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Why the Mac App Store is such a priority for Apple

Daniel Eran Dilger

Apple not only announced plans to open a Mac version of its App Store, but slated an aggressive target to begin selling titles within three months. Here’s why it’s so important to the company.
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I got started advocating for a Mac software store in 2006, almost two years before Apple opened its iPhone App Store and month before the company started selling iPod games.

The writing was on the wall; Apple iTunes Store was already selling blockbuster amounts of music, and Apple was also operating a major online store with everything from peripherals to software to cables and ink cartridges. Why not merge a store into the Finder?

My prediction was based on the idea that Apple could tie its online retail presence into the Finder, much like the iTunes Store fit right into user’s existing music libraries. That would enable the company to help users buy exactly the right type of RAM or toner carts they needed, based on what their system already knew to be installed.

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What I didn’t foresee was what Apple would do a month later: iPod games. However, having already primed the imagination pump, it seemed obvious to me where Apple was headed with iPod games, particularly a few months later when the iPhone arrived.

With iPod games, Apple was clearly experimenting with how to package, market, and securely deliver software. I was confident–or at least optimistically hopeful–that Apple was doing this to revolutionize how all software was sold, for reasons I’ll address in a moment.

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Walk before you run

In an industry where observers often forget that buildings require foundations and that good plans are more important than an enthusiasm to start building, Apple’s introduction of iPod games was roundly criticized.

Why weren’t small Mac developers invited to the party? Why wasn’t the open source community asked about how they would design a games platform? Why didn’t Apple allow customers to share software downloads like borrowed books? Why didn’t Apple just turn the whole concept over to Richard Stallman and let the GNU collective crank out a whole library of free games, something that had worked so well for Linux and Pandora?

From my perspective, Apple’s iPod games efforts were clearly a fledgling experiment. Once the iPhone was unveiled, it seemed very obvious that iPod games were simply an exercise in developing a secure software mechanism designed to make software a way to add value to Apple’s hardware, rather than a way to create new value, something that has dogged Apple for 30 years (and a problem I’ll articulate below).

And so it was that while everyone else seemed to think of iPod games as manure, I sensed that they were only a sign that a pony was around the corner. That pony turned out to be a really fast racehorse, but Apple’s history of partnerships with its software developers has been more along the lines of horse meat.

Apple reinvents software for its own survival

As a company, Apple doesn’t seem too worried about all the indigent criticism directed at it by open software ideologues. It is, however, very serious about the threats posed by software companies that get all chummy with its platforms. And for good reason.

In the late 70s, Apple’s hardware fell in love for the first time. And as most young creatures do, it fell for the first person to show it some attention. It was VisiCalc. The steamy romance caused little Apple IIs to fly off the shelf, establishing Apple as a major hardware maker in the emerging PC market.

Apple’s dependence upon VisiCalc didn’t last long however, as VisiCalc brought its software to other platforms, and particularly as Lotus invented 1-2-3 as a VisiCalc killer. Apple should have learned, we can now say in retrospect, that software is a heartbreaking player of fragile new hardware platforms.

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Office Wars 4 – Microsoft’s Assault on Lotus and IBM

In the early 80s, Apple partnered with Microsoft in developing the Macintosh. Steve Jobs recognized how important software would be in launching a wildly new hardware platform, so he arranged a marriage between the Mac and Microsoft’s Word and Excel, two ugly siblings that weren’t getting any action in the DOS PC world, where Lotus 1-2-3 and Wordperfect were still the heartthrobs everyone wanted to date.

The launch of Macintosh helped Microsoft more than Apple. It turned the minor language interpreter and DOS maker into a credible applications vendor via its Mac apps. But the Mac itself didn’t take off until Jobs lined up another mate: the offspring of Adobe PostScript and Altsys PageMaker. Wedded to Apple’s Mac and LaserPrinter, this desktop publishing family earned Apple enough money to comfortably take a nap in, where it dozed off while Microsoft snuck out of the compound armed with Apple’s real value: an easy to use desktop environment.

Microsoft married its copy of Apple’s technologies with its own Office apps to set up the Windows PC family, which ruled the PC desktop for the next twenty years as Apple struggled to find reasons for people to buy its non-Windows hardware.

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If Apple blogged its software strategy

Despite recently pulling in more revenues than Microsoft, Apple remains small enough that it must keeps its plans secret to remain competitive. But since you clearly are among those interested in knowing what the company is doing, here’s my take as Apple’s unauthorized biographer.

As a hardware maker, Apple doesn’t want to keep experiencing the pain of marrying a software partner, undergoing a few years of an abusive relationship, and then going through an expensive divorce that requires Apple to maintain its partner financially while it goes off to earn even greater fortunes with a younger, more attractive hardware maker.

This kept happening because Apple historically leapt into relationships with anyone expressing any interest, out of fear that a bad relationship is better than no relationship at all. Recently, Apple has taken a series of steps to prevent the expensive heartache of being jilted by its software lovers.

Don’t break my hardware heart

Particularly since 2000, Apple has figured out that, in many cases, it’s better to please yourself in the software department than to partner with another vendor you depend on for your software satisfaction. Final Cut, Logic, iLife and iWork were all acquisitions or new creations, not marriages of convenience with a partner capable of leaving.

The iPhone App Store converted Apple from being a hardware partner to being a platform vendor. Apple doesn’t hook up with software developers to create software that works on the iPhone; it maintains room and board for developers to sell themselves to its clients, whose entire experience is controlled by Apple. Apple’s not the hardware side of a marriage; it’s now a pimp (ahem, “madam”) for software workers who are free to leave but not to break the rules.

When iPhone developers start causing trouble, Apple can simply delist them, making the value of their software rather worthless. Google introduced a copy of the App Store for Android, with the promise that developers can pretty much do anything, as long as they put out for Android. The problem is that there’s no money in the free-for-all Android Market, so its stable is full of rather undesirable tricks who harbor viruses and other disturbing maladies.

The result has been that the software available in the App Store has added a lot of value to the iPhone and iPad for consumers, helped sell a lot of hardware, and brought in over a billion in revenues for its developers. In contrast, Android users buy the hardware primarily to use Verizon or Sprint’s network, and its software does little for developers or users, while Google earns a thin piece of mobile ad revenues.

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Bringing the brothel back to the Mac

Apple’s challenge now is to convert its existing software marriages into business relationships housed in an environment that Apple maintains and controls. Observers are asking how Apple can possibly demand a “new” 30% cut of software revenues through Mac App Store, how it could impose new rules, and how it can launch the App Store while also allowing alternative forms of distribution of Mac software. I see none of these as real problems.

First, while Apple’s critics like to howl about the 30% software cut in the App Store (or the 40% cut in the iTunes), they seem obliviously ignorant of the real costs of doing business. Outside the App Store, developers already pay at least 50% of their revenues to retailers. Of course, they can also set up their own fulfillment stores and try to market their products directly, but that costs a lot, too, particularly the marketing required to create public awareness that they’re even there.

Anyone who doubts Apple will find developers interested in delegating the costs of marketing, merchandizing, sales fulfillment, and software update distribution to Apple for a 30% cut needs only to look at the existing iPhone App Store. Currently, Mac software developers are unable to sell their work any more effectively than Android, Symbian, or Windows Mobile software. They pay more to retail their software, and must develop their own barriers to software theft, as consumers generally prefer not to pay for the software they use unless it’s too easy and simple to not throw down a few bucks.

“Controversial” quality control

Secondly, while Apple’s rules were (and continue to be) issues generating controversy, there’s little real credibility in the claim that strict rules haven’t helped the App Store achieve its success. If the iPhone has started out like Android, with little more than tens of thousands of individual wallpapers or ringtones masquerading as “apps,” plenty of buggy, ugly titles, and lots of adware junk, consumers would have quickly tired of returning to iTunes to search for and buy new apps. They haven’t.

Two years after the iPhone App Store appeared, Apple launched the iPad App Store to resounding success, a seal of approval from both developers and customers. The critics who have long imagined an imminent revolt occurring among App Store developers have lost all credibility. It just works.

Apple’s quality control standards are only novel in the world of computer software; there are no other large, successful retailers who stock tons of defective junk and other garbage at the haphazard whim of their suppliers. Even WalMart exercises staunch control over what its stores sell, to a degree that makes Apple look downright permissive.

How Mac App Store titles are different

Thirdly, it does not appear to be problematic that the Mac App Store will exist independent of existing software. While I haven’t yet seen a full detail on how Apple expects its new store to work, it seems to be the case that it will not simply be packaging up existing Mac software to sell online through a new storefront.

Instead, it appears Apple has plans to inaugurate a new class of apps that will be somewhat exclusive to the Mac App Store. First of all, Apple touted features of the iOS App Store (including autosaved documents and autoresume apps) as being endemic to Mac App Store titles. This will require some reworking, as today’s Mac titles don’t constantly behave like iOS apps.

Apps will also need to be created in line with a new set of guideline specifications, which include not using optional installs (including Java, Flash, or Rosetta for interpreting PowerPC code on Intel Macs). Apple is getting tough on creating a software market that put it in charge, rather than the whims of its developers. It makes sense that Apple would assert control over the relationship, as it’s Apple platform on the line here, not the developers’.

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Mac apps that only work from the App Store?

This also appears to mean that apps in the Mac App Store will be the same securely-signed, single-bundle, easy to install and update, exclusively Apple-API app files that the company sells through iTunes for iOS devices. Unlike existing Mac development, Apple now requires Mac App Store developers to obtain a company-signed certificate to encrypt their apps for sale in the Mac Store. That likely won’t do anything to prevent developers from selling their apps outside of the store, but it’s unlikely that developers would want to.

For starters, the app security that Apple currently uses on its iOS devices to limit casual piracy only works because the iPhone and iPad have a secure OS that requires that all apps be signed. This prevents apps from working on the devices unless they are legitimately obtained from iTunes via the user’s account (or are signed by a corporation or developer using an ad hoc security certificate that allows it to run on that specific device), unless of course the user has performed a jailbreak to disable the security system.

On the Mac, there is currently no requirement that apps be securely signed. The Mac App Store will set up an environment that enables signed apps to run. However, this won’t prevent them from being distributed without the signature by developers. That will likely be avoided by developers themselves, particularly once they witness how their sales implode once an unsigned, easy to steal version of their software hits widespread unauthorized distribution.

Developers could create their own secure environment for running their signed apps securely yet independent of Apple, but that would be an awful lot of work for little benefit.

People who think developers will be excited at the prospect of “saving” that 30% cut Apple charges by selling their apps directly are apparently unaware that developers customarily lose a 50% to 90% cut of their software revenues to piracy when there’s no DRM to stop consumers from stealing it. Just ask Android developers. Or Symbian developers. Or today’s Mac developers.

The flip side is that Mac developers will be able to float limited or trial versions of their apps outside the store (they can’t within the store, according to Apple’s rules). This offers them the ability to promote their wares independently from Apple, while still benefitting from the secure sales within the Mac App Store (something they can’t currently do with iOS titles). Additionally, Mac apps that are rejected by Apple can still be sold by the developers themselves on their own (albeit without DRM); iOS app developers are just out of luck if Apple rejects their app.

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A new take on developer love

And so it is that Apple is maturing into a leather hearted matriarch presiding over a stable of developers that everyone with a Mac will want to experience, repeatedly. Apple is ensuring that software on the Mac isn’t a market that carves value out of its side, but rather a break-even opportunity to enhance the value of Mac hardware sales while encouraging high quality, affordable software that adds value to its hardware in a way that its developers can’t easily take to other platforms.

This initiative is so important that Apple forced it into its late 2010 schedule of events, displacing some of the resources needed to deliver the next iPad or Mac OS X Lion. This is a big deal.

Apple isn’t alone in realizing that managed software markets are important to platforms. Microsoft has been talking about a Windows store for some time. The company attempted to launch one for Windows Mobile in 2009 after announcing the intent to do so in September 2008. Despite having an installed base similar to Apple’s iPhone (at least at the time), and lots of developers (including important ones in corporate and government circles), the company completely failed to make it work, and finally abandoned the entire effort to start over from scratch with Windows Phone 7.

This all happened before

Apple certainly didn’t invent the concept of managed software markets. Nintendo created what is perhaps the first hardware-approved consumer software portfolio when it launched the NES game system in the mid 80s with a licensing chip that prevented third party developers from creating software independent of its “seal of approval.” Every video game maker since has followed suit.

Nintendo’s lockout chip was largely in reaction to the glut of awful, unrestricted software that strangled Atari’s video game system a couple years earlier. What’s interesting is that Nintendo used its licensing chips to keep game software prices high and to extort high licensing revenues from developers, something Microsoft and Sony have emulated, as all of the video game hardware makers rely upon software to bolster their thin hardware margins.

Apple’s App Store security is intended to keep software quality high and enable prices to be cheap yet sustainable for developers due to volume sales. The company exacts a very low cut intended only to maintain the store and cover expenses, and the company has regularly reported that its App Stores are run at break-even, not to make a big profit from developers. This makes it most ironic when Windows Enthusiasts look up from their Xbox to decry the supposedly high cut Apple is charging in iTunes.

Also interesting is the historical reversal of Atari and Nintendo, this time played out of order by Apple and Google. Rather than fixing the fatal flaws of a predecessor like Nintendo, Google’s Android Market is reversing the success (that Apple has demonstrated how to achieve) by setting up a Atari-esque free-for-all market where low quality abounds amid piles of unsold merchandise.

And Apple’s priority to get the Mac App Store up and operational? It’s already twenty five years late to the software licensing party. Good thing its still years ahead of everyone else in the desktop and mobile computing world in that regard.

48 comments

1 Berend Schotanus { 11.01.10 at 1:48 am }

Nice and interesting article about a very relevant subject.

Apple’s challenge now is to convert its existing software marriages into business relationships housed in an environment that Apple maintains and controls.

Maybe as an addition to your many observations:
One of the interesting features of App Store apps is the scale of the app. You can see this most clearly in the way Apple translated its own iWork suite into three separate $10 applications.
We were used to massive $1000 software suites like Office or Creative Suite. This suite-model probably has its own reason of existence in the software market as it used to be. But it’s not the way the app store works.
Instead of a generic “one size fits all” kind of solution you find small but very targeted and specific apps. To do the tasks you used to do with an old fashioned software suite you will probably buy a dozen different apps, resulting in a much more appropriate, customized experience. Users choose their own cocktail of apps, simply ignoring functions they wouldn’t use in the first place, but that would be included in the big software titles as a matter of standardization.

So my guess would be these existing software marriages with old school “massive” software suites will gradually lose relevance in favor of smaller but much more targeted apps (that probably won’t be written by Adobe or Microsoft).

2 DesperateDan { 11.01.10 at 3:17 am }

I’m currently on day 5 of a wait for the postal service to bring me new software that I ordered. After experiencing the App Store for my iPhone, where you get the software you want immediately and usually very affordably, the Mac App Store can’t come soon enough.

Things like autosave will make a huge difference to the large proportion of people who don’t know how to work computers the way we all do. The amount of people I’ve heard saying they lost work because the forgot to save it is incredible (and I’ve done it a few times myself I have to admit).

Another great write up Dan, it’s great to have you back in full flow.

3 David Stevenson { 11.01.10 at 7:05 am }

When I saw the Mac App Store, I immediately thought that the main developers for it would be the iOS developers, who like the iPhone to iPad enhancements of their software, would do an iPad to Mac enhancement of their titles. Especially since the Mac App Store seems designed to cater to the very very small developer (one person hobbist) who can’t afford the time/money/effort to make a title that would work for retail distribution.

4 tundraboy { 11.01.10 at 7:07 am }

I was hemming and hawing about purchasing iLife 11 family pack until Apple announced that iPhoto (the only one I really want) will be sold in the Mac App Store for $14(?) and installable to up to five(?) authorized computers. Is this a win for Apple? Yes. Because I am more likely to buy software now that I need to pay for only those that I realy want. iWork is probably next up after iPhoto. FCE for sure if it surfaces on the Mac App Store.

5 brew57 { 11.01.10 at 8:03 am }

The App Store-on-a-Mac move is more revolutionary than it appears now….just as iPAD was dismissed as nothing more then large iPhone, this is now being dismissed as just another way of software “download” which “everyone knows how to do already”. The impact will be fun to watch. I just wonder when MS will announce their own copycat for Windows?

6 beetle { 11.01.10 at 9:41 am }

Such colorful analogies! Such great news! Hordes of inexpensive high quality games! What will Windows apologists say now?
Here’s a URL:
http://www.apple.com/mac/app-store/

7 ashwindollar { 11.01.10 at 9:51 am }

@brew57. Microsoft already has something pretty close. The Windows Marketplace.
The closest thing to the App Store for the Mac would be the software software stores on Ubuntu and other Linux distributions. What would make this superior would be it’s super simple DRM system and that this actually sells paid apps, rather than just free apps.

8 The Mad Hatter { 11.01.10 at 10:40 am }

Linux software repositories have existed for years, and have done a wonderful job of distributing software to users. So once again Apple is borrowing an idea from someone else. The only question is will they get it right (for those who think this is a complaint, remember that Apple is never first with an idea, but they often implement it better, like the IPod which was not the first MP3 player, but was the best).

However Daniel is wrong about ISVs who don’t use the store not being able to use DRM. ISVs have been using DRM for years. The issue I think he was trying to articulate is that they won’t be able to use Apple’s simple DRM system. Since DRM is one of the biggest complaints consumers have, and Apple has a great track record at producing acceptable (from a consumer standpoint) DRM systems, like the Fairplay system for ITunes music, using the Apple DRM system could have huge advantages.

And the store won’t lock out those who decide to use Free Software like Firefox. In fact it would be to Apple’s advantage to work out a way to get all of the major free software projects into the store, since they are often far better than their proprietary equivalents. I mean, who uses Safari? Firefox is a much better browser. For video, Videolan Player is far better than Quicktime or Windows Media player.

It should be interesting seeing if Apple can get it right, and for that matter fix the problems with the existing IPhone/IPad stores.

9 shawnpetriw { 11.01.10 at 12:00 pm }

Great analysis again. I’m going to go back and read Office Wars again – loved that stuff.

One small typo – Altsys PageMaker should be Aldus PageMaker. However, Altsys created Freehand that was licensed by Aldus I believe.

10 nevermark { 11.01.10 at 12:08 pm }

IT HAS BEGUN. The Mac App Store will set Apple up for another HUGE change – Once Mac users are accustomed to Mac Apps, Apple will have the freedom to ship Macs with non-Intel chips and other non-industry standard hardware without any disruption or compatibility problems for Mac App customers or developers.

The strict API requirements will let Apple recompile Mac Apps for any kind of hardware it ships.

Advantages for Apple:

1) The complete freedom from CPU compatibility issues will give Apple leverage to negotiate better prices with Intel, AMD or switch to its own proprietary chips for cost control and performance benefits. Laptops with iOS CPUs?

2) Apple will be able to leverage its experience with unique iPhone, iPod and iPad hardware design toward more creative laptop and all-in-one PC designs.

3) Switching the CPU from Intel to anything else, once the Mac App store is flourishing, will eliminate all non-Mac App software for that device. I would expect the change to happen at the low-price mobile end of the product line (MacBook, MacBook Air, iMac) first, and slowly extend to the higher end where non-Mac App software will be needed longer (MacBook Pro, Mac Pro).

4) Once all or most Mac OS software is Mac App software, iOS and Mac OS will be unified with only GUI differences. Apple will be able to quickly create new hardware products (wall screens, heads up displays) and provide them with App software, requiring at most small changes from developers to adapt existing iOS and Mac Apps.

5) Apple will even have the option of shipping Mac Apps to Windows, with little effort, with a Mac API library. It is not likely Apple will do this in the short run, but if Windows ever stumbles this could deliver a painful blow to Microsoft’s software development platform. Apple could also choose to ship a subset of the Mac API and Apps to pull Windows users into Mac software and give them a strong incentive to upgrade for full Mac functionality and unique iOS/Mac hardware integration options.

The complete hardware independence that Apple will get from the iOS/Mac App Stores is the biggest platform play in a decade. It will accelerate the expansion of Apple’s unique multi-hardware-form-factor ecosystem to new kinds of hardware and interfaces. It gives Steve even more freedom to re-imagine and re-invent computing hardware and software.

11 bregalad { 11.01.10 at 12:09 pm }

The Mac App Store is clearly restricted to small, highly targeted apps. It will help move some people away from monolithic application suites. Others, because of need for features like cross platform compatibility, will continue to buy suites through the usual channels. Many of the suite developers already have the resources to market their products and don’t need the App Store.

Eventually the number of people needing suites will dwindle and the majority of software will be small highly focused tools. At that point it would be possible to move users toward document centric computing, but whether that’s really a good idea is up for debate.

12 Andy Baird { 11.01.10 at 12:26 pm }

“If the iPhone has started out like Android, with little more than tens of thousands of individual wallpapers or ringtones masquerading as “apps,” plenty of buggy, ugly titles, and lots of adware junk, consumers would have quickly tired…”

Daniel, did you mean to say “If the iPhone HAD started out like Android”? Your present “has” wording doesn’t seem to support the point you’re making.

13 Mark Hernandez { 11.01.10 at 1:05 pm }

The Mac App Store is just another arm of the amoeba moving forward, and cannot be all things to all people.

But for this particular developer (me), it could not be MORE PERFECT!

14 kerryb { 11.01.10 at 2:48 pm }

Dan, you did not mention Apple’s recent tryst with Google, the one that gave birth to the little bastard called “Android”.

15 daveynb { 11.01.10 at 4:42 pm }

Gosh, titillation and edification in the same scented, suggestive breath…
I’m excited and informed, aroused and enlightened.
In need of a shower and feeling smarter.
Thanks for that!

16 kdaeseok { 11.01.10 at 8:54 pm }

“What’s interesting is that Nintendo used its licensing chips to keep game software prices high and to extort high licensing revenues from developers, something Microsoft and Sony have emulated, as all of the video game hardware makers rely upon software to bolster their thin hardware margins.”

Not entirely true. Video games then were ‘cartridges’, unlike today’s downloadable apps- (or even cds/dvds), they were expensive to make. Certainly more expensive than making today’s DS cartridges as well.
It means losing money if unsold. So putting a high price and licensing fee was the safety measure that Nintendo learnt from ‘Atari Shock’.
Of course, this made customers leave Nintendo N64 and head for Sony PS1- but at the time of NES and SNES when cartridges were the only means of video gaming, things were clearly different from ‘App Stores’ now.

17 kdaeseok { 11.01.10 at 9:07 pm }

“Additionally, Mac apps that are rejected by Apple can still be sold by the developers themselves on their own (albeit without DRM); iOS app developers are just out of luck if Apple rejects their app.”

I wish it was the same case for iOS…

18 gslusher { 11.01.10 at 9:12 pm }

“indigent criticism” threw me a curve until I realized you meant, “indignant criticism.”

19 cy_starkman { 11.01.10 at 9:24 pm }

Nice article but it doesn’t say why Apple is moving so fast. It is just saying why they are doing it. Why fast, I’d say it has to do with AppleTV. They want the AppleTV AppStore live, fast but there is no compelling reason for devs since it’s not selling volume and would need software to be re-engineered.

So if they fast launch the mac AppStore where arguably there are millions of customers, devs re-write for big res and no multitouch input then bam Apple just caused the creation of lots of apps for Apple TV, then next year it comes out already full of things.

See, AppleTV doesn’t have the volume in owners to be attractive (the iPad just upscaled in the interim period but it still allowed for the same input) so Apple is reversing the story. Make the apps, then “upgrade” Apple TV’s iOS and because of the apps people then buy the volume.

20 The Mad Hatter { 11.01.10 at 10:10 pm }

Author: gslusher
Comment:
“indigent criticism” threw me a curve until I realized you meant, “indignant criticism.”

Looks like he was working on an IPhone or IPad, that’s the sort of spelling mistakes I end up when using them.

21 imfullofit@gmail.com { 11.02.10 at 12:22 am }

I find myself wanting to leave my work and play games sometimes. Instead of grabbing my iphone that is charging in the other room I would be really happy to open up an app widget style on my mac and play for a bit even in a small format. This would also take care of the “lack of games on the mac platform” argument that is thrown around constantly.

Also, many of the iphone apps are much better than the web based solutions that are provided by many companies. I would prefer to use these instead.

22 Extensor { 11.02.10 at 12:31 am }

Great post Dan. One of my favorites. But I can’t believe you of all people actually wrote “developers customarily lose a 50% to 90% cut of their software revenues to piracy”. Do you really think that everyone pirating a piece of software would have bought it otherwise? Sure there is some loss but 50% to 90% is ridiculous.

23 The Mad Hatter { 11.02.10 at 7:21 am }

First off, it’s not piracy, it’s copyright infringement. Piracy involves violence in the high seas. Copyright infringement involves making copies that you do not have a right to.

As to copyright infringement rates, I actually did some research a while back, and the numbers I came up with were less than 10%. Now my methods would drive the Business Software Alliance to distraction, but I was interested in whether or not it really was a lost sale, and in most cases where an unauthorized download occurs, it isn’t a lost sale, i.e. the person tries the download, decides they don’t like it, and never use it again. This was especially common with games, where tastes differ wildly. But even with productivity software, in most cases if the free one wasn’t available, the downloader wouldn’t have bought it. ALL of the people who I talked to who were running Microsoft Office said that if they couldn’t get it, they would have installed Open Office instead. They all knew about it, but they chose to download MS Office because that was what they used at work.
So I don’t see that the Apple Software Store is really going to make a huge difference as far as copyright infringement goes. Where it will make a huge difference is that it will be a lot easier to find the software you want. It’s interesting watching Apple and Microsoft attempting to catch up with Linux.

24 T. Durden { 11.02.10 at 9:57 am }

@ The Mad Hatter:

Nah – it’s theft, plain and simple. It’s to take something without paying. No amount of verbal dancing around or playing with made up numbers can get around that fact. It’s a modern day disease to think that you’re entitled to something, just because you want it.

25 brew57 { 11.02.10 at 10:28 am }

@ashwindollar

“Microsoft already has something pretty close. The Windows Marketplace.”

Yes, right. Microsoft also had tablets and was a leader in mobile smart phones…before the Apple versions appeared. This is more like it.

26 The Mad Hatter { 11.02.10 at 11:54 am }

Nah – it’s theft, plain and simple. It’s to take something without paying. No amount of verbal dancing around or playing with made up numbers can get around that fact. It’s a modern day disease to think that you’re entitled to something, just because you want it.

Talk to a lawyer, and he or she will set you straight.

27 jlh { 11.02.10 at 2:06 pm }

I think the Mac App store is about the only way to sell Mac Apps without piracy in China – which is turning into a hotbed of sales for Apple.
China is cranking up now and App Stores for everything Apple is needed yesterday.

28 lowededwookie { 11.02.10 at 6:32 pm }

@gslusher and The Mad Hatter

“Comment:
“indigent criticism” threw me a curve until I realized you meant, “indignant criticism.”

Looks like he was working on an IPhone or IPad, that’s the sort of spelling mistakes I end up when using them.”

Might need a thesaurus there boys. I thought the same thing but indigent is actually a real word which means:

“poor or needy”

29 The Mad Hatter { 11.02.10 at 9:32 pm }

No, don’t need a thesarus. The IPhone/IPad software attempts to guess what you are typing, and sometimes it comes closer than others. Indigent is close enough to indignant, that the software some times mistakes one for the other.

30 lowededwookie { 11.02.10 at 9:37 pm }

Doesn’t come up with either on my iPad.

Either word kind of fits in the context.

31 John E { 11.03.10 at 9:59 am }

the huge issue not addressed in this article is: will Mac software prices drop dramatically? as happened with the iPhone app store compared to previous smartphone app prices. as independent Mac developers (starting with most shareware developers) are able for the first time to bring smaller focused applications to market via the store that compete on an equal footing with the established big name suites from Adobe, Roxio, MS, and all the rest. and ultimately forcing the big names to drop prices or break their suites up into separate chunks too.

i think so. which will be another big boost to Mac sales, especially combined with the Lion hype next summer.

32 The Mad Hatter { 11.04.10 at 8:40 am }

the huge issue not addressed in this article is: will Mac software prices drop dramatically? as happened with the iPhone app store compared to previous smartphone app prices. as independent Mac developers (starting with most shareware developers) are able for the first time to bring smaller focused applications to market via the store that compete on an equal footing with the established big name suites from Adobe, Roxio, MS, and all the rest. and ultimately forcing the big names to drop prices or break their suites up into separate chunks too.

Actually John, the big issue is what this will do to Microsoft. Apple relies on hardware sales. Decreasing software prices will help Apple sell more hardware, hardware which mostly doesn’t run Microsoft software.

And of course decreasing prices for Mac software will have people asking why exactly they are paying so much for Office? In fact it may push a lot of people towards considering the other option, Linux, and every machine converted from Windows to Linux also has negative impacts on Microsoft’s bottom line.

I think we can regard this as an all out attack on Microsoft. Steve said a long time ago that Microsoft doesn’t have to die for Apple to win. Maybe he was lying, like he was lying when he said that Apple wasn’t developing a tablet product.

33 hrissan { 11.04.10 at 10:15 am }

Daniel, I wondered how on Earth Apple will protect the software from Mac App Store from being stripped of digital signature and distributed via torrents and p2p networks? I pondered the question for sometime (being software security expert :)) and I came to conclusion that Apple will restrict access to certain APIs to apps signed by Apple (unmodified Apps from App Store running on Mac signed into corresponding iTunes account). So we’ll have a community willing to break this restrictions and we’ll hear soon about “Jailbreaking” your Mac. :) Thanks for good article and have a nice day!

34 JohnWatkins { 11.04.10 at 12:48 pm }

Theft versus infringement. Different but similar.

The difference is semantic and not really relevant in everyday life. If one is involved in a legal battle, it’s clearly more important. Semantics are the essence of Law, legal interpretation, and legal argument.

For practical purposes, whether one intentionally “infringes” or intentionally steals, both are illegal and put one at risk of severe legal and financial trouble. It would be silly and arbitrary to use the semantic distinction between the two to absolve one or the other. For example, the fact that “swindle” is technically and semantically “not theft” doesn’t really alter the harm resulting when either has occurred. Nor does it make one more or less legal than the other.

35 The Mad Hatter { 11.04.10 at 1:35 pm }

For practical purposes, whether one intentionally “infringes” or intentionally steals, both are illegal and put one at risk of severe legal and financial trouble.

Wrong again. Theft is a Criminal offence, Copyright Infringement is a Civil Offence. There is a huge difference between Criminal and Civil offences, so it isn’t silly and arbitrary to point out that they ARE NOT THE SAME.

For example in many US states, someone with a criminal record is not allowed to vote. Someone who has committed copyright infringement isn’t affected by the voting laws.

And of course there is the question of whether or not copyright infringement actually causes any damage. There have been a variety of studies on the issue, and findings have been divided. Curiously independent studies tend to indicate that non-commercial copyright infringement causes very little if any damage. Commercial copyright infringement is another issue, see the Oracle v. SAP court case for details.

36 gslusher { 11.04.10 at 4:10 pm }

@The Mad Hatter:

“Wrong again. Theft is a Criminal offence, Copyright Infringement is a Civil Offence.”

First, it’s “offense,” with an “s,” not a “c.”

Second, if you don’t think that software piracy is a criminal offense, just ask:

Maurice Robberson – 3 years
Thomas Robberson – 30 months
Danny Ferrer – 6 years
Alton Lee Grooms – 1 year
Timothy Kyle Dunaway – 41 months
Todd Alan Cook – 18 months
Matthew Thomas Purse – 21 months

The time periods after each name are the federal prison sentences each person received for software piracy. (You can find details by doing a Google or Bing or Yahoo or whatever search on the names.)

In the UK, IT directors of corporations can face up to 10 years in prison for software theft.

http://www.information-age.com/article-archive/305686/it-directors-face-prison-sentences-for-software-theft.thtm

Here’s an analogy you might contemplate. Ralph wants cable tv, but doesn’t want to pay for it. He convinces his neighbor Lester to let him splice into Lester’s cable. (In most cases, in the US, one doesn’t need a set-top box to get the basic cable channels if one has a cable-ready tv or DVD player or DVR.) Somehow, the cable company finds out about this and files a criminal (yes, CRIMINAL) complaint against BOTH guys. They’re convicted of theft of cable services and sentenced to prison.

Now, just how is that inherently different from software piracy? In both cases, someone obtained a good or service illegally, without paying for it.

“Curiously independent studies tend to indicate that non-commercial copyright infringement causes very little if any damage.”

Cite these, please. Many software developers would strongly disagree. Some can track how many people are using their software (e.g., through online games) and have found that the number is significantly greater than the number of license they’ve sold. Pirated software has been found on computers in corporations, even government agencies.

37 The Mad Hatter { 11.04.10 at 5:29 pm }

gslusher,

I’d really like to see the statutes they were charged under. I have a suspicion that if you check, you will find that the charge wasn’t copyright infringement.

As to stats, here’s an article which covers part of it:
http://www.techdirt.com/articles/20100412/2346298988.shtml

As to copyright infringement in corporations and government, that’s commercial, which is somewhat different. For a good example of commercial infringement, Oracle has sued SAP, and SAP has actually admitted that their people did the deed. The court is now looking into how much the penalty will be.

38 gslusher { 11.04.10 at 9:32 pm }

I tried to leave a reply, but I can’t see it. When I tried to leave it again, I got a notice of a duplicate comment.

39 gslusher { 11.04.10 at 9:42 pm }

I’ve tried to post a reply with a bunch of links, but it didn’t seem to go through. Here’s ONE on a conviction:

http://www.pcworld.com/article/143252/software_piracy_conviction_sends_two_to_jail.html

40 gslusher { 11.04.10 at 9:43 pm }
41 gslusher { 11.04.10 at 9:57 pm }

Apparently, the comment system won’t allow multiple links in one reply.

The convictions I mentioned were for software piracy, which was the topic of discussion, not copyright infringement, in general. Apparently, software piracy (and other forms of intellectual property theft) can be a crime, not just a civil offense.

As for the GAO report, did you actually read it or even the summary? It doesn’t say quite what the techdirt.com article suggests. Here’s the end of the summary:

“Generally, the illicit nature of counterfeiting and piracy makes estimating the economic impact of IP infringements extremely difficult, so assumptions must be used to offset the lack of data. Efforts to estimate losses involve assumptions such as the rate at which consumers would substitute counterfeit for legitimate products, which can have enormous impacts on the resulting estimates. Because of the significant differences in types of counterfeited and pirated goods and industries involved, no single method can be used to develop estimates. Each method has limitations, and most experts observed that it is difficult, if not impossible, to quantify the economy-wide impacts. Nonetheless, research in specific industries suggest that the problem is sizeable, which is of particular concern as many U.S. industries are leaders in the creation of intellectual property.”

Note the last sentence. (I read the parts of the report about software piracy.)

The GAO report looks at the overall economic impact of pirated and counterfeit goods. It does not really address the impact on individual companies or developers whose products are pirated. Some of them have good evidence of massive piracy. Even if one does not assume a one-for-one substitution (i.e., not everyone who used a pirated copy would buy one if they couldn’t get a pirated copy), ANY loss of sales and revenue can be damaging to a small developer.

As others have said, though, even if the economic impact of software piracy were very little, that wouldn’t justify the act. It’s still illegal and, in my estimation, immoral. Go back to my story about theft of cable tv services. In that case, the only “damage” was that the cable company MAY have lost revenue. (“May” because Ralph may not have subscribed if he couldn’t steal the service, so there may be no net economic impact on the cable company.) That’s essentially the same as in software piracy. Theft of cable tv service is a crime in many states.

42 berult { 11.05.10 at 5:30 am }

Here’s a comment I posted at “Asymco” on an article under the heading ” How much profit did vendors capture from Android powered phones ” and how it ties in with ” Why the Mac App Store is such a priority for Apple “:

” Every single smart phone vendor, including Apple, pays a disguised private tax to Google. Low grade, low cost Advertising ubiquity levies a universal tax on mobile, as it does on desktop. And with the added benefit of slipping under the radar, witness the charts above. 

It does look good for ios compared to Android. But for weighing Google’s comparative fate, one has to look at it through Apple’s prism. The better Apples does, the better Google does, for the creed here is to feed on Apple’s and other’s fortune.   

For Google, the principle is simple and so easy to implement that it startles the mind that few people really get it. 

Grow the smart phone global pie as much as you can, tease Apple to do the same, and Microsoft, and RIM, and the rest of them, and kill them with advertising easy profit and revenues. Aïkido the ebullience of the smart phone market, and subvert its dynamism towards your corporate goals of invading and controlling your hosts. Freebies galore for sneaky vectors. This is a development model that Nature has a patent on, so kudos to Google for not having to pay licensing fees on Nature’s meme. 

What geeks did with Software at MSFT, geeks “plus” do at Google with advertising: make every damn stakeholder pay a Google tax, money wise and degraded user experience wise, on their very own success, and systemically breed a “geekdom” monopoly. I know Apple gets it but have their hands tied up by Google’s “close to the vest” game with Governmental overseeing Agencies. 

As MSFT once controlled the software part of mainstream computing, and made a money printing press out of its practices, Google has its sight on streaming the bulk of advertising mind share to its global monopolistic scheme. A quite “natural” endeavor to prey on your competitor’s hosting capacity, especially while the defense mechanisms are neutralized by a third “not so neutral” party.” 

How can Apple counter, albeit in a systemic and rule abiding manner, Google’s foray into MSFT’s monopolist mind set’s legacy?

Well, first, wall the infected part out of your main ecosystem without prejudice to the User’s freedom of choice. The Browser is Google’s classic entry point into the user experience, the alpha and omega of Apple’s business model, with its quasi-monopolistic and heavily patented search engine. A Trojan Horse for Admob-like discounted Internet navigation that Apple has interest in optimizing out of its platform.  

Then offer a walled in alternative that extends the user experience into platform enhancing developer experience and its corollary, creative revenue sharing with mothership Apple: namely the App Store. A Mac App Store alongside ios App Stores will jumpstart some sort of self-sustained production and consumption cycle fueled essentially by emulated and market priced creativity.

Finally, cut Google’s supply chain off easy to prey on hardware vendors. Patents portfolio’s rigorous management is crucial to Apple’s ios and OSX platforms development; they should never relent on their quest for respect on their genial and creative undertakings. 

P.S. And prey through the Cloud that Google loses clout with Lobby permeated Agencies.                      

43 berult { 11.05.10 at 7:00 am }

Vowell and semantic trade off in my Post above, but feel free to leave it as is:

P.S. And pr”a”y through the Cloud that Google loses clout …

44 MikieV { 11.05.10 at 11:19 am }

Berend wrote, in #1: “Instead of a generic “one size fits all” kind of solution you find small but very targeted and specific apps. To do the tasks you used to do with an old fashioned software suite you will probably buy a dozen different apps, resulting in a much more appropriate, customized experience. Users choose their own cocktail of apps, simply ignoring functions they wouldn’t use in the first place, but that would be included in the big software titles as a matter of standardization.”

Funny how much this reminds me of Apple’s attempt to embrace the OpenDoc implementation of document-centric computing, instead of our existing application-centric model of computing.

Anyone remember CyberDog :)

If I remember correctly, the fatal flaw with OpenDoc was security, or lack thereof.

Wouldn’t an iOS-type system be able to avoid the problems OpenDoc had?

45 vanfruniken { 11.07.10 at 5:45 am }

Daniel, as to your expectation of an Apple Store being integrated into the finder, a task that is still assumed by itunes, I think this development is being held back because of the existence of iTunes for Windows, with which it likes to keep some parity on the Mac.

Indeed, on Windows, iTunes is more than an Apple Store. As you have pointed out repeatedly in the past, iTunes gives Apple quite a bit of leverage into Windows users’ software configuration, almost being a Trojan hourse to facilitate installation of Apple Technologies such as QT, Rendez-vous, Safari, etc., so the PC user gets exposed to all the Apple goodies that exist (and more) on the Mac platform.

[ I am only afraid that, if implementations on the PC were to exhibit bugs and substandard behavior, the whole Trojan horse idea may not pan out favorably]

46 The Mad Hatter { 11.07.10 at 10:58 am }

Now there’s a thought. Maybe Apple intends to get all of the Independent Software Vendors online, and sell Windows applications too.

Can you imagine the look on Ballmer’s face if they do?

Look out for flying chairs.

47 enzos { 11.07.10 at 10:15 pm }

The Cyberdog was a Wunderbeast, Mikie! Just not enough support from developers nor processing power in existence back in the late 1990s to make it compelling. Don’t know about OpenDoc security except that I never heard of any real-world problems with it.. and I’m sure it could have been fixed if there were.

48 NormM { 11.24.10 at 11:31 am }

I’m not convinced by the DRM argument, since the situation will be more like a jailbroken iOS device. I think the Mac app store will succeed because of convenience, low prices, and a guarantee of no malware if you buy directly from the app store.

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