
If you own the infrastructure you get to charge rent - dwynings
http://garry.posterous.com/if-you-own-the-infrastructure-you-get-to-char
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YooLi
Here is the rent Amazon charges for using their infrastructure to sell with
(i.e. selling your stuff on their website).

[http://www.amazon.com/gp/help/customer/display.html?nodeId=1...](http://www.amazon.com/gp/help/customer/display.html?nodeId=1161240)

Selling a $9.99 book would end up with Amazon taking 28.5% or 38.5% (the lower
percentage only if you enroll in the Pro Merchant subscription program for
$39.99/month) of the price.

~~~
JoeAltmaier
The argument is off the mark; Apple artificially restricts the iPhone app
market, SOLELY so they can skim money from all the apps.

Sell your stuff on Amazon, your own store, whatever; Amazon can compete in
that free market, and if its worth it to you, pay their premium.

Apple monopolistically freezes out any possibility of competition; skims off
of apps that have nowhere else to go.

Then they want to set your prices outside of their store too!

~~~
YooLi
Perhaps you should actually read the Amazon terms first:

"By our General Pricing rule, you must always ensure that the item price and
total price of an item you list on Amazon.com are at or below the item price
and total price at which you offer and/or sell the item via any other online
sales channel."

~~~
JoeAltmaier
So, you choose to NOT sell on Amazon. Try that with your iPhone app.

~~~
YooLi
That's easy, you don't develop an app to sell on iPhones.

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nomurrcy
A phone is a physical device. You own your phone.

This argument is tantamount to saying MSFT owns windows and so deserves 30% of
all purchases made through IE. This is insane.

If Apple wants to provide infrastructure developers can use for handling in-
app purchases, and give them the option to do so, that is fine. Forcing people
who write software for their platform to use their APIs for in app purchasing,
and to pay 30% is wrong.

Apple does not own phones it has sold. The owners do, that is why they paid
for them.

~~~
mikeknoop
A better analogy would be Lenovo, Dell, HP requiring all software installed on
their laptop or desktop machines to be purchased through them and skimming
30%.

~~~
Synaesthesia
If they can add value then they would be able to do that.

~~~
mikeknoop
I didn't imply a positive or negative view (though I do disagree with it). I
was simply offering a better hardware analogy since I disagree that Apple's
hardware lock-in would be similar a Microsoft Windows lock-in.

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ajessup
What absolute bollocks.

While I take the argument that being an infrastructure player rather than a
traditional 'make something people want' business is a good idea in the long
term, I disagree with the advice that it's a good idea for a new startup to
try to be doing this from day one. That's suicide.

It's worth noting that none of the companies that are 'infrastructure' players
today started out that way.

Amazon sold books, and needed to buy lots of servers to do it. The cash from
book sales justified buying servers, which some time later allowed them to
spin off EC2.

Apple sold personal computers and music players. Eventually they owned such a
dominant position in music players that they could build a compelling online
music store. Later they sold lots of phones, and used THAT position to justify
the app store.

Facebook were, if anything, anti-platform. The original Facebook was for a
single university. Later a few. Only some time later did they even allow
anyone to sign up, and later still (by the time they were well on the road to
being the dominant social network worldwide) did they roll out a 'platform'.

This is why the Internet platforms of today aren't like railroads of old. As a
founder you absolutely should NOT be trying to raise lots of money to build
infrastructure from day one. You should raise it to build a product that kicks
ass that people will buy. That's hard enough for most if us.

If you get your startup to that stage then the platform opportunities that you
can use to consolidate your position should be pretty obvious.

Don't get me wrong, dreams of platforms are what get entrepreneurs out of bed
in the morning. They're important for that reason, but you're crazy to put it
in your buisness plan. Keep it simple - build something people WANT.

Sent from my iPhone

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jhancock
Apple's single app store can only exist in the economic distortion created by
U.S. government regulation which provide severe penalties for unlocking an iOS
device.

If it were not for these regulations, we would see kiosks in Wal-Mart
sponsored by EA Games to get a free game by just plugging your iOS device into
the kiosk, which would give a free game, unlock your device and install the
"Wal-Mart apps store" all in one go.

~~~
herval
I wonder why didn't that happen on any of the several "open" mobile platforms
beside iOS (including Android)? Or in the cases where they existed (carrier-
specific app stores for symbian/javame), is there any case where ANYONE made
any money out of it at all?

~~~
jhancock
These types of markets have only been around a few years. I don't think you
can extrapolate much. Its a very short time frame.

~~~
herval
I work on "this kind of market" since 2003, when there were already millions
of smartphones out there. And even now, the Apple Store has been constantly
proving as the only successfull app store out there, specially compared to
Android and OVI...

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dpapathanasiou
Would you extend the same argument to net neutrality?

I.e., are the telcos right to be against it?

~~~
T-R
It's a glass half full/half empty thing.

If the (only) owner(s) of infrastructure or a limited resource offers access
for only a select group, do you consider them to be offering a service to that
group, or to be starving non-members of access?

What do you do about it? Do you hope for competition, or create rules against
discrimination? If you create rules, how can you prevent the rule-maker from
using the rules to do its own discrimination? If you hope for competition,
what if there's not enough of the resource, there are network effects or other
high barriers to entry, or everyone in the market decides to do the same
discrimination?

So, who do you trust less to be the gatekeeper, the government, or the ISPs?
Neither answer is really a good one.

The telcos are doing what's best for their business, but that's not
necessarily what's best for their customers - positioning yourself as the
owner of infrastructure is a powerful and profitable place to be, but if you
get to be in too good of a position, the same debate will come up again - the
parallel to the 1800's is a good one.

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rdouble
If you are a big company like Amazon this sucks.

However, if you're an indie developer Apple's infrastructure is pretty
awesome. You don't have to set up your own payment system, which sucks nuts,
or use one of the existing retarded payment services, which have worse terms
and worse user experience. Neither rolling your own nor using someone else
will get you 99-cent payments.

I do wonder how this affects rdio, though.

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arihelgason
Good analysis, though I'd point out that Modcloth is not strictly speaking an
infrastructure business.

Modcloth is closer to the traditional retail model. They buy inventory and
sell it. Their innovation is in getting user feedback before committing to
holding inventory.

What we're doing at Fabricly is building an infrastructure business, with a
distribution and production network for fashion designers.

~~~
garry
Oh definitely, I never said Modcloth was infrastructure. =)

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joe_the_user
From the article: "Further, Facebook has one of the most sophisticated
targeting technologies for ads ever created. Some retailers can make 2x-4x
returns on their ad spend. That's real."

Considering this is a point that's been debated, some references would be
good. Further, _SOME_ retailers making 2x-4x investment doesn't sound
impressive - the really smart, clever retailers should make that amount on any
medium. That doesn't say what the average is at all.

What is "real" in this context?

