iPod = Apple 2.0?
When Apple first became a legal partnership just over thirty years ago, few would have suspected that the next thirty years would end up being little more than a prelude to being the next big thing. Most surprised would be the founders, Steve Jobs, Steve Wozniak and Mike Markkula, they thought they were just going to be making a really profitable personal computer.
The personal computer they had in mind was, of course, the Apple II. The trio’s instincts were correct, the Apple II was a monster hit. For a time, until the IBM PC was introduced, Apple was the player in the personal market. Once the PC got around to being the PC, well, Apple took a quick backseat.
This seems confusing, how could Apple go from dominant computer maker with scads of software, software that included Oregon Trail, go from dominance to irrelevance? The chain of events seemingly defies rationality. If the Apple II was markedly inferior to the PC, why hadn’t some other computer maker made a machine demonstrably better than the Apple II? The truth is that plenty of people made better machines than the Apple II, and plenty of companies made equivalent computers that cost substantially less. Unfortunately, for the competitors, they got their product to market after Apple.
Thus, Apple had the huge advantage of being first to market. How big of an advantage is being first to market? Take pharmaceuticals, every so often some key piece of research will be suddenly uncovered and a drug will be pulled from the market. Usually the drug pulled is the first one in some supposedly new class. The interesting thing is that before the drug is pulled from the market, generally, it is still the best selling product in that segment of the market. This despite the fact that when drugs are pulled from the market it isn’t because of concerns over efficacy, it is because they tend to cause the adverse reaction known as death. It is easy to conclude at this point that being the first to market is of the utmost importance. The idea makes sense, a void for a product exists and the first company to fulfill said void naturally has a huge advantage.
Of course, the first to market advantage doesn’t last forever, Penicillin isn’t the world’s go to antibiotic anymore not because it is dangerous but because it has been outclassed by other drugs. Apple wasn’t stupid, it knew that the reign of the Apple II couldn’t last forever so they tried to be first to the market again with the Lisa and the Mac. The company might have had the edge in tech and usability but Apple lacked the legitimizing force of three important letters: IBM.
In truth, there was little Apple could do to actually compete with IBM and later the clones, short of giving up on the hardware side of things and start licensing the software. The move was suggested but by the time it was taken as a serious option it was far too late. Apple shouldn’t be seen as shortsighted, no one expected the eventual winner to be a software company and there was nothing in Apple’s previous experience that would indicate that massive profits and world shaking power would be found in something as fleeting as software.
By 1983 the days of Apple dominance were fading quickly and the long slide to “beleaguered” and “dying” had begun. The Mac only broke into double digit market share for a single year and most people, including the board of directors, saw Apple as a company that needed to be bought out by a company that could actually get something right.
While pundits, CEOs and the stock market all saw Apple with one foot in the grave Apple employees went about doing their jobs and trying to make some great stuff. Year after year, the company did crank out enticing, if not always successful, products. The Newton spawned the PDA market, Apple had one of the first digital cameras, and came out with a very early videoconferencing camera. These products and others kept Apple in the public mind as a company capable of making cool and cutting edge stuff.
When Steve Jobs returned to Apple he quickly realized that Apple couldn’t beat Microsoft Windows on features alone. The power of Apple wasn’t in their gizmos, the power off Apple was in the company name. The public did have a positive image of Apple, the average person would say (incorrectly) that Apple invented the personal computer. They would also likely opine that Macs were in some intangible way better than PCs but that they were also very, very expensive.
Apple’s reputation for ease of use, the perception that Apple made an inherently higher quality than other manufacturers spurred the adoption of the iPod. What started life as a Mac only, FireWire portable hard drive with a headphone jack and a few extra chips took the .mp3 player market by storm. Actually, saying the iPod took the digital audio player market “by storm” actually understates the influence. The iPod created a huge chunk of the market.
The iPod yearns to be much more than an .mp3 player. In the ideal world of Steve Jobs all your media will come to you through Apple branded products. The concept makes sense, is there something inherently better about watching a cable TV show via the cable? Is there something that makes a physical CD superior to an iTunes purchase? Is there a legitimate reason why a DVD is preferable to a download? While the answer to the questions may be “yes” for the moment, in the long term the answer is a resounding “no”.
Apple wants to be the company that manages all of the previously mentioned information and, what the heck, the company wouldn’t mind being the one to sell all of the digital goodness to the consumer as well. The iPod is the perfect way to achieve that goal, a perfect way to take Apple to the market dominating company Mac fans are so desirous of seeing. Can Apple pull it off, will Zunes “squirt”* feature derail Apple’s plans? The next six months will tell and it will be a very interesting half-year.
*Sometimes it is better to let the market come up with a name for a feature. The Zune’s wireless transfer feature has been dubbed “squirt” by Microsoft. As in “I’ll squirt you a video of my vacation.” The name sounds forced and incredibly lame. Below I present 20 better terms for “squirting.”
Ooze, push, transfer, WiFile, zip, jump, slap, slam, spurt, side load, slide, barf, splooge, spill, drive, zing, breathe, blow, charm, infect your Zune with a virus
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Comments
Ben, you’re missing the overall point, which is why are you holding these two monopolies to a DIFFERENT standard?
1. Are they self-sustaining? Yes in both cases. The biggest argument against the Zune from everyone including Apple fans is that it does NOT work with iTunes and that your purchased songs won’t play on it all. That’s the very definition of a self-sustaining monopoly.
2. Do they lack innovation? Yes in both cases. The big difference here is that the Apple apologists seem to accept the lack of innovation in Apple products, using various terms such as “feature creep” and “simplicity.” And in your case, arguing that the quality of the product is more important. But that’s preposterous on its face and an uncharacteristically disengenuous comment from you. If making a quality product alone were enough, then why would Apple need to change the iPod at all? Why not stick with the 1st gen? Wasn’t it a quality product? Wasn’t that enough?
3. Are they vulnerable to loss of marketshare? Yes in both cases. This does NOT mean they are not monopolies or that they are not detrimental.
4. Are they anti-competitive in order to preserve marketshare? Yes in both cases. Apple’s DRM, which you admit is reprehensible, is one example. That they might not need to is no excuse. If I cheat on an exam even though I know all the answers, I’m still cheating.
5. Do they exploit their marketshare? Yes in both cases. Apple recently raised their licensing fees for iPod accessories to 10% from 2%, the industry standard.
Btw, I don’t cite examples from Microsoft here because I’m assuming you are familiar with them.
I do agree with Ben, Chris. You’re saying we’re both wrong, but your argument backs up what I’m saying about monopolies, but expands it to include third party vendors.
And I actually do mention them in my post above, which I wrote before having read your comment (“great minds” and all that).
I’ve just spent almost 45 mins writing a very complicated reply to all this which for everyone’s sake I’ve deleted. simpler approach needed. I should say though I introduced the term “self-sustaining” as a descriptive way of saying “anticompetitive” and the two can be taken to mean the same thing.
The biggest argument against the Zune from everyone including Apple fans is that it does NOT work with iTunes and that your purchased songs won’t play on it all. That’s the very definition of a self-sustaining monopoly.
I’m confident it will very quickly become exceptionally easy to move your music from one to the other. Hell, if it doesn’t, I’ll start a company and sell a tool on the cheap to convert your music library either way.
I don’t deny that purchased songs represent more of a challenge. But what is important is whether actually in reality iTMS DRM will lock people in, or not. I personally think not because A. it accounts for a minority of tracks, B. you can circumvent it.
You say of course “That [Apple’s DRM might have no effect on its monpoly] is no excuse.”
And I agree as I will tell anyone who will listen that indeed Apple’s DRM is ethically unsound, but if it truly does have hardly any effect on the monopoly then I cannot see any valid sense in which they have “cheated”. To me cheating would be the active prevention of competition, not the hypothetical prevention of competion in different circumstances. Your analogy highlights effectively that DRM is reprehensible, but *not* that it contributes to sustaining the monpoly, which is the question at hand.
Do they lack innovation? ...Apple apologists seem to accept the lack of innovation in Apple products, using various terms such as “feature creep” and “simplicity.” And in your case, arguing that the quality of the product is more important. But that’s preposterous on its face ... If making a quality product alone were enough, then why would Apple need to change the iPod at all? Why not stick with the 1st gen? Wasn’t it a quality product? Wasn’t that enough?
I reject the statement “that’s preposterous on its face” as I just can’t think of any reason why it’s true. There is a very strong reason for apple to change the ipod: to continue to seem fashionable. There is very little actual *innovation* between revisions, but they look ever more beautiful. People would simply have stopped buying iPods if they hadn’t changed with time. Their Seasonal Hipness Refresh (tm) is part of what keeps them in the money. People like beautiful new things.
More importantly, this paragraph ignores my argument above that even if there is little innovation, it is because the competition is poor. My response (presponse?) to this was that 1. Apple doesn’t *need* to innovate the ipod because nobody else is and 2. even if microsoft made the zune view .doc files apple wouldn’t need to because the idea confuses target audiences.
The short version of all this is that a PMP does need to retain its simplicity and look cool, more than it needs to innovate. As I already said above, “I don’t believe that Office document support and deep windows synching would draw users to the zune. I think that being beautiful and working like a charm for the simple purpose of playing yo media would.”
Disingenuous, I think not.
Point 4 = Point 1 with analogy
I just can’t see the relevance of point 5. I know it’s a bit obscene. But it only serves to demonstrate that apple has dominant marketshare. I can find no shred of evidence in the fact that apple creams 10% off their 3rd party accessory makers that supports the idea that they behave anticompetitively.
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I would really, really appreciate not being called disingenuous because I am not being. If you have a valid objection to a point then it is up to you to make it. I think for example my opinion here was valid or at least worthy of consideration, it was further illustrated by a number of things I said. It seems like I’m being cast forcibly into the apologist mould, which does not fit me and I therefore find it very hard to respond to what you say productively. You actually call me an apple apologist in your point 2 although that could just be a sort of grammatical artifact. Kindly grant me the shred of respect my electronically-conveyed self deserves and which I grant you.
Is it possible we’re using the word “innovation” in slightly different ways?
yeah, guys that was a bit of Aussie tongue in cheek about you both being wrong.
It was just a way of to get your attention and say there’s another group who are getting screwed by the monopoly which then flows on to the consumer anyway. So yeah, you’re not really wrong.
Beeb said If making a quality product alone were enough, then why would Apple need to change the iPod at all? Why not stick with the 1st gen? Wasn’t it a quality product? Wasn’t that enough?
The reason we keep getting new iPods is because people keep buying them. Steve said so himself.
Is it possible we’re using the word “innovation” in slightly different ways?
True, Ben. Some will see innovation as simply adding features - eg video playback, bluetooth headphones, FM tuner, wireless.
Whereas others (like me) go to the other extreme and see it as truly doing something different - eg click wheel.
Innovation tho is damn hard. Was the iMac G5 innovative? Not really. It’s just a redesigned laptop. One innovative aspect of it though is the speakers that point down so the sound is reflected back to you. Don’t know how much is marketing and how much is tech, but that’s more innovative than the the design of the whole iMac.
Innovation to me is more about clever and original solutions to a problem.
I’m not even sure what Apple could do to innovate the iPod. Maybe make the GUI cleverer. I’ve never like it. Too much clicking around.
Ben, AGAIN you are failing to address why you think the Windows monopoly is somehow less deserving of the rather lengthy defense you give the iPod monopoly.
1. Why no apologist excuses for ways around the Windows monopoly? In what way is it self-sustaining that counters the similarity with the iPod?
And I’m having a hard time understanding how Apple’s DRM is unethical if, as you argue, it provides no impediment whatsoever, does not in any way help sustain Apple’s monopoly, is not detrimental to consumers or competitors in any way. It’s like it’s not even there. So what’s wrong with it? Why do they even have it? Why do they refuse to license it?
There is a very strong reason for apple to change the ipod: to continue to seem fashionable.
For argument’s sake, let’s just assume this is true. What I’m looking for, ONCE AGAIN, is why this makes them different from Microsoft. It’s possible you don’t think that a lack of innovation in Windows is the point either, or that both Windows and the iPod have improved JUST ENOUGH to dominate the market and you have no problem with that.
Is that the case?
I can find no shred of evidence in the fact that apple creams 10% off their 3rd party accessory makers that supports the idea that they behave anticompetitively.
You are arguing that in no way is Apple’s monopoly position detrimental. This is fairly clear-cut case of marketshare abuse. And marketshare abuse is detrimental.
I’m not even sure what Apple could do to innovate the iPod. Maybe make the GUI cleverer.
It’s true that innovation is a subjective term, but I think we can all agree that adding a bigger harddrive every year or so isn’t it.
And I’m not saying the iPod isn’t innovative AT ALL. Only that, like Windows, a lack of competition suppresses the need or desire to innovate. Think of the improvements over the iPod in the Zune. Think of the fake pictures/features of the so-called video iPod. There’s no reason none of these features have been implemented into the iPod except that Apple can take its sweet time rolling them out.
Now imagine that a real threat came along with these features in tow. There are already rumors that Apple is getting ready to roll out the so-called video iPod in order to trump the Zune this holiday season.
Now imagine that the iPod and the Zune were bitter rivals battling it out for marketshare. We’d be three years ahead of where we are now in terms of portable device capabilities.
Now imagine that the iPod and the Zune were bitter rivals battling it out for marketshare. We’d be three years ahead of where we are now in terms of portable device capabilities.
That sums it up perfectly, Beeb.
you are failing to address why you think the Windows monopoly is somehow less deserving of the rather lengthy defense you give the iPod monopoly.
What I have been doing is focusing on the ipod monopoly situation’s details. I’d like to point out that the two cases are separate and it is a potentially valid position to think that one monopoly is detrimental and the other is not. ie neither position is de facto preposterous.
I am not treating the two differently, I’m just not really discussing the windows monopoly. Don’t get me wrong, the comparison would be interesting. But comparing the ipod monopoly to the MS one without paying much attention to the particulars of either is not enlightening.
For argument’s sake, let’s just assume this is true. What I’m looking for, ONCE AGAIN, is why this makes them different from Microsoft. It’s possible you don’t think that a lack of innovation in Windows is the point either, or that both Windows and the iPod have improved JUST ENOUGH to dominate the market and you have no problem with that.
I draw a firm mental difference between observations of Apple’s practices that might be taken as anticompetitive, and observations of the state of things that might be taken as “symptoms” of an anticompetitive monopolist controlling the market.
The lack of innovation is clearly not a practise designed to be anticompetitive. You are arguing that it is a symptom of an anticompetitive monopoly controlling the marketplace, and this is true. But it does not indicate this - it does not diagnose apple as a mmonopoly. Because all it really indicates is a lack of competition. I have argued extensively that this is not because of apple’s practises themselves, but because of other factors.
I think that what apple is guilty of is making the best product.
You are arguing that in no way is Apple’s monopoly position detrimental. This is fairly clear-cut case of marketshare abuse. And marketshare abuse is detrimental.
“Abuse” seems like a rather rhetorical, loaded term when you’re talking about how one company treats another. Characterising apple’s dealings with its parters as “marketshare abuse” is misleading because marketshare abuse would normally relate to abuse that matters - abuse of the customer.
Is this marketshare “abuse” detrimental? I cannot see how. Some poor accessory companies get 10% less profit. I don’t give a shit. It is certainly not detrimental in any way that remotely matters.
Again all your arguments add up to is that apple is dominant. And I agreed long ago that the market would be “better” if there was more competition. But the important question is if apple’s practises are anticompetitive in any real sense.
Please do not characterise my position as an apologist just because I happen personally to feel that the facts point to apple’s ipod monopoly as not being significantly anticompetitive. The fact that there is little competition or “innovation” in the market certainly does not evince the opposing view. (And I am not trying to “defend” apple as you say but trying to establish what is my own view of the facts. But I often feel like I’m trying to defend myself from what amounts to slurs on my good name…)
I think your position that both microsoft’s and apple’s monopolies are anticompetitive is based on the noble desire to be fair, or at least the fear of hypocrisy. But I haven’t seen evidence that convinces me that apple’s is anticompetitive, and in my attempt to be fair I apparently come out with the opposing view. C’est une énigme.
Beeb,
Why do you always insist on calling people names when you don’t have a valid point?
All I said was I’m sure Apple is watching the competition. How do I know that? Because EVERYONE WATCHES THE COMPETITION.
Do you think Apple employees are such idiots that they just ignore everything that comes out of a competitor? Don’t be a fool.
You claim all Apple employees are blissfully unaware of anything outside of the iPod universe (or too arrogant to care). The only delusions here are your own. If anything, you’re the “Mac-tard”, in that you opinion of Apple’s R&D is completely retarded.
“Vb_baysider, like most Mac partisans, is full of contradictions, double-standards, delusions, and hypocrisy in regards to the numerous parallels between Apple and Microsoft.”
When did I make any comparative/parallel statements about Microsoft and Apple?
I compares the iPod to the Apple II and said is that I didn’t think MS was a 3.0 company. I never even MENTIONED MS except to say that minor additional features on the Zune are no different than minor additional features on other MP3 players. As long as Apple continues to keep their player UI elegant and easy to use, minor features aren’t going to hugely impact marketshare. Clearly Apple has responded where it thought there was customer demand (ie - iPod Photo, iPod Video, Nano, etc).
Could you please point out a single “contradictory, double-standard, or delusionary” statement I made? Or are you only able to insult someone (without examples) to “prove” your points?
I never even MENTIONED MS [in comparison to Apple] was the part I left off…
Beeblebrox,
The crux of your opinion seems to be the iTunes FairPlay DRM provides a “lock-in” that sustains the iPod monopoly… and that perhaps if Apple licensed FairPlay (or used the same DRM others do), the iPod wouldn’t dominate so much.
So, how do you explain the Jupiter research study that states that the average iPod only has about 20 purchased songs?
http://www.theage.com.au/news/digital-music/itunes-shunned-by-ipod-owners/2006/09/19/1158431695747.html
“[Jupiter Research] study which reveals that more than 80 per cent of iPod owners do not regularly download tracks from the iTunes store. [...] According to Jupiter, the global base of iPods sits at about 60 million, putting the total number of tracks downloaded from iTunes Music Stores (iTMS) at about 20 per device…”
From this, one can very easily conclude that the iTunes Store (and the FairPlay DRM) MAKES LITTLE DIFFERENCE to the overall marketshare of the iPod.
Since iPod users are downloading or ripping the vast majority their tracks from other sources (which anyone can do with any other MP3 player), the conclusion is that they are not picking the iPod for iTunes Store (FairPlay) compatibility… which, in turn, means users are not staying away from Creative/iRiver/Whatnot because they don’t work with the iTunes Store.
You wanted an illustrative difference between the Windows monopoly and the iPod monopoly… Well, there you have it.
iPod users buy iPods because they like them better than the competition, not because the other players aren’t “iTunes Store compatible”.
You seem to conveniently overlook this fact in your debate.
The fact that the vast majority of iPod users *don’t* have tons of iTunes Store music that they’d have to repurchase for a different player means that people AREN’T locked in to the iPod/iTunes integration.
The Windows monopoly, on the other hand, is sustained by businesses who would have to invest millions to switch from their current platform (as well as users who have had the “Windows compatibility” mantra hammered into their heads since childhood and will keep using whatever is used at work, or on their last CPU).
The two market share situations couldn’t be more different.
One could even argue that you couldn’t call the iPod market share (75%) a “monopoly” since that implies few or no alternatives when that simply is not the case. Users can get their music from multiple sources to use on various MP3 players whether they own a Mac or a PC.
You also compare the “Halo affect” to “Window lock-in”, saying they are essetially equivalent. Total BS.
The halo effect means that users like their iPod so much, they are willing to try Apple products.
When have you ever heard of people loving Windows so much they want to try other MS products?
If people choose Zune because it’s “more Windows compatible” (as opposed to “it’s better”), that isn’t a halo effect.
You claim all Apple employees are blissfully unaware of anything outside of the iPod universe
I do? Could you point to the comment in which I even remotely suggest such a thing?
I call names AND I make valid points, vb. Whereas you ignore reality (or invent your own), apologize for Apple, defend their monopoly, and loyally regurgitate talking points.
And frankly, your post goes downhill from there.
From this, one can very easily conclude that the iTunes Store (and the FairPlay DRM) MAKES LITTLE DIFFERENCE to the overall marketshare of the iPod.
Uh huh. From that article: “The study, conducted in Europe by Jupiter Research.”
Europe, where the iPod has about 40% or so of the market but does not have the de facto monopoly that I’m referring to in the US.
Vb, do yourself a favor and unhook your skull from the automaton wiring that connects you to Steve Jobs’s ass and start thinking for yourself. I can only imagine how unhealthy it is to devote so much time to defending a multi-billion dollar corporation that could give two shits about you.