Thoughts on Newsweek's "One Bad Apple" Piece
While I will plead guilty to a long-term love affair with Apple, I’m not naive. Steve Jobs and Apple make decisions that are in the best interests of Apple first, shareholders second, and consumers third.
That said, I think Daniel Lyons (a.k.a the retired Fake Steve Jobs) is greatly exaggerating some of Apple’s actions in his “One Bad Apple” Newsweek article. Apple is far from perfect, but it doesn’t deserve many of these attacks. Let’s look at what’s accurate and what’s not so accurate.
That Vudu That Apple Does So Well?
Lyons paints Vudu as a victim targeted for termination by Apple in the market for streaming/downloadable video to home televisions. So Apple is evil for competing in this market? And, Apple is the only bad guy victimizing Vudu?
It’s not as if Vudu created this market and then Apple stole it from them. Apple has had a long-term interest in consumer digital video delivery and has done as much as anyone to create that market. (QuickTime, iTunes and iTunes Store with video, iPods with video, iPhones, Apple TV, etc.) Apple certainly didn’t make or revise the Apple TV simply because of Vudu.
I have no doubt that Apple was already focused on supporting rentals, broadening its movie catalog, and allowing direct movie downloads without a computer. Jobs said all along that Apple TV 1.0 was a “hobby” that they were working to perfect. And, lots of users and analysts were publicly calling for the features that came in Apple TV 2.0. They were not simply copied from Vudu.
Also, why don’t Netflix, Amazon/TiVo, or cable companies with On Demand get any “blame” for Vudu’s plight in Lyon’s article. If Vudu is laying off staff, I doubt that all of the blame can be laid at Apple’s door. The market for streaming/downloadable video to home TVs is a competitive place with major players.
Apple Owns Boardwalk and Park Place?
Lyons writes that:
“Apple owns popular hardware platforms (iPod, iPhone) and operates the only store that can sell music, movies and software programs for those platforms. Apple sets prices and takes 30 percent of the money. With iPhone, Apple decides which independent applications will be allowed, and it can pull the plug on any application at any time, without explanation<snip>”
Let’s break this tortured mess down:
- Apple operates the only store that can sell music for iPod/iPhone. As George Carlin would say, pure bullshit. The iPod and iPhone play numerous audio formats, including MP3s. It is a simple matter to buy music from Amazon MP3 or other online stores, put it into iTunes, and get it onto an iPod or iPhone. It is also a simple matter to purchase a CD, rip it in whatever audio format you like in iTunes, and get it onto an iPod or iPhone. Apple does not have a music monopoly on the iPod or iPhone and Lyons should be ashamed for implying it does. The fact that many iPod/iPhone users choose to use the iTunes Store to buy music doesn’t make the iTunes Store a music monopoly.
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Apple operates the only store that can sell movies for iPod/iPhone. Lyons is on firmer ground here, but just barely. No movie studio is allowing its films to be sold online without some sort of Digital Rights Management. And, there’s no standard for DRMed video. So, different stores and devices are using different DRM methods. That’s a shame, but it’s not Apple’s fault. If and when there is a standard for DRMed video, I think Apple should support it on iPods and iPhones. In fact, I’d love to see Apple show leadership in the creation of such a standard. Until then, I think it’s unfair to criticize Apple when no one else is offering a non-proprietary video store. Finally, if you are willing to use third-party software, it is already possible to get DVD video onto an iPod or iPhone.
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Apple operates the only store that can sell applications for iPod/iPhone. True. And, I would like to see this change. I applaud Apple for making it easy for developers to sell their applications and get payment, and for making it easy for users to purchase and install those applications. But, the App Store is a monopoly and I think it would be in the best interests of users for them to have more options for where and how they purchase apps. I won’t hold my breath.
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Apple sets prices and takes 30 percent of the money. This is a true statement for iPod/iPhone applications. But, it is untrue for music and video purchases and again Lyons should be ashamed for implying it. While I don’t know the specifics of the deals Apple has with record labels and movie studios, I do know that Apple is thought to only get a few pennies for each 99-cent audio track purchase. While the cut may be higher for video, I seriously doubt it’s anywhere near 30 percent. Is 30 percent too high of a cut for the iPod/iPhone App Store? I don’t know, ask a developer. Apple does help developers promote their applications, it handles all the financial transactions from sales, and it automates the downloading and installing of purchased applications. That’s certainly worth something.
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Apple decides which iPod/Phone apps will be allowed and it can pull an app at any time, without explanation. True. And, again, I would like to see this change. While this power can be used to ensure quality apps and to prevent fraud, it can also easily be abused. I think users who want to have this control for themselves should be able to have it. Again, I won’t hold my breath.
No White iPod Cases Allowed After Labor Day?
Last on his list of Apple gripes, Lyons takes the company to task for how it treats the makers of iPod and iPhone accessories. He says that Apple controls when accessory makers can announce new products, charges various fees to accessory makers, and takes large cuts on accessory sales in Apple retail stores (75 percent of the sales price in one noted case).
I have little knowledge of how Apple’s relationships with accessory vendors work. So, I don’t know whether these things are true or not.
If Apple asks a vendor to hold off on an accessory announcement because the physical design of an iPod/iPhone is changing and thus invalidating the accessory, that’s certainly reasonable. Beyond that, I don’t think a hold is reasonable.
I would have to see the specifics of the fees and sales cuts charged to have an opinion on whether they’re reasonable. Seventy-five percent is insane if true! But, I will say when it comes to sales cuts, keep in mind we live in a capitalist system. As Lyons own article somewhat notes, if you don’t like the deal the Apple Store is giving you to sell your accessory, go sell it at WAL-MART, Best Buy, Circuit City, or Target. Or, use an online store like Amazon or your own e-storefront.
Bring Back Fake Steve!
In closing, I want to say two things. First, Apple is an amazing, yet flawed company. It does many stupid and greedy things, just not all the stupid and greedy things mentioned in Lyons’ piece.
Second, I miss Fake Steve Jobs dearly. I found Lyons was more interesting, insightful, and (oddly) more accurate when he wrote about Apple as Fake Steve. Can we please, please, please have Fake Steve back?
