Daniel Eran Dilger
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The iPhone Monopoly Myth

Daniel Eran Dilger
After initially dismissing the notion that Apple could ever break its way past entrenched rivals and make any significant impact on the smartphone industry, tech pundits are now aghast that Apple is running its business the way its executives see fit. Critics charge that the iPhone and its mobile software store amount to a monopoly and a restriction of free trade. They’re wrong, here’s why.

Apple and the New Software Market
How Apple Is Changing the PC Software World… Back
iPhone Apps Store Growing Twice as Fast as iTunes Music
The Other iPhone Apps Store
SDK 3.3.3: The iPhone Podcaster Surprise Myth
Banned iPhone Apps and the John Gruber Podcaster Defense
The iPhone Monopoly Myth
The iPhone Launch Critics.

I usually spend to much time recounting historical context. But since the iPhone was only announced just short of two years ago, I shouldn’t have to spend too much time reminding anyone of the condescending laughs all around that came when Apple announced its intention to deliver the iPhone. John Dvorak said it was “trending against what people are really liking,” while Palm’s CEO Ed Colligan famously said Apple was “not going to just figure this out. They’re not going to just walk in” and become successful in the smartphone segment.

Why Dan Frommer and Scott Moritz Are Wrong on iPhone Sales

That continued throughout the six month waiting period from the iPhone’s announcement to its release, with Dvorak comparing the iPhone to Hitler, insisting that Apple pull the plug on it, and saying that its battery would only work for 40 minutes, while Rob Enderle called it “damned” and ‘not a good phone’ before even having seen it, and imagined a series of scenarios where kids would be killed and women would be raped if users ever dared to use an iPhone. Everyone from Gartner to the gadget blogs were all down on the iPhone’s prospects and encouraged users to not buy it or even boycott it on ideological grounds.

the perfect phone

Secret iPhone Details Lost in a Sea of Hype and Hate

Hot on the heels of attempting to manufacture Zune excitement headlines for Microsoft, ABI Research jumped at the chance to announce that it had decided the iPhone wasn’t a smartphone because it couldn’t run third party software, such as the $444 in top Windows Mobile software that I profiled, all of which is either unnecessary on the iPhone or was already bundled on it.

More Absurd iPhone Myths: Third Party Software Panic

Enderle even told San Jose Mercury News spin doctor Troy Wolverton that 2007 “will be a difficult year for Apple, and the iPhone could be more of a drag on earnings than a help.” Wolverton, who had long predicted that iPod sales would amount to the death of the Mac, started imagining that that iPhone would subsequently kill Apple’s iPod business, since every other iPod killer hadn’t lived up to the task.

Troy Wolverton Digs Up Rob Enderle In Desperate Apple Attack

No Mr. iPhone, I Expect You To Die!

In the second half of 2007, The Street and other market manipulation outlets began accusing Apple of covering up a miserable launch failure, saying that the company planned to sell a million iPhones in its opening weekend, despite the fact that Apple didn’t even put a million units on shelves for weeks after the launch. It also presented “five reasons to not buy the iPhone,” along with an explanation of why the iPhone would really cost users $17,670.

Unraveling Anti-Apple Panic: the iPhone Launch Success
The Street’s Flaccid Campaign Against the iPhone

Toni Sacconaghi of Bernstein Research, Barron blogger Eric Savitz, and Rex Crumb, a colleague of Dvorak at MarketWatch, all published and rehashed the story of how Apple faced a possible demand shortage problem complicated by excessive worldwide demand in markets where Apple hasn’t yet established an exclusive partner. It wouldn’t sell enough while selling too many!

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Toni Sacconaghi Alert: Excessive iPhone Demand Reason to Panic

Nomura financial analyst Richard Windsor published a research note in the fall of 2007 suggesting that the iPhone would likely suffer problems due to a faulty industrial design using “a chemical deposition to provide touch sensitivity based on heat,” and said Apple might have to recall millions of faulty units. Windsor repeated the same prediction a year later with the iPhone 3G, this time referencing imagined problems in the phone’s Infeneon chips.

Inside the iPhone 3G dropped call complaints

Success Despite Massive Lies.

With the nonstop lies and over the top criticism, it’s hard to imagine how the iPhone was ever able to break through the smoke and mirrors to become the top selling phone model in the US in its debut quarter. It muscled the entire Palm and Windows Mobile markets out of the way to become the second place smartphone platform in North America after RIM, despite only being sold in one market and on only one provider.

With the launch of the iPhone 3G, Apple’s smartphone business jumped into overdrive, selling millions of units in its first quarter, and apparently pushing ahead of Windows Mobile in market share world wide to boot. The new phone was released alongside the new App Store, which like the iPhone itself, has sent competitors scrambling to copy it.

Apple’s market power has not only kicked the shallow breath of air out of rival mobile smartphone platforms, but has also breathed life into Apple own vibrant marketplace, which delivered over 100 million downloads within just two months, which represents growth four times as fast as song sales in iTunes.

The iPhone App Store enabled 18 year old Bryan Henry, the developer of Equivalence, to earn $8,000 in his first month as a casual student developer, and significant new revenues for professional developers. All this success has Apple’s critics fuming. The same people who said the iPhone would never take off are now trying to suggest that the iPhone is a monopoly that restricts trade.

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iPhone Apps Store Growing Twice as Fast as iTunes Music
App Store Downloads Top 100 Million Worldwide

The iPhone Monopoly Fallacy.

How is it that those who were skeptical that the iPhone would take off, or even hopeful that it wouldn’t, are now taking the position that Apple shouldn’t be allowed to chart its own destiny, but should instead be run by the community of pundit opinion that tried to destroy it?

That question is too difficult to answer, but I can dismantle their argument. It goes something like this: Apple’s market power has now reached equivalence with Microsoft’s in the 90s, when that company began using its monopoly position to prevent competitors from entering the market, stomped out rivals using illegal practices, and after agreeing with the court to stop then violated its consent decree to continue its efforts to restrain trade and abuse its monopoly position.

Microsoft had a monopoly position over the PC market due to its deal with IBM to retain the rights to DOS back in 1981. IBM apparently didn’t realize that its hardware wouldn’t be very useful with DOS, since there were no other platforms that could run on early PCs due to IBM’s own market power that helped destroy CP/M, the original basis of DOS. IBM would go on to handle much of the updates to DOS itself while Microsoft took money for it.

Had this relationship continued, the PC would have existed as combination product from two suppliers. However, Microsoft also licensed DOS out to PC clone makers such as Compaq, and subsequently to a wide number of “PC compatible” hardware vendors. IBM’s own hardware sales fell in a heap with just a few years, and its attempts to deliver a new generation of advanced Microchannel PS/2 hardware was thwarted by a PC cloner rebellion, resulting in the PC lagging behind the state of the art in hardware technology while Microsoft continued to rake in profits.

1985-1990: 16-bit Graphical Computing
SCO, Linux, and Microsoft in the History of OS: 1980s

Microsoft’s Monopoly Abuse.

As the 90s began, Microsoft began to wield so much power that it could dictate to PC makers how to build their systems, and what software they could install on them. It forbade PC makers from selling alternative operating systems, including IBM’s OS/2. By the middle of the decade, it had forced them all to add Microsoft logos to their keyboards (apart from IBM) and killed the growing alternative DOS market by tying DOS into Windows.

It then tied productivity apps into Windows PC sales, and in the second half of the decade worked diligently to kill Netscape as an alternative web platform, Java as a competing web app API, OpenGL as a threatening interoperability layer for 3D, QuickTime as a media platform, AOL as an online service, and so on.

This wasn’t free market competition, because Microsoft wasn’t competing against rivals in an open market. Microsoft had established a monopoly over hardware sales from every PC maker and was leveraging its software monopoly as a weapon in threatening to destroy any manufacturer who might challenge it by partnering with a competitor. When Apple struck a deal to parter with Compaq to bundle QuickTime on its PCs, court testimony reveals that Microsoft quashed the deal.

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Microsoft’s Plot to Kill QuickTime
SCO, Linux, and Microsoft in the History of OS: 1990s
Office Wars 3 – How Microsoft Got Its Office Monopoly

Apple’s Assault on the Microsoft Monopoly.

The only undoing of Microsoft’s monopoly power came from Apple, which refused to cooperate with Microsoft’s bullying in the late 90s. The only reasons Apple had for standing up to Microsoft were that Apple owned its own Mac platform independent of Windows, and that Microsoft was guilty of stealing code from QuickTime.

After Steve Jobs returned to Apple in 1997, he stuck this to Microsoft in a leveraged deal that demanded a show of public support and continued development of Office for Mac. Apple continued developing QuickTime and obliterated Microsoft’s own attempts to produce any competing technology. QuickTime went on to become the the core file wrapper technology of MPEG-4, including AAC audio and H.264 video, relegating Microsoft to the sidelines in media.

After successfully defending QuickTime, Apple parleyed it into further success with iTunes, which served to support iPod sales, which served to ignite media sales in Apple’s iTunes Store. After establishing the iPod and iTunes against Microsoft’s attempts to lock down all media sales and media players under the same Windows-branded monopoly as the PC, Apple released the iPhone and crushed Microsoft’s weak efforts to monopolize smartphones under Windows-branded software.

Apple has proven that by writing its own software, it can produce better products that the consumer market prefers to the hardware designs dictated by Microsoft to the hardware makers who are enslaved to Microsoft’s monopoly run software business. Apple can’t possibly erect a monopoly in MP3 players, phones, or PCs until it copies what Microsoft did in licensing its software across the industry. Apple has shown no interest in doing that.

How Microsoft Pushed QuickTime’s Final Cut

Apple and Competitive Markets.

The only remaining way Apple could monopolize any of those markets is to simply outsell everyone else until all of its PC and consumer electronics rivals go out of business. This isn’t likely to ever happen.

In a free market with competition, monopolies rarely last because more efficient competitors will always deliver greater innovation or lower prices, preventing any entity from simply taking over entirely or retaining complete control for any period of time.

Microsoft’s PC monopoly existed over the last two decades because it subverted the market by preventing anyone from competing with it, and contractually obligated its partners from competing with it directly or indirectly. The primary “competitors” to Windows and Office on the PC are free applications written by volunteers: Linux and OpenOffice. That’s not a functional market.

In contrast, Apple competes against much larger companies in the US and worldwide PC markets, and much larger and more powerful companies in consumer electronics, from Sony to Samsung to Nokia. Apple will never outsell all of these companies out of business entirely. So speaking of Apple as having a monopoly among iPods or iPhones is ridiculous. The situation is not similar to Microsoft at all.

Apple’s Product Control.

As a competing hardware maker, Apple does control its own products. It does not license out the iPod or iPhone operating system to cloners. It chooses not to license or support competing software platforms, such as Microsoft’s WMP or Adobe’s Flash or Sun Java ME. It also exercises control over its App Store, refusing to carry titles that it deems as unprofessional, those that fail to meet its user interface guidelines, and any that work against its business model.

Apple’s decisions are certainly objectionable to Microsoft, which desperately wanted to embrace and extend the iPod into a WMP PlaysForSure tool and take over Apple’s success in the same way it swallowed down Java and OpenGL and burped up cleaned bones and its own proprietary alternatives.

It’s also unnerving to Adobe, which has never cared enough to deliver a decent version of Flash Player for the Mac, but now desperately wants to get in on the iPhone because Apple has caused the mobile web to overwhelming become Flash-free. It’s also a pain to developers who want to march onto Apple’s platform and rope off reserved access to competition-free application development.

Gone in a Flash: More on Apple’s iPhone Web Plans
Flash Wars: Adobe in the History and Future of Flash

Apple Independence.

I think it’s clear Apple will continue to use its success to leverage its control over its own platforms. When I said a year ago that Apple would use the iPhone to kill Flash, everyone scoffed and said Apple would have to whip up some sort of magical layer to run desktop Flash applets on the iPhone (a technical impossibility without some major changes to all the Flash apps out there).

Windows Enthusiasts whined that Apple had some sort of duty to allow Windows Media DRM to work on the iPod because it was technically possible. Today’s tech media complains that Apple owes small developers the right to develop apps that compete with the company.

The reality is that Apple has earned its success, not by being granted a monopoly by fate that it turned around as a weapon to stop competition, but by actually competing to deliver a better product.

Why Apple Doesn’t Owe the World a Living.

Apple’s ability to compete rests upon its making decisions that allow it continue to erode into Microsoft’s monopoly position on PCs and Nokia’s dominant position in smartphones. It can’t do either by being a timid pacifier for every weeping individual and small company on the planet that wants to eat at the table without contending for a seat.

Daniel Lyons, the Fake Steve Jobs who went to Newsweek to write up absurdities about how Apple is like Microsoft because Vudo is going out of business because Apple sells movies in iTunes, is a great example of why the tech media needs to educate itself on the difference between successful competition in a functional market, and Microsoft’s abuse of its monopoly position to prevent competition. At Forbes, Lyons praised Microsoft’s media center products after the company shipped him free stuff to fawn over, so perhaps his problem isn’t ignorance so much as disingenuous hypocrisy.

In any event, BMW isn’t obligated to license its car designs out to Chinese manufactures, nor does it have to sell the car radios of every manufacturer who wants to ship their product with new BMWs. Similarly, Apple doesn’t have a moral obligation to grant other companies success. It’s already provided them an example of how to attack monopolists and win. If they can’t compete, that’s their problem.

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Forbes’ Fake Steve Jobs Is Also Fake On Apple

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  • http://lantinian.blogspot.com lantinian

    If funny. Appart from the music industry, Apple is minor player in the charts of PC sales, Phones, Browsers, or even Operating systems. Yet its competitors are complaining as to why is Apple getting profits comparable to their market shares.
    It’s like they are doing something illegal or something. No they just do something fundamentally simple. Apple makes people like their iPods, Macs and iPhones.
    Its about time those pundits start acknowledging that the Apple business plan is working and everybody is copying it and stop complaining that the old players are loosing the status quo.

  • isserley

    “No they just do something fundamentally simple. Apple makes people like their iPods, Macs and iPhones.”

    –> oooooooh, UNFAIR. Apple is certainly a crazy monopolist with an evil plan!!!!! – THEY MAKE PEOPLE LIKE APPLE´S STUFF. That smells of really evil behaviour. Noone ever likes consumer electronics and the fact that people like Apple´s stuff certainly doesn´t mean that Apple engineers stuff well, but that they do sth illegal, like, uhm, like drugs.
    Yeah, they drug people!! Some chemical in the surface of all those shiny plastics and coated aluminium. And they hynotize people. Yeah, that´s right all those TV ads have subliminal messages saying “Buy our stuff and like it. ” And all those hipster Apple store clerks. These metrosexual mofos certainly are quite certainly indoctrinatedto make queer and straight guys & gals feel good about shopping there. That´s a scandal, customers have to be treated like horsepoop, else it´s monopoly abuse!!!

    OK, I´m off taking my meds now. ;)

    Here´s to hoping some pundit reads my comment, doesn´t get the sarcasm and stirs up the next conspiracy theory

    Regrds from Madrid, Daniel, hope you get well really soon

  • http://johnsessays.blogspot.com John Muir

    Dan Lyons is being a pain in the arse with his post-Fake Steve return to normality. He used to make good points masked in the persona of well-crafted satire. He was sometimes even very insightful: such as when he’d predict the shape and the form of the coming media storms the “dirty hacks” were about to unleash on the latest Apple news, comparing their predictable Master Narrative to Joseph Campbell’s Monomyth.

    But now he’s back to being just another dirty hack. Strange irony. Oh well, it’s his choice.

    As for the Podcaster affair: you’ve made yourself clear in a number of articles now. This one with its wealth of historical background is (despite your expressed reservations) the “Best RDM” on the issue. It’s the sort of well considered and well laid out writing many readers come here to enjoy, myself included.

    But I must still respectfully disagree.

    Where the problem still lies in Apple’s handling of this is the culture. Simply put: Mac developers love to write about their craft and share a lot of knowledge with each other. This is the culture of software development on the platform. It’s not as rigid as the Linux doctrine that all code be shared of course. Rather: Mac developers constantly learn their craft like anyone with a true skill, and share their understanding of this ever-growing and high-paced field with their friends and peers … if not quite all the shipping source code!

    But when Mac developers want to be iPhone developers: it all turns to something different.

    The NDA is the underlying issue. The developer community – indie outfits and big software houses alike – don’t like being gagged so they can’t socially function as usual. It impairs learning and therefore software quality. What made the Podcaster issue such a burning topic is that it seemed the next step to curb coding culture. Not only were you supposed to keep quiet about what you are doing and discovering, but even if you did you then found at the end of the process some apparent tyrant turns up: who gives a thumbs up or down to your product (a sizeable investment in skill and time). The process is full of secrecy such that you’re left with a constant nagging doubt that what you are doing is worthwhile. Will they say yes or no? What are the rules? Who can you talk to and receive a plain answer? And if and when you do discover it’s thumbs down for you: that’s it. All decisions are final and non-negotiable.

    Is all of what I’ve just said the same as it seems for the casual observer, uninvolved in iPhone development? Probably not. I know it must sound paranoid and over the top. But that is how it feels for those invested in this process. And that is what they are talking about and debating feverishly among themselves; in social groups long defined by more open Mac development.

    It’s not that the little guys are demanding welfare. Nor is it that Adobe and so forth should be granted the same distorting rights as they exploited on the Mac in the past. It may sound like that at first inspection, but put yourself in the perspective of someone on the inside. See if there is no germ of truth to it.

    What Apple could do to clean this up is issue a Thoughts on Music style statement in well-considered, well-laid out English on what they want and don’t want in the App Store. That is instead of the current all-too muddy legalese, itself hidden behind NDA. We know it’s far from beyond them to describe their vision better than anyone else can. Just look at Thoughts on Music for an example. A complex issue was cleanly analysed and Steve Jobs’ view very clearly expressed.

    You are correct that no one has the right to demand changes from Apple in their store. And you are also correct that there are other interests out there entirely counter to Apple’s own. But that does not mean there is no overlap between the desire among developers to know where they stand, and the platform’s own good. What many fear is that Apple’s fondness for secrecy could sour what is an exceptional opportunity in the long history of software. So far, even granting all of your arguments as true, it cannot be denied that just such a problem is indeed going on.

    There’s a balance.

  • http://www.roughlydrafted.com danieleran

    Competition for software features and in specific markets is a very different issue than the SDK NDA issue. I wrote earlier about why Apple is keeping things under tight control, and the issues are related, but I think we’ll see a solution to the latter. I don’t think Apple is going to capitulate its iTunes models to any developers who want to take it over just because pundits weep about it being the “right thing to do.”

    I don’t think there is much confusion about what Apple wants in the store or not. Fart jokes, tethering, and an end run around iTunes for podcast downloads are not anything that anyone with an average IQ could imagine Apple would approve.

    Anyone who thinks that squawking about petty demands matters a hill of beans to Apple while its managing 50 million downloads per month has an overinflated sense of importance.

  • http://home.comcast.net/~daguy daGUY

    “Anyone who thinks that squawking about petty demands matters a hill of beans to Apple while its managing 50 million downloads per month has an overinflated sense of importance.”

    Quite right. I’ve seen multiple articles, blog posts, and comments on this issue where people have declared this will be “the downfall of the App Store.” Are you kidding me? We can argue back and forth over whether or not Apple should have let Podcaster in, but does anyone actually think that this issue is even a blip on their radar? They sold *100 million* apps in two months. ONE application blocked – whether it’s fair or not – amounts to absolutely nothing. Their explosive growth will continue unhitched.

    The most ludicrous comment I saw? One commenter on Digg declared that Apple “should watch out for Linux” now. Yeah, because of this. Hahaha.

  • Phildikian

    Excellent article Dan.

    I personally think that one of the problems at play here has to do with people’s (mainly these “analysts”) inability to learn. I think a lot of these pundits are 90’s era business school graduates – they were taught the “90’s” way of doing business and therefor there could be no other way. Well here we are. Microsoft’s 90’s strategy is crumbling, Dell’s heyday of selling bargain basement PC’s is over and all those other computer manufacturers have realized that they succeeded in racing for the bottom – the cheapest. They devalued the PC hardware (after all if you could get a computer system for free, everything else is “over priced”), and they all pursued market share instead of profit. The PC industry is so unprofitable that IBM – the very company that started the “PC” – got out of it.

    Those are the 80-90’s business school grads. Instead of taking stock and realizing that maybe they need to adjust their thinking, that perhaps they were taught wrong – they just criticize Apple for not following in their path. Idiots.

  • brett_x

    “No Mr. iPhone, I Expect You To Die!”
    I got a good belly laugh out of that one. Thank You Daniel.

  • mcloki

    “Similarly, Apple doesn’t have a moral obligation to grant other companies success.”

    But do they have a moral obligation to allow them access?
    This is a licensing situation not unlike games for the wii or PS3.
    Nintendo used to give out their Gold Seal of approval to the detriment of a lot of other game developers. And eventually Nintendo was forced in court to drop the standard.
    I think the same will happen to Apple.
    Of all of the iapp store programs that have been pulled. only one seems legit. And that is the Phonesaber. There clearly there was a breach of copyright and I commend Lucas on his handling of the situation. Offering to work with the developers rather than do a “scrabulous”.
    The $1000 dollar app should have been allowed to continue.
    it’s stupid. It’s asinine. But whatever happened to buyer beware.
    Anyways. This event brings Apple under scrutiny and gives competitors a way create a better competing product. And Android and Windows mobile are watching and taking notes. If they take appropriate action is up to them.

  • tundraboy

    “The $1000 dollar app should have been allowed to continue.
    it’s stupid. It’s asinine. But whatever happened to buyer beware.”

    You are totally off base. Apple has every right to make sure that its store shelves are not stocked with fraudulent, scamming products. Practically every person who bought this product demanded a refund.

    I want to go to the supermarket and be reasonably assured that anything I put in my cart is not an outrageously overpriced virtually useless product. Apple isn’t allowed to do that?

  • http://alienryderflex.com DarelRex

    Monopolistic: “We’ll allow Podcaster on the iPhone only if you agree to not market a RIM version.”

    Not Monopolistic: “We don’t care if you make a RIM version — we want podcasts to go through iTunes, and we’ve never planned to allow third-party apps that duplicate that function. We don’t think iPhone users should have to search multiple apps to find podcasts.”

    Apple is inviting us to provide things on the iPhone that they aren’t providing. That’s not an abuse of power. They didn’t have to open up app development at all.

  • http://johnsessays.blogspot.com John Muir
  • John E

    Quick comment first: yes, true, there was a lot of FUD from bogus pundits about the iPhone in 2007 (and some this summer too). but come on, Dan, the iPhone at the same time enjoyed a massive amount of media hype that far, far outweighed the FUD. like, um, the cover of Time magazine … overall media-wise, it was a sensation, and this article should have noted that. put in that context, the FUD is revealed as sour grapes from jealous losers.

    which is what we are seeing a lot of now too, focused against the 2008 technical revolution and snowballing popularity of the App Store – and the fact it has suddenly cut the competitive market pricing of smartphone and portable game player apps, by about 2/3 across the board! plus opening up a huge array of free services!! wow!!!

    as to legit issues about Apple’s management of the App Store …

  • John E

    it is true, as many say, that Apple’s business model is the “walled garden.” Apple software tightly integrated with Apple hardware. OSX allowed on Apple computers only, or they sue you. iPods and the iPhone especially tightly linked with cross-platform iTunes (and AT&T) and now its App Store. it’s Apple’s garden, and they dictate its “house rules” via the EULA’s and NDA’s.

    and their attitude is take-it-or-leave-it. it’s pretty hardball business-wise and they don’t “dialog.” yeah, arrogant.

    but that is not a “monopoly.” the consumer has other walled gardens available – iTunes knock offs like Zune or subscription services – or ‘free range’ media/unlocked communication devices that will play anything without DRM. there are only two reasons consumers stay inside Apple’s iTunes walled garden: one, it’s a terrific place to be, and two, practically it’s a royal pain in the ass to move all your stuff to another one. and nothing Apple does stops anyone from buying and using other media players/services in addition to Apple’s stuff, it would just cost somewhat more due to the duplication.

    Microsoft didn’t set up a walled garden, it set up a prison yard. non-technical consumers were forced to use Windows/PC’s as their only option, as MS tried to destroy everyone else’s attempts to create alternative places for them to go. that is/was a monopoly, but it is clearly decaying now.

    i’m glad to see Apple held accountable for its business style. some is FUD, some is just whining (whining seems to be universally the #1 blog style), and Dan does a great job of skewering those guys. but there are legit issues to debate too. Apple’s “house rules” are certainly not perfect.

  • Realtosh

    @ John Muir

    Thanks to the link to Mike Ash’s insider view of iPhone development. It was insightful.

    The NDA matter seems to cause some grief for developers.

    But as long as the iPhone continues to sell like hotcakes, and Apple provides a ready marketplace for iPhone software; then developers will jump through whatever hoops necessary to create and publish their software.

    Hopefully Apple will not make the process unnecessarily difficult and provide quick and efficient assistance throughout the development and approval process.

    If at any point, Apple is discouraging too many developers, than maybe they should adjust their practices somewhat to be more accommodating. They will adjust as necessary to continue improving the experience for all involved. But it makes more sense that Apple should concentrate on making their products and their platform the best ever. That’s what creates he value in the platform that everyone will want to develop for.

    But I have to agree entirely with Dan. This is Apple’s baby.

    Personally, I could care less if they allow the farting phone app and the I’m Rich app. The platform is not better nor worse for lack of these. The fart phone app seems innocent enough. The I’m Rich app probably was downloaded by one or more curiosity seeker, who realizing the mistake immediately asked for a refund from Apple and/or their credit card companies. Frankly, the app was likely not worth the hassle for Apple. Although, it was a brilliant move on the developer’s part to put it out there for rich fools to download.

    The Podcaster is another story altogether. If Apple wanted the iPhone to have the ability to download podcasts directly, they would build it into iTunes. The feature is not present because either 1) Apple chose to leave it out for the bandwidth and others reasons that have been mentioned or 2) Apple will build that feature into iTunes in the future. Either way, Apple will never want someone else to create a distribution platform on the iPhone that competes with iTunes.

    Further, by sidestepping iTunes, not only is the value of the iTunes ecosystem diminished, but also the value of the computer on which iTunes runs also is attacked. Don’t forget that Apple not only has this Phone/iPod/iTunes franchise that they need to protect, but they also have a quite successful Mac Business that Apple would like to remain relevant.

    Apple has already allowed direct purchase of songs via wifi at Starbucks. See how this downloading provides a revenue stream, and even then only works via wifi. ATT is already overwhelmed with the data usage of the iPhone.

    Over time, as the iPhone becomes an ever more powerful device, it will continue to take on ever more functions of the PC/Mac. This may in time mean direct podcast downloads in iTunes, even if only via wifi. The iPhone may become the focal point for the iTunes interface. The Mac/PC or Time Capsule will be relegated to a backup /storage function, that may also be done in the cloud.

    I can see the value of being able to remain current with some favorite podcasts, even while one is traveling and doesn’t want to bring along a laptop for syncing. The iPhone is becoming a little computer in its’ own right. So, I would like Apple to evolve the iPhone into a more independent computing device over time. For example, with this podcast feature on the iPhone and with MobileMe syncing, some iPhone users could go months or more without ever having to sync up with a “host” computer, if ever. Nokia has some idea to eventually build a cloud community around their phone devices. It’s cute idea, but Apple will get there first.

    Apple has shown that they will not easily be left behind as technology marches forward. However, don’t hold your breath waiting for Apple to let someone else muscle in on iTunes. Partnering is one thing, Apple has been happy to partner in iTunes, with content providers and affiliate marketers from radio stations or whomever. Letting someone do a complete run-around outside of iTunes just will never be in their best interest.

    To pout and jump up and down seems immature. If someone wants to offer a product that doesn’t work with iTunes, they are free to do so. Microsoft is hard at work on a iTunes replacement, as is Google and Nokia. We can wish them all luck, but don’t expect Apple to cooperate on an an alternate distribution mechanism that decreases the relevance of their own iTunes distribution platform on their own product. Get real.

    @ danieleran

    This is one of the finest examples of the analysis that appears on RDM. Keep up the good work.

  • GwMac

    I think the trend of Apple selling to several carriers in recent countries instead of only one exclusive carrier like AT&T is great news. I understand why they did it at first, but I was hoping that exclusivity would only last around 3 years, looks like it could be 5 or more years now. Yeah, I would love to see voice dialing, video recording, more bluetooth profiles, copy/paste, and all the other top wishlist items, but even if they released a brand new iPhone that had all of these updates I would still not get one for the simple reason that AT&T does not have 3G where I live and what good is it without 3G in 2008? In fact I am pretty sure AT&T has the smallest 3G coverage of all the big 3 carriers. That is why they say fastest 3G in their ads and not largest. I think Sprint easily is the hands down leader when it comes to 3G availability. Verizon have made some progress, but their maps are disingenuous because they count 1xrtt as 3G so you can’t really see their EVDO only coverage.

    I also have an incredible plan where I only pay $30 a month and get unlimited data, text, 500 minutes, NW at 7PM…so I would have to more than double my monthly bill to switch and then not even have any 3G service at all. Now I realize that my plan is unusually cheap, and maybe AT&Ts coverage in your city might be excellent and the iPhone plan might even be competitive if you are not lucky enough to have a great plan like SERO, but I think there are a lot of people out there in the same boat as me. We want the iPhone, but not badly enough to switch to what may be an inferior carrier and pay over twice as much per month. I think Verizon is evil with their severely crippled phones and the way they nickel and dime users so I hope Apple never releases one for VW, but I do hope to see a Sprint version someday. Assuming Sprint can stop the bleeding and avoid going under.

  • jragosta

    “How is it that those who were skeptical that the iPhone would take off, or even hopeful that it wouldn’t, are now taking the position that Apple shouldn’t be allowed to chart its own destiny, but should instead be run by the community of pundit opinion that tried to destroy it?”

    It’s really quite simple. There is a group of journalists and analysts out there (Dvorak, Enderle, Gartner, and quite a few others) who have made a career out of never reporting anything positive about Apple and, in fact, spreading inane lies over and over. I did a study a decade ago about Gartner’s obvious lies about Macintosh software sales – which they continued for a 5 year period. I don’t know what these people gain from their incredibly anti-Apple position (maybe they pick up enough support from the “MAC sux” crowd to make up from the intelligent readers they lose), but there is an unending blitz of FUD from them.

    Your mistake is in expecting rational thought from the likes of Dvorak and Enderle.

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