Jason Calcacanis: The Case for Seizing Apple’s Technology
August 14th, 2009
Daniel Eran Dilger
Being a CEO doesn’t necessarily mean you have a basic grasp of logic. Jason Calcacanis proved this point while trying to make a rambling critique of Apple in his personal blog, oddly republished by the Silicon Alley Insider. Calcacanis demands that Apple be stripped of its technology so that less capable and innovative companies can benefit from it instead.
To make this moralist assault on free markets more palatable, he wraps up the whole thing with emotionalist language about openness and evil. At the core however, his rant reflects the new low in moron journalism that is eating up America like a swiftly spreading flesh eating bacteria.
Make no mistake, there are plenty of things that one could sort of justifiably criticize about Apple, ranging from a disappointment that the company does not exist primarily to create free software for the tinker community (this is expressed daily by a variety of GNU/Linux enthusiasts) to complaints that Apple hasn’t been able to keep every last one of its thousands of iPhone developers 100% ecstatic while they make loads of money selling a library of 50,000 apps hand over fist (certain pundits have made expressing this issue their full time job).
However, when I choose to critique something foolish in the tech world, I have to limit myself to the most outrageously knuckle dragging and specious expressions of falsehood published by the most visible of semi-legitimate sources or I’d be stuck doing this around the clock.
In this case, the offending piece is “the Case Against Apple,” written by Mahalo.com CEO Jason Calacanis, who also credited as the co-founder of TechCrunch50.com. Calacanis complains that he loves Apple products, but they all cost so darn much that he’s over his initial enthusiasm for Apple. That idea might make a suitable Facebook status or perhaps be worth a tweet, but Calacanis seems to think it’s also enough to fill out a five item list essay, suitable for submitting to Digg. It is not.
The Case Against Apple–in Five Parts « The Jason Calacanis Weblog
To support his opinion, Calacanis resorts to making a series of emotion-inciting, populist arguments for what appears to be a desire for the government seizure of Apple followed by a replacement of its board and managers with the kind of “community” thinkers who haven’t been able to get us to the “year of Linux desktop” over the last decade. In a word: communism.
In the past, people usually advocated communist revolutions after losing all confidence in the existing regime to properly allocate available resources in a fair manner. A serf suffering under a imperial tzar or a laborer being exploited under outrageous working conditions might both be willing to support the idea of a populist uprising that promises to result in greater opportunity and a more level playing field.
However, we today, as a population that has witnessed multiple attempts to deliver communist states that all failed miserably, generally find the idea of a central entity seizing the assets of legal, functional, and successful private companies to be a bad idea. But Calacanis argues for this very thing, disguised under an appeal for “anti-trust action.” The problem is that legitimate anti-trust action only applies to companies that monopolize markets, fix prices, and stifle innovation.
Over the last decade, Apple has done the opposite. It forced Microsoft back to the drawing board to compete in PC operating systems and web browsers; it upset the stagnant status quo surrounding music players from Sony with the iPod and saved the world from being enslaved to a monopolized market for music and videos planned between Microsoft and the labels and studios; and with the iPhone, Apple has injected a massive dose of competitive spirit into what was a boring and slowly converging market for smartphones. All of this is simply uncontroversial. So where’s the anti-trust problem?
Five Myths of Calacanis.
The first, according to Calacanis, is “Destroying MP3 player innovation through anti-competitive practices.” He complains that Apple’s iPod is so popular that most people couldn’t think of a competing brand. Yet he also complains that the iPod is overpriced and fails to offer features that other devices do.
Is this because Apple exerts a Microsoft-style lock on the market, refusing to allow other hardware makers or retailers to sell or offer competing products? That’s not the case, as any trip through WalMart or Best Buy will reveal. Apple won its success by offering a product people chose to buy, not by erecting and maintaining barriers to entry for its competitors as Microsoft did with both DOS and Windows on the PC. And nearing the iPod’s ten year anniversary, Apple continues to match or exceed the features and prices offered by its wide range of competitors, many of which are larger than Apple.
Calacanis complains that he’s seen many music players in other countries that “have TV tuners, high-end audio recorders, radio tuners, dual-headphone jacks built-in and any number of innovations that the iPod does not. You simply will not see those here because of Apple’s inexcusable lack of openness.”
Oh really? Then why haven’t these jewels outsold the iPod, here or in Japan? And is adding two headphone jacks really “innovation”? What about Apple’s side of the innovation timeline: developing a usable interface, adding headphone-integrated mics for recording, creating Nike+, adding real gaming features, and the unmatched web-browser and software platform on the iPod touch? The truth is that Apple has achieved its position in MP3 players in a very competitive playing field of much larger and more powerful and connected competitors, from Microsoft to Sony. “Openness” has nothing to do with this.
Scrambled Ideas, Maybe Some Will Stick.
Calacanis then jumps, mid-thought, to iTunes, reviling it for not providing an API for competitors to use. “Think for a moment about what your reaction would be if Microsoft made the Zune the only MP3 player compatible with Windows,” he asks, apparently unaware that the Zune is exclusively tied to Windows and that Windows is sold, without competition, as the software platform for all generic PCs. Apple’s iTunes is not a platform, it is Apple’s music player software for iPods. Also, unlike the Zune’s software, iTunes works cross-platform.
As a solution to this non-problem, Calacanis recommends “An iTunes API which allows the attachment of any mass storage device, not just a short list of players that jumped through Apple’s hoops. If need be, perhaps consumers pay a simple licensing fee of $1-5 a unit to attach a non-Apple MP3 player to iTunes.”
Yes, no doubt the same industry that crapped its pants over Apple’s attempt to levy a $1 royalty for FireWire will be pleased to pay the company five times as much to use iTunes, further cementing Apple’s control over media sales. I know Apple would be pleased to sign them up. Perhaps Apple could collect all this money if it didn’t tell these companies that they can already copy music from iTunes simply by showing up as a USB mass storage device? I’m also sure Microsoft would be thrilled to see Apple making more per Zune than Microsoft itself does.
Note that we’re only one-fifth into Calacanis’ logical fallacy assailing Apple and it’s already obvious he doesn’t grasp much of anything in the subjects he speaks about so self-assuredly. But wait, it gets much worse, even worse than his MP3 complaint that “We are all enabling him [Steve Jobs] to be a jerk [because] we buy the products and we say nothing when our rights are stripped away.”
How about this for a free market solution: stop buying the iPod if you think you’re not getting a good deal. Unlike a monopoly like Windows, there are lots of competitive alternatives to the iPod. No, Calacanis wants to strip Apple of its products and property and distribute these to people who don’t want to pay to own them. That’s communism, and not even righteous-minded idealist communism, but simply a bail-out-the-losers ploy, along the lines of the Bush Bailouts.
What? You failed in banking? Here, take somebody else’s assets and pay yourself bonuses!
What? You can’t deliver a workable mobile platform? Here take iTunes and the iPhone from Apple, tinker, and pat yourself on the back!
“Monopolistic practices in telecommunications”
Calacanis next launches into a tirade that complains that Apple and AT&T are somehow monopolizing the telecommunications market with the iPhone, despite the iPhone only commanding an 11-25% share of the smartphone market over the last few quarters. What Calacanis means to say is that Apple is the only company anyone can buy an iPhone from, and AT&T is the only provider in the US. This is not a monopoly because there is not an iPhone market.
And once again, Calacanis espouses communism by insisting that Apple’s property be take away and given to some centralized community group that could better decide how to market it and what features it should have. Perhaps the same community that failed to deliver OpenMoko or GreenPhone or various other Linux phones?
Acting as a pretend supreme soviet, Calacanis offers a “simple solution and opportunity: Not only let the iPhone work on any carrier, but put *two* SIM card slots on the iPhone and let users set which applications use which services. (Your phone could be Verizon and your browser Sprint!) Imagine having two SIM cards with 3G that were able to bond together to perform superfast uploads and downloads to YouTube.”
Never mind that only GSM providers use SIM cards (which excludes both Verizon and Sprint in the US); why would customers benefit from signing voice and data contracts from two providers? And how exactly would having multiple SIM cards make the device twice as fast? Wouldn’t you need dual radios? And two expensive data plans? And who is paying for this wildly inefficient solution, which is nearly as nutty as Mao’s plan to have Chinese peasants smelting iron in their backyards?
See, the problem with communism is that it ends up puts idiots in charge of making important decisions. In our capitalist society, if everything works out like it should, decisions are made by people who prove their competency. Companies that can’t execute are starved of resources until they go bankrupt, at least in ideal circumstances.
Calacanis hasn’t proved anything about his ability to manage platforms or sell devices. He’s the CEO of a crappy search engine powered by community input, which pays people to write articles like “How to Become a Walmart Greeter,” which somehow made it to the front page.
“Draconian App Store policies that are, frankly, insulting”
For his third act in arrogantly berating something that is actually the jealously envied state-of-the-art in technology, and offering in its place a simplistic solution that would cause far more problems that it would solve, Calacanis recommends Apple abandon its entire app approval process for the iPhone and instead set up something that works more like that great bastion of success that is Windows Mobile, primarily to facilitate mobile apps that offer, as he says, “something adult in nature,” because apparently the iPhone’s web-standards browser can’t pull up enough boobies by itself.
“Apple’s justification for this nonsense is that they have to protect AT&T’s network,” Calacanis says. Actually, no, that’s not Apple’s justification for wanting to own and manage iPhone software market the same way Nintendo has successfully managed software for the most popular game consoles over the past couple decades. Apple’s real motivation is survival and profitability.
Apple only talks about protecting AT&T’s network (along with every other partner provider globally) in the context of not wanting a DMCA exemption granted for bypassing the iPhone’s software signing security system. It’s not the random rejected app that threatens to brings down networks, but rather a real potential for rogue apps, liberated from Apple’s “draconian” rules.
“Aren’t there dozens and dozen [sic] of open phones on everyone’s network?,” Calacanis asks. No, there’s not. Unless by “open” you mean “unmanaged.” There’s nothing unrestrictedly open about Symbian or RIM or Windows Mobile or even Android, and especially nothing open about the majority of Linux phones, which are sold by Motorola to China, locked down tighter than the iPhone is.
“The network hasn’t crashed yet,” Calacanis insists, “and even if someone did create a malicious iPhone application, you would know EXACTLY who was running the application and be able to block and/or turn off their phone. The network was MADE to deal with these issues on a NETWORK level. To say you have to control people down to the application level defies all logic. A second year CS student understands this.”
Where does one start? How about in 1995, when Microsoft launched what would become the most parasitic attack on the Internet ever devised: a global platform of unmanaged devices that eagerly ran any app written for it, including viruses and worms designed to use the network to launch anonymous attacks. Does Calacanis really think that mobile networks are unspoofable and impossible to successfully attack? Are all those mobile and wireless radio regulations just drawn up as an unnecessary precaution? And what planet is he on if he thinks mobile networks never fail?
The simple solution this time around? Offer customers the option of “waiving your previously-understood customer service arrangement.” Maybe Ford could also include a button on the dash that disabled its cars’ seatbelt and airbag systems as a convenience to drivers who didn’t want to be inconvenienced, and attempt to shirk all accountability by adding similar wording in the car’s EULA. I’m sure nobody would sue after actually having an accident.
“Being a horrible hypocrite by banning other browsers on the iPhone”
Calacanis next claims Opera set out to develop its own web browser for the iPhone but was stymied by the iPhone 2.0 restrictions. This isn’t true. Opera develops web browsers for platforms that ship with an unusable trash browser, such as phones with BlackBerry OS or Windows Mobile. Nobody would trade Mobile Safari for Opera, let alone pay for it, so Opera never seriously considered shipping a browser for the iPhone.
“What Apple is doing is 100x worse than what Microsoft did [when it bundled Internet Explorer with Windows]” Calacanis says. Except that it isn’t comparable. Microsoft represented Windows to developers as an open platform, then yanked that premise out from under them, repeatedly. That began with WordPerfect and Lotus 123 and continued over and over until Microsoft identified Netscape as a successful opportunity to steamroll.
Apple never represented the iPhone as an unrestricted platform. From the beginning, Apple outlined exactly what it would allow and what it wouldn’t. The company indicated the iPhone’s web platform itself would be open to anything standards-compliant, but that native apps would have to be approved and align with Apple’s restrictions, including limits on content, bandwidth, and even style. No developers can complain that Apple blindsided them after first suggesting that the iPhone would be as unrestricted and unmanaged as Windows, because Apple never did. There is no hypocrisy here.
Once Apple reaches a threshold where the iPhone becomes the dominant mobile computing platform and barriers to entry into the smartphone market become excessively high so as to prevent any potential for competition, then the issue of Apple’s app restrictions might become an anti-trust problem. Until Apple achieves global domination, which is not likely, let’s worry about why Opera is the only browser available for the Wii. Oh, now that’s hypocrisy.
Office Wars 3 – How Microsoft Got Its Office Monopoly
Office Wars 4 – Microsoft’s Assault on Lotus and IBM
Apple in the Web Browser Wars: Netscape vs Internet Explorer
Blocking the Google Voice Application on the iPhone
A lot of people were disappointed by the revocation of various Google Voice apps. I’m presuming Apple was among them. After all, the company didn’t prohibit the apps from the beginning, as it did with certain other types of apps that were clearly incompatible with Apple’s terms of service. Instead, they were pulled all at once after approval, strongly suggesting that the impetus to pull them came from AT&T.
AT&T issued a statement saying that it doesn’t veto individual apps, and an investigation is underway to determine whether the action was a product decision by Apple or a situation pressured by AT&T to prevent competition from occurring in the mobile VoIP space. While there are still some unknowns, it is clear that Calacanis’ take is simply wrong when he says “This point is similar to the browser issue, in that Apple wants to own almost every extension of the iPhone platform.”
First off, there’s nothing wrong with Apple seeking to own its own product and platform; secondly, there is no similarity with browsers because Apple didn’t replace Google Voice with its own bundled app to take over the VoIP service business after finding it potentially profitable; and thirdly, its just another non sequitur in a series of demands for public ownership of Apple.
The simpleton solution offered in this case: “simply stop being jerks and let the free market decide how to use the data services they’ve BOUGHT AND PAID FOR. That’s the joke of this: you’re paying for the data services that Apple is blocking. You pay for the bandwidth and Apple doesn’t let you use it because, you know, they know better than you how you should consume your data minutes.”
Actually no, iPhone users are not paying for units of data like commodity boxes. We’re licensing use of AT&T’s network, subject to the terms of that license. This is the same with any other mobile provider or Internet service provider. Again, Calacanis insists that Apple can’t position its product as it sees fit, and should therefore have the iPhone taken away and its intellectual property given to those who would like to use it as they see fit. He fails to understand even basic concepts of the mobile industry and how network service providers work.
True, it’s fun to play couch-communist as Calacanis does, insisting that companies should give away their products for you to try first, or insisting that some aspect of their business model should be changed. It’s fine for Calacanis to express his opinions, however poorly informed they may be. And they are very poorly informed, with little understanding of how technology works and clearly even less incisive about how businesses and laws and contracts work.
But it’s another ball of wax to insist that Apple should be taken over and its management replaced by a supreme soviet of open source wonks that prance around handing out free gifts to users while competitors seek to destroy the company using more predatory and closed products than Apple itself, and positioning the whole tirade as a moral high ground.
Does Calacanis seriously think Apple has some impossible hold over the tech industry the way Microsoft has since the late 80s? There is vibrant competition in smartphones, not in spite of Apple’s unique innovations, but because of it. Calacanis cites fellow complainers, including TechCrunch’s Michael Arrington and Engadget’s Peter Rojas, both of whom have vocally given up the iPhone for similarly ideological reasons. Which is fine, as long as their competitor-supported theatrics are seen as such and not portrayed as some moral high ground related to real issues.
While Calacanis doesn’t point it out, both men are his business associates. Arrington was also implicated in the “People Ready” scandal, where Microsoft paid bloggers to inject ads into their “opinions,” and Engadget certainly makes more money talking about the scores of hardware sold by Apple’s competitors than about Apple’s iPhone. It’s not exactly shocking to see both figurehead bloggers talking populist smack about the iPhone to curry favor from their advertisers.
The Monopolists Will Save Us From Apple!
“Apple will face a user revolt in the coming years based upon Microsoft, Google and other yet-to-be-formed companies, undercutting their core markets with cheap, stable and open devices,” Calacanis predicts, apparently unaware that Microsoft and Google both brutally monopolize their respective markets and work hard to block competition. Sure, they’re both willing to be open in areas where they make no money, as is Apple, which will freely offer you the Darwin OS, Darwin Streaming Server, WebKit, and lots of other open projects because such altruism has no downside.
Does Microsoft offer any “openness” in areas it wants to own? Does Google offer open access to its crown jewels? Send me the source code to Caffeine if you can. No, Google is only open in areas where, like Apple, it makes more sense to offer free incentives than to try to charge for it, things like access to its Maps APIs or use of Gears or the whole please-use-Android so we can sell ads on your mobiles thing.
Google’s complete lack of interest in putting any work into creating a viable marketplace for Android apps that safeguards users’ security may be spun as a win for open source ideologues, but it is not done in the interest of consumers; it’s only because Google wants to roll out Android as cheaply as possible, just like Microsoft’s half-assed approach to blowing out Windows as cheaply as possible as an unfinished product with no security back in the 90s.
Open is a Potential Advantage, Not a Moral Imperative.
It’s time for couch-communists like Calacanis to go back to school and realize that “openness” isn’t something companies can be forced to do. Companies will only do what is in their best interests. Companies like Apple, Google, IBM, and Sun and have all demonstrated that the use of open source and open standards can be a competitive advantage in some cases. However, it’s simply moronic to suggest that the more one gives away, the better things get, or that rushing to give away all your intellectual property is some mark of “not being evil.”
Apple’s phenomenal success over the last decade has come from knowing what to open and what to keep closed. Had Apple opened the iPod up to third party software and accessories back in 2003, it would have been saddled with a lot of very limited apps and gadgets that it would have needed to kill off to make way for the iPhone and iPod touch, or alternatively, be forced to drag along in a long tail of extended support, the very problem Microsoft faces with its “always backwardly compatible” Windows strategy.
Instead, Apple’s limited platform of providing simple games on color iPods demonstrated a successful model that the company expanded upon with the iPhone. Had the iPod been wide open, the tinker community might have ported over an unfinished version of Tux Racer, but Apple would not have been better equipped to compete against other vendors. Were the iPhone and iPod touch plagued by a sea of garbage apps unfettered by Apple’s own quality control, the company’s mobile platform would be stuck in the same rut as Windows Mobile, where everything looks like crap.
And to all those naysayers who insist that many of the apps in the iPhone app store are not worth their 99 cent price, image the signal to noise ratio if Apple weren’t holding back the floodgates of trash. Actually, no need to imagine, just rummage through any of the mobile app stores run by competitors.
A wide open iPhone would also face the same confusing array of store options as Symbian or Windows Mobile, apps would be much higher priced due to widespread piracy, and developers would have no special reason to develop for the iPhone, just like they have no particular incentive to develop anything interesting for other mobile platforms where vendors haven’t bothered to actually build a workable software model.
This All Happened Before.
Recall that Apple was devastated in the early 90s by a mass defection of its software developers, led by Microsoft (the company Apple launched into the desktop application business; before the Mac, Microsoft could only manage to profit from BASIC and DOS).
Imagine if Apple had instead been able to sell Macs like iPhones, and then had delivered a software model where Mac apps were all $40 rather than $400 (as all the big apps were back in the day) due to piracy-limiting DRM. Imagine if this model could have eliminated virus transmissions and launched a sustainable development model that created a wide variety of reasonably priced software.
That’s a lot to imagine, but had the company known how to pull it off, the computers of the 90s would have been a lot smarter and better looking, and hardware makers like Apple would not have been ripped off by software cloners like Microsoft. Actually, we don’t have to imagine anything; this is exactly how Nintendo held onto its gaming empire through generations of consoles and handhelds.
Software: Consoles vs Generic PCs.
Is the Nintendo Wii and DS, the Sony PlayStation, or Microsoft’s Xbox “evil” in the mind of Calacanis for not allowing third party software that isn’t properly approved and licensed? Does Calacanis also realize that there have been lots of “open community” attempts to deliver game consoles, all of which have failed miserably?
The iPhone is an example of how Nintendo’s closed, managed software model can work to raise quality standards and lower piracy (Nintendo pockets the savings, while Apple chooses to instead incentivize lower software prices and therefore generate greater sales volumes).
Many people, particularly people who like to talk loud and authoritatively, like to bark about how this is bad and that Apple should adopt an Android or Palm OS/WebOS or Windows Mobile-like software model, apparently unaware that those models have all either already failed or are completely unproven (in the case of Android, consider the case of Andre Torrez, who decided to blog about switching from the iPhone to the Android G1 “Google phone” for a month, only to give up completely after a week of trying).
And Mr. Calacanis, after supporting the Microsoft monopoly for all these years, calling Apple “hypocritical” for playing within the rules of a game defined by Microsoft really just makes you the hypocrite. Perhaps you should prepare for a career that suits you better; I know a site where you can read up on being a Walmart greeter.