gave it monopoly power, which it abused in multiple ways.
Attorneys General and others zeroed in on the "bundling" of the Internet
Explorer Web browser, which they claimed was forced on users because
Microsoft offered it as part of Windows.
People love iPods (including me; my family of four has purchased 12
iPods in the past few years). But iPods come bundled with iTunes. Want
to buy music from Apple? Guess what? You must install iTunes. Want an
Apple cell phone from AT&T? Yep! ITunes is required even if you want
only to make phone calls. Want to buy ringtones for your Apple phone?
ITunes.
Apple not only "bundles" iTunes with multiple products, it forces you to
use it. At least with Internet Explorer, you could always just download
a competitor and ignore IE.
Not fair, you might say. Any hardware device that syncs data with a PC
as part of its core functionality has software to facilitate that
syncing. True enough. But operating systems have browsers as part of
core functionality, too. Doesn't Mac OS X come with Safari? Doesn't the
iPhone?
And "bundling" works. Steve Jobs bragged this week that Apple has
distributed 600 million copies of iTunes to date. The overwhelming
majority of those copies were iTunes for Windows. And iTunes for
Windows' popularity isn't driven by software product quality. ITunes is
the slowest, clunkiest, most nonintuitive application on my system. But
I need it because I love my iPods.
At least with Windows, you could reformat your PC and install Linux or
any number of other PC-compatible operating systems. Can I reformat my
iPod and install something else? Can I uninstall iTunes but keep using
the iTunes store and my iPods? Apple strongly discourages all that,
claiming that the iPod, the iPod software and iTunes are three
components of the same product. But that's what Microsoft said about
Windows and IE.
Sorry, dad
Here's a scenario for you. A consumer walks into a local retail outlet
to buy a Christmas present for dad. The Apple iPod "section" of the
store dwarfs the section where all the also-ran players are displayed.
IPod is clearly the trusted standard. The consumer buys a shiny new
"Fatty" iPod nano with video.
Dad opens the present and is excited. He follows the directions,
installs iTunes and immediately splurges on a few dozen songs at the
iTunes store. He loves it, and is an instant convert to portable digital
music.
The only downside is that he works out every day at the gym, where
cardio machines face TVs that broadcast sound over FM radio. Six months
later, when his iPod is stolen, he goes to buy another player -- this
time, he hopes, with an FM radio in it. Several competitors offer this
feature, but not iPods. He's about to choose a new player with an FM
radio when it hits him: None of his files -- now totaling 300 songs and
50 movies -- will play on the new player. He bought and paid for all
this content, but it only works with iPods and iTunes.
Apple has an iPod customer for life. Microsoft never had this kind of
monopoly power. Sorry, dad. I should have bought you a tie.
Sticker shock
Another clue that a company has monopoly power is when you find yourself
suffering sticker shock. How many times have you stood in line at the
theater megaplex and marveled at the chutzpah required to charge $4.50
for a soft drink, when the same beverage is one-third the price at the
quickie mart 50 feet outside the theater doors? But -- so sorry! -- no
outside food or beverages are allowed in the theater. The theater has a
monopoly on soft drink sales, and you'll pay what they charge.
That same shock rippled through the iPhone enthusiast community
yesterday when Jobs announced with a straight face that iPhone ringtones
based on iTunes songs would cost the full price of the song, plus 99
cents extra. What? The full song costs 99 cents! How on Earth can Apple
seriously charge the same amount again for the ability to hear just 30
seconds of the song -- the same length as the free iTunes "samples"?
Apple fully understands the power of monopoly pricing. The company has
sold the 8GB iPhone for two prices in its short, three months of
existence: $599 and, now, $399. When the iPhone was the only way to get
the whole multitouch, big-screen, Wi-Fi iPod experience -- when the
product had no alternatives -- the price was $599. One analyst estimated
Apple's cost to build an iPhone is $245.83. I don't know if that's true
but, if so, more than half the user cost was profit. That's theater soda
pricing. But as soon as Apple introduced an alternative to the iPhone --
the iPod Touch -- Apple dropped the price by one-third.
Imagine if another company were allowed to compete in the OS X media
player market. These players would all drop to below $300. Don't hold
your breath, though; it'll never happen. Apple has the power to exclude
all others from software than runs on its media players. Microsoft could
only dream of such power.
Apple the copycat
Ten years ago, Microsoft haters complained that Windows followed the Mac
OS to market as a graphical user interface, copying the Mac's features
such as folders, trash cans, resizable windows and other elements. That
complaint was repeated with each new version of Windows -- Apple was the
innovator in the operating system space, and got there first with a host
of key features. Microsoft just came along later, duplicated features
that Apple pioneered, and reaped the benefit because of its monopoly
power.
But who's innovating now? The LG KE850 was winning awards for its
full-screen, touch-screen, on-screen keyboard before Jobs even announced
the iPhone.
The best thing about the iPhone and iPod Touch -- the warm-and-fuzzy
multitouch UI with gestures -- wasn't new, either. Various labs have
been demonstrating similar UIs for more than a decade, and even
Microsoft demonstrated a fully realized 3G UI in May, well before Apple
shipped the iPhone. Microsoft will ship its tabletop UI, called
Microsoft Surface, in November, and Apple will likely enter this space
with a 3G UI months or years after Microsoft does.
And Wi-Fi in a media player? Ha! Microsoft's funky Zune had that almost
a year before Apple did and SanDisk's Sansa Connect with Wi-Fi was
released last June. Apple even stole the name for its iPod Touch
product, according to HTC, which sells a touch-screen smart phone called
the HTC Touch.
Don't get me wrong. I think Apple's execution of these features is far
better than its competitors'. And it would be horrible decision-making
to not build the iPhone simply because others pioneered key features.
But that's not what I'm talking about. I'm talking about Apple doing
what Microsoft did: dominating the market with features other companies
had first. If it was fair to slam Microsoft over Windows, it's fair to
slam Apple over the iPhone and iPod Touch.
Apple the bully
Microsoft used to be the big bully, pushing everyone around and
dictating terms to partners. Microsoft has lost its edge in this regard
-- most of Microsoft's major resellers brazenly hawk Linux. Even Intel
-- the "tel" part of "Wintel" -- is powering Macs these days. Microsoft
is still profitable, but it has lost control -- and has lost its
reputation as the bully nobody can say no to.
Meanwhile, Jobs has suddenly become the most feared man in Hollywood,
bragging Thursday about Apple's scary dominance in digital media sales.
Apple has sold more than 3 billion songs and 95 million TV shows via
iTunes. While music CD sales crash and burn, almost one-third of all
music sales are now digital. As Jobs euphemistically said yesterday,
"iTunes is leading the way."
Although full details haven't been revealed, NBC apparently wanted more
"flexibility" to charge higher prices for its TV shows on iTunes. Apple
said no, and NBC was sent packing. NBC now plans to sell shows on
alternative locations, such as its own Web site and on Amazon.com.
Prediction: NBC will come crawling back to Apple and beg the company for
inclusion, and on Apple's terms. Why? Because iTunes is increasingly
becoming the only venue in which media companies can succeed selling
music and TV show.
Jobs rules like Bill Gates never did. If you want to succeed in the
digital music or downloadable TV business, you'll do things his way.
Why I support Apple
After reading my preceding comments, you may be surprised at my next
statement: I come not to bury Apple, but to support it.
You see, my point isn't that Apple's growing bad reputation is deserved,
but that Microsoft's wasn't. All that evil monopoly hype, court cases
and public posturing directed for so long at Microsoft drained energy
and resources from the entire industry. The market, however, corrects
issues such as that. In the case of Microsoft's "monopoly," Linux,
Firefox and now Apple prove that customers always had choices.
The same goes for Apple.
As pundits, bloggers, users, politicians, Hollywood big shots,
regulators, lawyers and competitors increasingly bash Apple, accuse it
of unfair play and call for legal and regulatory action, I will defend
it, as I defended Microsoft. It's fun to slam big, powerful companies
that are dominating their markets. But in the final analysis, Apple has
earned its growing power and influence, just like Microsoft did.
Is Apple a monopolist, copycat and bully? Yes, and deservedly so. And if
anyone thinks Apple's success is a problem, well, bringing in the
lawyers wasn't the solution for Microsoft, and it won't be the solution
for Apple.
Mike Elgan writes about technology and global tech culture. Contact Mike
at mike.elgan@xxxxxxxxx or his blog, The Raw Feed.
.
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