

Apple’s Next Greedy Move: Exclusivity - mikecane
http://mikecanex.wordpress.com/2011/02/15/apples-next-greedy-move-exclusivity/

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barrkel
I've actually wondered if the next move isn't device subsidies, somewhat
similar to console manufacturers. Use their market size to squeeze more money
out of app developers, then use that money to subsidize increasing the size of
the market, which in turn keeps the app developers on side, in a virtuous
circle. It could also act as a strategic blocker on Google, as it would work
against their openness narrative if they tried to do the same thing, as well
as changing device prices.

In terms of devices, I'm thinking beyond just phones that are already
subsidized with contracts, etc.

~~~
technomancy
> in a virtuous circle

That's an interesting definition of virtuous you've got there.

~~~
barrkel
I don't mean to imply a moral judgement; I rather simply mean mutually
reinforcing.

It's a common idiom:
[http://en.wikipedia.org/wiki/Virtuous_circle_and_vicious_cir...](http://en.wikipedia.org/wiki/Virtuous_circle_and_vicious_circle)
\- and it would be virtuous from Apple's perspective.

~~~
technomancy
Attempted joke; sorry.

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uptown
I just don't see this happening. In order to enforce this, it'd need to be
enforced across the board. Do you really think they want to make Rovio pick a
platform for Angry Birds? Or that that in order for there to be a Facebook app
it'd need to only be on the iPhone? If they were to go this route, it'd be the
fastest way to kill their app store ecosystem, and promote HTML5 as the
platform of choice for developers. It's just not going to happen.

~~~
nextparadigms
They might require this only for new apps. Besides, the idea that they'll
require Amazon to pay up 30% of their book revenue didn't seem plausible
either, yet here we are.

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kylec
Outright removing and/or rejecting non-exclusive apps is a recipe for a huge
backlash, but I could see maybe giving better terms for exclusive apps - maybe
only taking 20% instead of 30% of the sale. I'm sure there are a fair number
of app developers that would jump at the chance to sign an exclusivity
agreement if it led to higher profits.

~~~
Dn_Ab
I don't know if that is necessarily ideal for Apple or any of the other
platforms for that matter. What is to stop the next platform from offering
19%, 20% or even 25% non exclusive cut and 15% Exclusive? Competing over the
percent of profits taken per app could start a chain reaction race to the
bottom that ultimately reduces profits for all platform makers and moves it
into the hands of the developers. Which is a good result for developers but
not so ideal for the platform makers. So they may all choose to not steer
things in that direction for as long as possible.

Also I may be missing something but I don't think reducing margins is typical
Apple. They have no problem charging you more with the backing that the
experience you get will be top quality and polish compared to the competition.
No matter that you are user, developer or publisher.That is their leverage.
Their brand is associated with quality, heck given their image of vigorously
(note use of vigour v rigour) curated excellence, exclusivity might even be a
positive signal to consumers and some developers.

These two points make it so I would actually be more surprised by a reduced
percentage trade for exclusivity than outright requirement of exclusivity.

~~~
kylec
I don't think it's as simple as comparing the percentages - the App Store
generates much more revenue than the Android market and other, similar stores
on other platforms. As it stands now, the decision of whether or not to port a
successful iOS app to other platforms is based on whether or not the revenue
generated is worth the time and money to do the port. However, if there's an
exclusivity deal in place, you also have to factor in lost earnings from the
iOS version as well.

However, you're right that it's not a typical Apple move to reduce the
margins, but nevertheless I think it would be a very effective strategy for
keeping high-quality, high-revenue apps exclusive to the iOS platform.

~~~
Dn_Ab
You're right and make an excellent point. But the other platforms are also
going to have to work on increasing the revenue per app for the developer or
obsolete themselves. So the current state of affairs might only hold for a few
years or so.

As well, there are a whole host of factors considered when a developer chooses
platforms and while I don't know about how people weigh decisions, its
possible that this number could come to irrationally? dominate considerations.
So platforms competing over that number will have unpredictable, possibly
undesirable effects to the outcome of the current equation for the leader at
first and then everyone else.

Just considering the other side, but I do agree with your above point.

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dstein
Steve Jobs: "The developer agreement has been altered. Pray I do not alter it
further."

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gabrielroth
Mikecane's Next Greedy Move: Predicting what other people will do in the
future, then writing blog posts criticizing them for it.

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tjogin
I think "predicting" is a too much of a compliment. How does "fantasizing
about" fit?

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CurrentB
The last thing Apple should want to do in these times, where their superiority
over competitive devices is growing ever thinner, and there is a growing risk
of actual shrinking market share, is force developers to choose between Apple
or all other platforms.

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GHFigs
_Go ahead and scream and/or laugh in disbelief._

Consider it done.

~~~
reemrevnivek
The screaming, that is.

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philsalesses
I can see Apple offering monetary subsidies to a select few applications,
granting them special access to engineers, to get exclusive access, but sorry,
I don't see them doing this.

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eric5544
This move would simply wake up too many sleeping dogs one the whole "Apple has
a monopoly" front.

~~~
neworbit
in a world where Comcast can buy NBC? Monopoly statutes might as well not
exist.

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NyxWulf
Apple doesn't need to do this to keep competitors at bay. I don't think they
will do it, but that's a different story. Right now Apple's biggest strength
is their ecosystem. Developers creating high quality applications and users
willing to put up actual cash to get them in large enough numbers to create a
vibrant platform. The systems map with reinforcing and dampening actions is
much larger than this, but those are the essential interactions.

In the early days it was about features, but once you have an ecosystem in
place, they are _very_ hard to displace. Examples: Microsoft and the windows
platform. US Dollar as the world's reserve currency. Amazon Kindle.

With IOS, people have purchased all these applications. If they move to
Android they will have to find a way to get those again. When you have a
substantial investment into an ecosystem, you don't rush out and jump on the
next one because it's a little better. Or even if it's close. The larger your
investment, the larger the switching cost, the more compelling the alternative
has to be. From a strategy point of view, those are the most important factors
governing the market right now imo.

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dageshi
Microsoft didn't change the rules every 3 months, sure they drive netscape out
of the market but they never said that netscape couldn't run on windows. If
you develop for windows you could be absolutely sure your app would install
and work on it in 12 months time, can anyone say that about iPhone?

But developers make money you say? Well there are people out there tonight who
were making money with subscription based apps who presumably aren't going to
now apple is taking their 30%.

So apple has a big userbase, but for how long? Android comes in cheaper, it
iterates faster, from personal experience I know people who are avid apple
users who have droid phones because their cell providers offered them a great
deal and their droid phone gives them what they need in terms of apps,
(facebook, twitter e.t.c.)

All it takes is one killer app on android but not iphone and suddenly apple
are on the back foot.

~~~
NyxWulf
Your argument is based on tangential statements relating to your mores. I made
no moral or value judgements, just a simple analysis of the situation. None of
what you said even addresses my central premise, that the ecosystem is the
issue now. One killer app on the android will do absolutely nothing to the IOS
ecosystem.

If history is any guide, the only way to kill a functioning ecosystem is
through some type of fundamental shift in technology, paradigm shattering
change, or through long attrition with a competing ecosystem.

Sure I know numerous people that have gone to Android based phones. I also
know that the app ecosystem on android is not vibrant right now. There are a
lot of factors involved, but before android can build a sustainable
competitive advantage, they have to build a functional ecosystem. I have
questions about how android can do that with the fractured market places.
Android came out in 2007, four years is a long time to not have _any_ killer
apps. Given their wide distribution, I am frankly surprised that android is
not much more prevalent. The reality though is that ecosystems are incredibly
hard to build. Phones are one thing, I have yet to see a single android based
music player or iPad competitor. How do you attack a fortified, focused
competitor with more cash, better design aesthetic, and an innovation pipeline
that is the envy of the world? I honestly have no idea, but I'm fascinated
watching it all unfold.

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wtracy
"I have yet to see a single android based music player or iPad competitor."

<http://www.google.com/search?q=android+tablets>
<http://www.google.com/search?q=galaxy+player+50>
<http://www.google.com/search?q=archos+32>

~~~
NyxWulf
I wasn't talking about seeing advertisements or pictures. I mean literally see
one. I don't see them in the stores anywhere, and I certainly have never seen
one in someone's hands out in the wild.

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Stormbringer
I had a comment I was prepared to make, a complaint if you will about the
tactics of Apple bashing. However, upon reading the article, I see that this
fits into an entirely different category: just making up lies out of nothing.

Does this guy work for Fox news? <\- please don't attribute this to me being
'a hate filled Democrat'. (A) I'm more close to libertarian on the political
scale (NB: tea-party is a bunch of racist corporate-shills, so wrong again if
that was your second guess) and (B) The Democrats are a bunch of complete
pussies. All those complaints about how the Republicans halted congress and
wouldn't let you pass any bills? That was _EXACTLY_ what you should have been
doing the previous 8 years. And here's a heads up: if you're not on their
'team', you are _supposed_ to oppose them. But no, you went along with what
the other team was doing, because you didn't want the dreaded label "not a
team player". If the other team is raping the dead and rotting corpse of your
beloved constitution, you're not supposed to help them!!! Pussies.

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Dilpil
The reason film and music operate like this is because consumers have loyalty
to individual actors and musicians. It is also very hard to imitate having a
specific actor in your movie. It isn't hard to imitate another developers
application style, and I don't think consumers have too much loyalty towards
their app developers. I don't see it happening.

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Synaesthesia
Totally unfeasible. They would have to delete thousands of apps from the
store. No consumer would stand for it.

~~~
originalgeek
Not to mention the lawyer-decades they would spend fending off a bunch of
Sherman Act litigation.

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matthew-wegner
I think they'll move to capture new slices of more pies, rather than a larger
slice of the pie they already have.

If people are bothered by the 30% subscription take, wait until iPhone users
start buying gas and groceries using near-field communication on iPhone 5+
(with a cut going to Apple)...

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MacTuitui
Well, isn't it what they already did by deprecating Java on MacOS? Make sure
you develop for iOS/MacOS and not for all available platforms? The exclusivity
will come naturally,

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ebaysucks
Forcing exclusivity would be a bad idea, but incentivizing it (giving back
some of that 30%) would be a smart move for Apple.

If they than limit this program to popular apps they can negotiate prices one
by one (e.g. give Amazon a great deal if they don't sell on Android).

You'd end up with an ecosystem where the key apps are exclusive and the rest
of the apps pay 30%.

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tjarratt
This is beyond outrageous and can hardly qualify as news. Can anyone explain
why they upvoted this in the first place?

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drivebyacct2
Because requiring applications to use your in-app purchasing API and sacrifice
30% is "outrageous and hardly qualified as news" before it was confirmed. I'm
not saying this is being rumored as happening, but it doesn't seem impossible
to have a discussion about.

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tjogin
I don't understand, what does Steve Jobs have to do with this fictional
bullshit, and how does it make Jobs greedy?

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vlado
Well, for a lot of apps exclusivity, will mean that everyone else could do a
clone of the app for another platform, but not you yourself. Which would mean
that you can do it too, only under a different name.

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donaq
Uh, I'm no Apple fan, but I doubt Steve Jobs is so out of creativity that he
has to resort to such tricks to stay in business. It's not like he's still
working for the money.

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bonch
"Greedy" is such a misused word. Businesses are supposed to be, for lack of a
better word, avaricious. That is neither good nor bad; it's basic capitalism.
That greedy system spawned the very computer which the author used to type his
rant and the electricity that powered it.

