Has Apple Jumped The Shark?!
I’m probably going to get roasted to a crisp for this post, but oh well… I run Linux… (wait, I meant GNU/Linux, I swear!!) so I’m used to flame wars. ;)
You’d have to have your head under a really heavy rock to fail to notice that, while they may have surged in statistical numbers by a little bit, Apple Inc. failed to really cash in on the glorious gift that Microsoft handed them with their Vista fiasco. At least as much as they could and should have, given the circumstances.
Did they really think that their “I’m a Mac” ads were going to pull all of the weight? Sure the ads are cute and highly entertaining, but they aren’t sale closers and that’s what Apple needed. They needed to really put their shoulders into closing the deal a lot more than they did and now that Vista SP3… er… ahem… I mean Windows 7 is around the corner and getting some blogger/media love (perhaps due to their new menu bar that mimics the kpanel that KDE had in Linux as far back as the 1990s), they realize that their free ride into increased market share on the desktop is over.
[NOTE: That's not to say that Windows 7 is necessarily good, it's just that the consumer market is wantonly ripe to be accepting of anything that isn't Vista at his point.]
Then there is the ubiquity of the iPod. Pretty much everyone who wanted to own one and was willing to pay the asking price for it has one by now, which means that Apple’s iPod sales are now mostly driven in a large part by the upgrades and replacements of their current customer base. In other words, it’s not exactly a market segment that holds much more room for them to achieve the explosive growth that they once had due to the saturation caused by their very own success. Especially with the current economic pinch.
[More after the jump...]
Which brings us nicely to the iPhone. In an effort to push the upgrade advances of iPods, Apple merged the iPod with the cell phone and changed the cell industry forever. Think about it, they took an iPod, slapped a cell antennae into it and managed to get people to pay ~$2000 for the pleasure once you account for the contract. Genius!
The cell industry has too much of good of a thing going for themselves with their billions in combined profits to mess around with their golden formula of forcing US customers into a 2 year contract while locking the device that they sell to them to fulfill that contract into exclusively and permanently using the originating network.
However, what Apple did manage to do, was to convinced AT&T that, when it comes to designing cell phones and deciding what applications go on them, cell companies pretty much suck at it and that they need to leave things like that up to the people who know what they are doing. And when it comes to UI design, Apple is consistently on top. That was HUGE concession to get at the time because prying the control of device development and applications away from the iron clad grips of cell providers was hitherto unheard of.
One of the main bargaining chips to getting that concession was the exclusivity contract. In essence, Apple showed AT&T Executives the awesomeness of the iPhone and said (and I’m just paraphrasing my left brain here), “Look, we have a groundbreaking product and an army of fan-boys; if you ink a deal with us you’ll be the only cell company in the US who has it. However if you don’t, we’re sure that your competitors will be interested given what we proved we could do with the iPod.” So AT&T did the unthinkable and they blinked….
At least that’s how the story goes, but did they really blink and give up control or was it really just sort of a wink?
As it turns out, AT&T is still very much the puppet master of the show and still has strings that they can pull. It’s probably buried somewhere that’s hidden beneath gobs of NDAs (Non-Disclosure Agreements) and under all sorts of other legalese involving giving up one’s immortal soul for breaching or even acknowledging them, but recent events have proven that they do in fact exist and that AT&T is still very much in the drivers seat. Key among them is Apple’s recent contemptuous actions involving Google.
First Apple gave the green light to Google to develop a Google Latitude app and in the eleventh hour had a sudden change of heart. It turns out, AT&T would rather have customers pay them $9.99/month for their FamilyMap plan to have a similar, though less feature rich capability.
Then Apple pulled all of the Google Voice (GV) enabling apps from their App Store even though they were approved by Apple originally and had been selling for months prior and summarily rejected Google’s official GV app at the last moment. Not surprisingly, AT&T offers single number mobile convergence solutions themselves and like all services that are advertised without upfront pricing, they likely are charging a fortune for it. Not to mention, it too is not as nearly as feature rich as GV.
And let’s not forget the good ol’ SMS scam that AT&T and all of the other cell companies are continuing to pull on everyone either. You know, the one where they are charging their customers $5.99/month/user for a text plan or $0.20/message/user that piggybacks inside of packets that the phones and cell towers transmit anyways, whether that tiny chunk of extra data that an SMS has is actually inside them or not. SMS texting on Google Voice is free, though if you forward it to you iPhone, AT&T will still take their rake, thank you very much.
In addition, GV allows for making cheap international calls (For example I can call Canada for $0.01/min through GV). It’s obviously something that’s on AT&Ts minds right now because they are actively campaigning on behalf of their own long distance service. Just today I receive a marketing postcard from them pushing their “International Roaming and Long Distance Services”. Of course, it was a hollow fluff piece that was designed to just give a feel good impression and didn’t actually tell customers what their current rates actually are (even in the fine print), so I looked it up… AT&T’s rate to call Canada is $0.29/min (or $0.19/min if you pay them $3.99 up front every month for their World Connect Plan). Hmmm, talk for an hour for $0.60 or talk for an hour for $17.40… I wonder which one the public would choose if given the option?
For Apple’s part, these two actions against Google are going to hurt them… severely. First,their competitors already have or will soon have these apps available on their devices and are going to get a decisive boost. Don’t think it can happen? First allow me to remind you of a little piece of history that recently came back to mind after the recent passing of the late, great, Walter Cronkite. After reporting in Vietnam in 1968, Walter Cronkite made a comment on the air that “it seems now more certain than ever that the bloody experience of Vietnam is to end in a stalemate.” This prompted President Lyndon B. Johnson to remark that if he had lost Walter Cronkite, he had lost Middle America; soon afterwards Johnson announced that he would not seek re-election.
Now just CLICK HERE to see what Cali Lewis of GeekBrief.TV thinks about Apple’s change in character from their once glorious days and mark my words, when it comes to consumer technology products and Apple’s products especially: If you lost Cali Lewis, you’ve lost Middle America.
Secondly, Apple just undermined two of their own major campaigning points, their “Jailbreaking is bad” self-preservation campaign and their “There’s an App for that” marketing campaign. Now when they try to trot those out there to the public, people are going to have a hard time not instantaneously thinking up parodies of their own such as “Jailbreaking is bad, we want to keep control of you because it’s profitable” and “There WAS an app for that” or my favorite if you aren’t constrained to twitter length “There’s and app for that… except if it’s Google Voice… or Google Latitude… oh, or Qik… er… and you can’t stream Skype or Slingbox over 3g either… but MLB pays us a bunch so you can stream them all you want after you fork over some more money. Did we mention no boobies in any apps except our fully functioning non-filtered web brower?”
Finally, while everyone loves to make fun of our chair throwing, monkey friend and Microsoft’s CEO, Steve Ballmer and his “Developers, Developers, Developers” rant (CLICK HERE FOR THE VIDEO CLIP). He would catch much more flack for it if there wasn’t some good solid reasoning behind his seeming insanity. The truth of the matter is that it IS all about the developers and Apple has, in essence, just given all current and potential future developers a nice big middle finger through their recent collective actions.
If they can string along and then blow off a company like Google, do you really think that they could care anything about some no name start-up company, a small group or even a lone developer? If they can deny such a game changing feature-set like that of Google Voice, what does that say about the level of genius that they will view your idea as being in on the scale of things? If you or your company can somehow navigate the treacherous waters of funding and somehow safely cross Apple’s tightrope of requirements while blindfolded to their satisfaction and you get your app approved and they can then just pull the plug on it ex post facto at any time if the whim hits them; and if they can do all of that without even giving you a straight answer as to why other than a generic and uninformative boiler plate of “It duplicates functionality and may confuse end users” so you can try to resolve the issue to not go out of business or bankrupt over it… would you or your company still put in any serious investment of time or money into developing an iPhone app? I dare to say, that the answer to that question is a very loud and decisive NO!
That my friends, is why the App Store will continue to be plagued with a never ending plethora of choices for the Fart Machine of one’s dreams (well someone’s dreams at least), but it will be bereft of the innovation that will be advanced on all of the other platforms going forward. (Especially, ironically enough Google’s own Android platform.)
Lacking that direct access to the innovation of some very smart people and some very big players, Apple’s iPhone dominance is not going to just wane, it is going to shrivel up and die.
Of course, it won’t be instantaneous, we’re under contract after all. But watch the churn numbers as the 3G owners who haven’t upgraded come up for renewal next year and especially for when the 3Gs owners come up for renewal a year later. They’re going to be very telling.
The other smart-phone manufacturers were caught flat footed out of the gate because they had to wait for the other carriers to get their asses kicked a little before they too relented under the pressure and let loose of the reigns. But we are only in the incipient stages of the smart-phone era and there’s still plenty of ground ahead for them to take over the lead.
Is this something that Apple can reverse? Probably not. The only true way that Apple can regain the trust of developers in the iPhone platform at this point is if Apple stops being the gatekeeper and open is something they are definitely not. However even if that were to happen, they’d still keep their finger on the kill switch and with Amazon’s recent mess in deleting purchased books from customers’ Kindles still fresh in everyone’s memory I doubt trusting that will come easy if at all. Besides, Apple has done a pretty good job of instilling ill will among the developer community, through not just this, but many prior incidents of their shenanigans ensuring that few will want to help them from the hole they’ve now dug and thrown themselves into.
They might find some short term relief by not renewing the exclusive contract with AT&T so they can tap into a fresh customer base for a contract cycle or two. However let’s face it, either Apple has jumped the shark or at the very least, they’ve donned their floatation device, strapped on their skis and given the boat driver the thumbs up signal to throttle up with good old “Eyyyy!” thrown in.