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Six Reasons Why Apple May Never Open the iPhone

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Daniel Eran Dilger
The history of the Office Wars provides interesting context for Apple’s software strategy with the iPhone today. While third party software development offers all kinds of tantalizing potential for the new mobile, there are a half dozen reasons why Apple may not ever deliver the iPhone fully open to third party development, following the model of gaming consoles.

Software Lessons For the iPhone: 1997 – 2007.
When Steve Jobs gained the opportunity to retake control of Apple in 1997, he immediately set out to build and assemble a software business for the Mac platform. Apple restarted serious development of QuickTime, much to the chagrin of Microsoft, which had targeted its sights on quickly destroying it to make way for monopolistic expansion of its Windows Media.

Microsoft's Plot to Kill QuickTime

[Microsoft's Plot to Kill QuickTime]
[How Microsoft Pushed QuickTime's Final Cut]
[Why Apple Failed]
[How CPR Saved Apple]
[Why Apple Bounced Back]

In addition to repurposing NEXTSTEP as Mac OS X and buying and building a series of professional and consumer software suites, the new Apple also developed the iPod platform.

The iPod used intuitive software to differentiate Apple’s hardware, launching the computer maker into a new market for sophisticated, data-driven consumer devices. Microsoft’s own efforts in consumer electronics have flopped miserably with the failures of its Handheld PC, Pocket PC, UMPC, Windows Mobile, Media2Go, Mira, SPOT, and Personal Media Center initiatives, among many others.

WinCE

[Apple’s NeXT Server Offensive on Microsoft]
[The Spectacular Failure of WinCE and Windows Mobile]
[Windows XP Media Center Edition vs Apple TV]

Microsoft Outgunned in Software by a Hardware Maker.
Microsoft was late to realize the software threat posed by the new Apple. Five major revisions and over thirty free updates to Mac OS X have ran circles around Microsoft’s capacity to deliver one desktop operating system software update and a couple service packs since 2001.

[Leopard, Vista and the iPhone OS X Architecture]

Apple also introduced three generations of iWork as an expanding productivity suite during the four year hibernation period Microsoft left since its last version of Office for Mac. Apple delivered support for Microsoft’s own proprietary OOXML file format on the Mac even before Microsoft itself could. At $79, iWork will eviscerate sales of the $400 Office for Mac, which has until now been a cash cow lazily ruminating for years between releases.

Apple's Secret iPhone Application Business Model
This year, Apple also targeted and destroyed Microsoft’s fledgeling efforts to repurpose WinCE as a smartphone platform, seemingly overnight. That has given Apple a significant new platform in the iPhone, soon to be joined by the new iPod Touch.

[What’s New in iWork 08]
[Apple's Secret iPhone Application Business Model]
[Curious Stuff About the New iPods]

Six Reasons the iPhone Will Stay Closed.
Will Apple give third party developers the keys to its new vehicle and allow them to drive off with the value it has created? It hasn’t yet, and there are a number of reasons to think that Apple won’t.

Note that I am not expressing an opinion that the iPhone should be left closed, but rather simply presenting why I think it is unlikely Apple will ever open it up in the same way the Mac is open to any and all development.

First, the company has lined up a suitable outlet for third party expansion via the standards based web platform available within Safari. That’s not enough to do everything developers want to do–it has serious constraints for creating games, for example–but it offers a good enough alternative to serve more than 80% of most developers’ needs.

Gremlins

[Mobile Disruption: Apple's iPhone and Third Party Software]
[iPhone Gremlins: Crashing, Security, and Network Collapse!]

Second, the company has developed and begun production testing of online software sales through iTunes, currently limited to 5G iPod games. This mechanism appears too sophisticated to simply be designed for a half dozen $5 games. Apple is quite obviously going to distribute other software through iTunes for the iPhone. If it were going to be open, there would be no need for such a secure software distribution system.

[Apple's New Dual Processor Game Console]
[Hacking iPod Games: How Apple's DRM Works]

Third, historical perspective suggests that once a solid platform has been established, a vendor can sell software as fast as it can deliver it without even trying very hard. Apple’s Claris, Microsoft’s Windows, and the game consoles from Sony and Nintendo all provide examples of this. The iPod’s success suggests Apple can establish a viable mobile platform without the need for software partners. It can handle software transactions as fast as it can sell iTunes songs. That’s big.

Office Wars 2 - Microsoft’s Outrageous Office Profits

[Office Wars 1 - Claris and the Origins of Apple’s iWork]
[Office Wars 2 - Microsoft’s Outrageous Office Profits]
[Office Wars 3 - How Microsoft Got Its Office Monopoly]
[Nintendo Wii vs Microsoft Xbox 360, Sony PlayStation 3]

Fourth, depending upon large third party developers has caused Apple–and Steve Jobs–some severe headaches. Microsoft’s late 80s betrayal of the Macintosh led to Apple’s enslavement to Office, and induced CEO John Sculley to sign away broad intellectual property rights to Microsoft, which Microsoft then immediately used as a weapon against Apple.

In the mid 90s, Microsoft led Adobe, Macromedia and other large companies to abandon the Mac platform. In the late 90s, those same companies refused to support Apple’s new Rhapsody plans following the company’s acquisition of NeXT, forcing Apple to spend half a decade retooling the Mac OS, primarily so those developers could sell their existing apps to Mac users without much effort, even while they were earning fantastic software profits and delivering minimal innovation.

In other words, Apple’s technology game plan was delayed for a half decade so that Microsoft could sell its $400 copies of Office and Adobe could sell suites of its $500 and up creative applications, all while Apple did all the work in adapting its $99 operating system to run their Classic Mac OS code with minimal effort.

Prior to returning to Apple, Jobs experienced his own betrayal and abandonment at the hands of partners–including IBM, HP, Digital, Data General, and Sun–related to NeXT and OpenStep.

In all of these cases, the third parties were simply acting in their own best interests. With the iPhone, Apple will act in its own best interests. It will carve out a phenomenally powerful software platform for itself.

Rhapsody-1

[Why OS X is on the iPhone, but not the PC: The History of NeXT]
[Office Wars 3 - How Microsoft Got Its Office Monopoly]
[Cocoa and the Death of Yellow Box and Rhapsody]

Fifth, open Application Programming Interfaces involve complex management and maintenance. This is not a problem unique to Apple; it exists for Microsoft and every other company that offers an API for developers to build upon. An API is an interfacing boundary between the software supplied by a vendor and the software supplied by third parties.

Ideally, an API allows third parties to do everything they need very cleanly. That allows the vendor to make changes on their side of the API curtain without causing any compatibility problems for software on the other side. In reality, nearly every change and update has significant impacts for third party developers. The more complex and low level of an API being exposed, the more difficult it is to manage significant changes without introducing problems for third party partners.

Apple has worked to develop objective APIs that are stable and resilient to internal changes, but if developers are unsatisfied with the level of performance or portability provided, they will work around the API boundary, almost guaranteeing that any significant changes made on Apple’s side will break their applications in the future.

Microsoft has often accommodated such “bad programming” by expanding APIs and creating new ones, and lugging around a legacy of old APIs to retain broad compatibility with existing applications. The result is that it is very difficult for Microsoft to actually innovate, or to offer OS level enhancements that upgrade existing applications. 
This is particularly a problem for Windows Vista, which is hamstrung between the problem of providing entirely new hardware driver APIs on one hand while also maintaining a boatload of crufty legacy APIs on the other. It is absolutely the worst of both worlds.

[Five Windows Flaws]
[Leopard vs Vista 5: Development Challenges]

eopard vs Vista 5: Development Challenges

Sixth, as is the case with software APIs, closed hardware platforms offer a vendor open flexibility for future expansion, portability, and upgrades.

With the Xbox, Microsoft didn’t provide a wide open set of APIs for developers, only a subset for building very similar types of games. This closed API allowed Microsoft to move the console from Intel to PowerPC hardware in the Xbox 360 without extreme problems, something the company was unable to maintain earlier when it tried to deliver Windows NT for various hardware platforms in the late 90s.

Apple has already benefitted from the flexibility of a closed hardware platform on the iPod. Had Apple allowed developers to write applications for the iPod, it would have to string along support for those old applications across every new generation of the iPod. Having to do that would complicate Apple’s own efforts to deliver new iPods.

Additionally, customers would be upset with Apple’s iPod if the apps they downloaded crashed, installed spyware, or caused performance problems. While a rogue Mac app isn’t likely to drain a laptop battery down dead, power management is far more critical on handheld mobile devices like the 11 mm thick iPhone.

Given that many consumers are already flummoxed by the reality that batteries wear out after a few years, imagine their rage at finding out that Apple allowed them to install a some worthless Tamagotchi pet that destroyed their battery early.

Similar problems plague Palm OS and Windows Mobile devices. In particular, Microsoft’s attempts to provide a “one size fits all” solution and broadly license it to hardware developers results in API constraints that limit supported screen size resolutions, break compatibility with existing versions of applications, and severely limit the power management performance of those devices and their ability to deliver acceptable battery life.

If there were any meaningful installed base of Windows Mobile phones, it would also be plagued with spyware and viruses, just as Windows is on the desktop.

David Sessions Tries to Milk iPhone Battery Panic in Slate

[Inside the iPhone: UI, Stability, and Software]
[Device Problems In Search of a Solution]
[David Sessions Tries to Milk iPhone Battery Panic in Slate]

A Safe API Boundary for Third Party Development.
The simple solution to all these issues is to not offer a custom, wide open API at all, and instead leave third party developers to build applications that make use of open web standards. Nothing new to learn, no barriers to adoption, no proprietary development tools to maintain, no pleading with developers to support a new platform that remains unproven in the marketplace, and no third party crisis to manage when the hardware and software are significantly upgraded.

No API, no problem! Hackers can discover how to install tools and handy mini-apps, but Apple’s next software update or hardware revision won’t have to figure out how to maintain compatibility with those hacks. That allows the hackers to hack without holding things back.

Meanwhile, Apple can reserve the right to offer highly integrated applications of its own that take full advantage of the underlying system without revealing or sharing its intellectual property secrets with third parties that may choose to use those secrets against it–just as Microsoft did to Apple with Windows in the late 80s, or as Sony did to Nintendo with the original PlayStation just a few years afterward.

[Mobile Disruption: Apple's iPhone and Third Party Software]
Mobile Disruption: Apple's iPhone and Third Party Software

Closed Development Involving Third Parties is Not Open.Incidentally, this is the same closed model that resulted in great success for Microsoft and Sony after they betrayed and then supplanted their former partners. Microsoft set up the illusion of an open, developer-friendly platform with Windows, but then used its home field advantage to plot out the assassinations of any and all of the potential rivals it didn’t want to compete against: WordPerfect, Lotus, Ashton-Tate, Borland, Netscape, Sun, and today’s targets such as Google and Symantec.

The unsurprising result was that Windows users ended up using Microsoft’s Word, Excel, Access, Fox Pro, language tools, web browser, media software, desktop search, anti-virus, spyware management, etc ad nauseam. With Windows users completely enslaved to Microsoft’s own applications, it was easy to erect significant barriers to prevent the emergence of any new competitive applications from rivals.

Clearly, Windows is only an “open platform” in areas where it suits Microsoft. Further, Microsoft’s idea of who a “competitor” is can change. For example, Windows desktop search wasn’t a rival feature for Microsoft to kill until it decided it wanted Google’s business.

[Office Wars 3 - How Microsoft Got Its Office Monopoly]
Office Wars 3 - How Microsoft Got Its Office Monopoly

Windows Enthusiasts’ Slavery to a Vicious Master.
Whether Microsoft’s closed Windows platform is a bad thing is a matter of debate; Windows Enthusiasts celebrate their enslavement. It is my opinion that Microsoft’s closed Windows platform isn’t bad simply because it is closed, but rather because Microsoft’s insatiable greed is holding back innovation that would otherwise flourish.

One example is Microsoft’s Internet Explorer browser, which rapidly advanced until Microsoft destroyed Netscape. After that, it went into maintenance mode hibernation and didn’t budge until Firefox began to threaten Microsoft’s position years later. That’s anti-consumer; Microsoft won’t do anything for its enslaved users until a would-be savior threatens to set them free.

Microsoft isn’t bad because it is closed; it is bad because it is disgustingly greedy. Windows Enthusiasts need to stop deluding themselves into thinking that they live in a free world of an open platform. They are slaves, and their master is not only vicious, but also incompetent and has no taste.

[Safari on Windows? Apple and the Origins of the Web]
[Apple in the Web Browser Wars: Netscape vs Internet Explorer]
[The Web Browser Renaissance: Firefox and Safari]

Www2

Closed Without Pretense.
At the same time, it is possible to voluntarily join a closed platform and benefit from its advantages. Nintendo carved out a closed video gaming empire that required third party developers to pay it licensing fees in order to develop any games to sell for its system.

Nintendo’s closed business model worked better than Atari’s with the 2600, which had earlier allowed third party games developers to glut the market with bad games, resulting in the video game crash of 1983. Consumers were left thinking that home video games were done to death and would never recover.

Sega, Sony, and Microsoft’s Xbox group have all similarly managed closed gaming platforms to deliver high quality expectations, even subsidizing game consoles to establish user interest.

Closed-1

The only differences for Apple’s closed iPhone may be that:

  • Apple’s iPhone hardware sells at a sustainable profit without a desperate subsidy, removing risk and allowing for regular feature upgrades. 

  • Apple is likely to use software downloads as a way to integrate the iPhone into Mac hardware sales and its online services, rather than simply trying to make a killing selling $50 to $75 game software titles as the console makers do.

[Mac OS X vs Linux: Third Party Software and Security]

Software as a Great Differentiator.
By offering free or low cost software in the model of $5 iPod games, Apple will be able to use its closed platform to deliver software designed to:

  • attract more iPhone and iPod Touch hardware buyers.
  • earn iPhone mobile service revenue fees.
  • earn commissions from WiFi iTunes sales and related deals.
  • direct new iPhone users to iTunes and Apple TV.
  • draw attention to the Mac, which will offer iPhone integrated features Windows does not.

Microsoft does some of the same things with Windows Mobile, which ties into the company’s Windows Server products–including Exchange Server–and is also deeply integrated with the desktop sync services of Windows and its Office applications. The problem for Microsoft is that it does not sell phones or make money on service revenues as Apple does.

Microsoft charges expensive client access and software licensing fees, but still can’t make a sustainable profit on its Windows Mobile business. It’s also stuck with lame vendors such as HTC, which make poorly integrated hardware that is embarrassing to use.

Microsoft could make its own phone, but like the Zune it would alienate its existing hardware partners; further, the Zune disaster indicated that hardware sales isn’t a core competency of the company anyway.

TyTN
[Phone Wars: iPhone vs TyTN, Treo, Pearl, E62, P990, Q]
[iPhone Sales vs Zune, Palm, RIM, Symbian, Windows Mobile]

Selling Hardware with Software vs Selling Software Licenses.
Using software to sell hardware fits in with Apple’s past and present use of free or low cost software to differentiate the Mac. In the distant past, that included HyperCard and QuickTime; today it includes the shareware-priced but highly regarded iLife and iWork apps. The full version of Mac OS X costs $129, while Microsoft’s Ultimate Windows Vista is an absurd $400, the same price as an iPhone!

Apple’s strategy of using low cost, high quality software to differentiate its hardware plays well against the fact that consumers simply don’t want to pay for software, while they think nothing of paying big money for desirable hardware. Nobody would pay much for an iPod “OS” or a software music player, but millions of people have paid hundreds of dollars for an iPod.

That principle has worked in Microsoft’s favor in the past, as it hides the cost of Windows by invisibly bundling it into PC sales. However, its recent fantasy that consumers will widely upgrade their PCs to more expensive versions of Vista indicates Microsoft is highly delusional.Pro-Microsoft wags can chart out their predictions of “impressive Vista adoption” based entirely upon OEM bundled copies, but consumers don’t want it, and no significant number of people are going to pay big money to upgrade to the $400 Vista Ultimatum.

[Windows 95 and Vista: Why 2007 Won't Be Like 1995]

The Commodity Future of PC Software.
What will happen instead is an increasing commoditization of the consumer PC and its software, driven towards standards by an industry that demands interoperability. Microsoft couldn’t hold back the web with its proprietary MSN a decade ago, and companies that once pushed Windows are now behind Linux, including Novell and IBM. PC OEMs are also rethinking their unilateral relationship with Microsoft as they struggle to survive in the shadow of Microsoft’s vast profits.

Rather than paying $400 for a PC with a $50 OEM copy of Windows running IE and Outlook, nagging you to verify your software as Genuine and to upgrade to the $400 version of Vista and to hand your credit card number to the dancing paperclip recommending a subscription to Windows Live OneCare terrorism protection, the $250 PC of the near future will come with a standards based web browser and email client.

It will be called an iPhone, and it won’t run Microsoft Office.

Continues: How Closed Is the IPhone?

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4 comments

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