Can an Apple, divided against itself, stand?

Can an Apple, divided against itself, stand?

Speaking of John Siracusa, he has an interesting post up on his Fat Bits blog concerning the Apple strategy tax -- whether Apple's increasingly divergent interests, from iTunes to iOS to App Store to iAds, will inevitably lead to compromise, contention, and/or conflict.

Apple's recent App Store changes, however logical and empirically justifiable they may seem, all point strongly to a company that has started to believe that what's good for Apple is good for America. And indeed, this may be the only way to reconcile the inherent conflict of interest. The alternative is philosophically and practically untenable. Apple can try to be a good platform owner and ensure that popular apps like Kindle and Netflix thrive on iOS, and it can also try to advance its own competing services like iBooks and iTunes, but both efforts cannot succeed to their fullest potential.

So the new 30% subscription policy can increase revenue but drive out companies like Amazon and Netflix, hurting the platform. Having AdMob on iOS it improves the platform but hurts Apple's own iAds. If they try to dominate everything it stifles competition and Apple risks stagnating and becoming non-competitive (as Microsoft did with Internet Explorer 6.) If they keep their own software and services modest they aren't producing the best possible products they can and suffer in a similar fashion.

If Apple were only making the platform it wouldn't be a problem. If they were only doing content it wouldn't be a problem. If they were only handling content delivery it wouldn't be a problem. But by trying to do all three successfully, it divides Apple against itself.

What's the answer? Perhaps Apple shouldn't have entered into so many businesses, especially the ones increasingly outside their core competence like online ads and subscriptions. But they have entered them, so what now? Can they balance all interests fairly and profitably? Could anyone?

[Ars Technica]

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Rene Ritchie

EiC of iMore, EP of Mobile Nations, Apple analyst, co-host of Debug, Iterate, Vector, Review, and MacBreak Weekly podcasts. Cook, grappler, photon wrangler. Follow him on Twitter and Google+.

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Reader comments

Can an Apple, divided against itself, stand?


To use one example, Steve Jobs claimed last June at the All Things Digital 8 conference that the iAd business was introduced mainly for the "convenience of the developers". I've read references to that effect a couple of times since then, so maybe it's just a means to limit Google's presence on iOS?

I think they can handle it. They wouldn't venture into it if they didn't think they could do it. And if it comes down to it, they could just drop some ventures and focus on the more important ones.

But they're not handling it. They better back off of this in-app subscription policy before big providers like netflix and hulu and amazon remove their stuff from the app store and there's widespread backlash.

"Perhaps Apple shouldn’t have entered into so many businesses, especially the ones increasingly outside their core competence like online ads and subscriptions."
Using that rationale, they never should have produced an mpg player, never sold media (music, video or books), and never produced a phone. All were well outside their core competence. There is no reason to think they won't bring the same diligence to ads and subscriptions... indeed quite the opposite.

It is not a question of diligence or focus -- Apple has proven many times over that they can keep multiple plates spinning in the air at once.
Siracusa's point is that that by providing both the platform and competing against developers who use that platform, Apple is in a position where the goals of one part of the company conflicts with those of another. In other words, past a certain point, the more diligent and focused the "platform group" is, the more damage is inflicted upon the "developer ecosystem group," and vice-versa.

I thought I had read somewhere Steve Jobs said that the new subscription rules only applied to magazine subscriptions and not Netflix and Amazon.

Actually according to a supposed email he sent, he said it applied to publishers. Now, technically I don't know what he means by publishers but to me publishers refers to actual content CREATORS such as newspapers, magazines, music/movie studios, etc.. By that definition Amazon & Netflix don't count as publishers. Now as to the Apple's in-app subscription policies and legalities I don't know the definition. Hopefully we'll know earlier but June 30, 2011 is when all subscriptions have to get on board so we'll know better by then I'm sure.

If it works well with published content, could it cross over to all in app purchase applications? Costs are always passed to the customer. Not such a good thing always.

All I know is that Apple needs to loosen up the cuffs on developers and restrictions. If they keep cracking down, Developers WILL leave, and their beloved platforms (Mac and iOS) which now thrive on apps, WILL NOT thrive.

Yup. Basic conundrum for every large company.
Intel: They sold their StrongARM CPU line in favor of x86. It would be incredible if Intel made ARM SoCs for Apple. Its amazing to me that EPIC processors continue to live, but they must get a lot of money for it.
Microsoft: "Windows" everywhere. Why shouldn't it be Microsoft software everywhere?
Google: Google's AndroidOS division makes enemies. Google's search/maps/youtube divisions (whatever they are in) likes to be everywhere.
So if you want to be a big company, you have to walk a fine line, and this is where the CEO and the executive team all have to have their heads on straight. As long as Apple continues to create win-win situations for Apple and customers, they'll be walking that line right.

"Why shouldn’t it be Microsoft software everywhere?"
Because Microsoft only has two successful software products: Windows and Office. Windows Everywhere makes more sense (to Gates and Ballmer) than Office Everywhere.
Microsoft doesn't need to succeed in the consumer space because they have locked in so many corporate IT departments. And because they don't need to succeed in, say, pad computing or online search, they don't bother to do it right. So they fail.

Yeah, that's the problem. Why doesn't Apple make Outlook, Word, Excel and Powerpoint for iOS? Why doesn't Microsoft make iE9 for X-windows and Mac OS X? Why doesn't MS make compilers, development environments for all sorts of OSs? It doesn't have to be Microsoft Windows everywhere.
However, Siracusa's article is one of those "stating the obvious things." The magic trick is how does one chart a path to win-win-win when one of the end goals is to be dominant. And Apple does want to be a 100 billion/year company in a couple of years, than a 1 trillion/year company down the road.
Also, I almost think it's a kind of a false premise. He thinks there is some kind of scenario where, based on his judgement, that winning should involve everyone should win, and that being a dominant winner is path down to stagnation and no-competition. Not an original thought as anti-trust laws are pretty old. It is a characteristic of any company or organization that becomes so big and so dominant that the they ceases to advance and the market its in ceases to advance.
Is it really true that it has to happen this way?

Awesome write up and cool critical thinking going on here. Props to Rene for posting this and linking to arguably the most intelligent blogs that exists today. We'll have to wait and see what happens. lol

What an excellent article? I must say though that I tend to focus on solutions more than I ever focus on problems :-) It's like I said on another article, Apple's current in the middle of a game of chess and whichever way they move there will be consequences for one or more parts of their business. It'll be interesting to see what they do about the above points, and as developers have until the end of June, and this years WWDC is "rumoured" to be between the 5th - 9th we'll probably get an update then.
I personally would like to see Apple have iAd's as mandatory on FREE Apps, and the split reduced to 80-20%.

"Apple can try to be a good platform owner and ensure that popular apps like Kindle and Netflix thrive on iOS, and it can also try to advance its own competing services, but both efforts cannot succeed to their fullest potential."
True, but being a good platform owner is more important to Apple right now. Hardware is still Apple's bread and butter, and 3rd party apps add enormous value for end users of Apple hardware.
But 10 or 20 years from now, hardware will be a commodity. It will essentially be free. Apple won't be able to maintain their profitability on Macs and iDevices alone. So they're setting themselves up for that low hardware margin future by developing services. Thinking ahead.

These companies need Apple more than Apple needs them. Apple doesn't need any publishing companies for consumers to buy their products. Do you honestly think a person is going to ask "Does the iPad have "Washington Post" app?" to decide whether or not to buy one? The answer is no. And if Netflix leaves, well here comes Apple's new movie streaming service if that ever happened.
Apple has the power and MONEY to do whatever they want. Do I agree with some of their policies? No, but is that going to stop me from buying their product? No. Besides the new In-app purchase makes my life way more easier then having to pay over and over again for a new issue on the iPad.

Is being anti-competitive illegal? Yes! Is being a company that controls when and how you use the device you paid for a smart choice? No!
People buy apple products at this point mainly because of the hype / marketing machine. If they get caught with anti-competitive practices, and some of the big apps like nook, kindle, and netflix. They will definatly face backlash, and with apple/steve jobs ego trip they need to.

Touché, but the problem is Apple doesn't have a sizable marketshare in anything but music and tablets. I just can't see them getting caught being anti-competitive for creating rules and restrictions on just their platform. If developers do not like these rules they will leave and go to android and windows. And as of right now they don't seem to mind.

Would the Daily have posted the news about Giz getting hold of a prototype iPhone 4? (If it were big enough news). The answer to this question relates to how apple can or would handle all interests effectively. If a jailbreak app somehow saves lives or mitigated some type of disaster that is newsworthy to the Times or what have you, the strong-point of the story noting that such app was rejected by apple, would such a story appear on the Daily?
We'll have to wait and see if apple is willing to take some hits for diving into uncharted waters.

Talking about corporate America, looking at iPad 2, just wanted to comment that the challenge for HP and RIM is not whether they can make their tablets compelling to consumers. It is whether they can make their tablets sufficiently compelling to replace their PCs and augment their smartphones (respectively) in corporate America. HP has literally millions of PCs in offices all over the country, many if not most still running Windows XP. RIM has Blackberry servers in most major corps. Both can see the potential of the iPad to provide a technology switch for no more cost than a useful upgrade – and providing all the ease of use and management of Apple’s overall hardware/software model. They are not trying to invade Apple’s consumer space; they are trying to invent a value proposition for their corporate customers that will forestall an invasion of corporate America by Apple’s “post-PC” devices.