[LINK] "Why Apple Needs to Loosen up"

[rfmcdonald]

The point that Jon Stewart recently made on his show, about how disturbing it is that Bill Gates is a humanitarian hero giving children clean water while Steve Jobs is calling the police on bloggers, bears repeating. Daniel Lyons in Newsweek wrote about how Apple's desire for control as epitomized by the recent iPad may end up costing the company.

Now along comes Apple with a walled garden. Not only does it produce the iPad's processor, its operating system, and the device itself, but Apple sells its content, via iTunes, and keeps 30 percent of the money. It also operates the App Store, the only place selling applications to run on the iPad, and it keeps a 30 percent slice there, too. This summer it will start selling ads that run inside the apps and will keep a 40 percent slice of that revenue.

Apple does not explain its strategy. But my interpretation of what it's thinking goes as follows:

The first two decades of the World Wide Web have been a huge mistake. The Internet is not a philosophy. It's a distribution mechanism. The laws of physics did not change when the airplane was invented, nor have the laws of economics changed because the Internet exists. You make money on the Internet the same way you do everywhere else—by having something that people want and forcing them to pay for it. There is a reason a circus takes place inside a tent, and it's not to keep you dry when it rains. They want to charge you to watch the big show.

Part of me is glad Apple is doing this, because someone needs to buck the "everything is free" trend and see what happens. But I think the company is taking things to an extreme, exerting a degree of control that may ultimately undermine its own success. If you own an iPad or an iPhone, you're aware (and no doubt frustrated) that it won't run videos created in Adobe's Flash software, which accounts for half or more of all the videos on the Web. An Apple spokesman says Flash is "closed and proprietary" and that Apple supports other development tools that are "open and standard." But banning Flash also pushes customers to buy movies and TV shows from iTunes rather than watch them on a free Web site. It pushes developers to write apps that get distributed through Apple's App Store, rather than through a Web browser.

[. . .]

We've seen this movie before. A quarter century ago, Apple got a jump on everyone else when it introduced the Macintosh computer in 1984—another gorgeous product. Microsoft didn't have a credible alternative until 1990, when it introduced Windows 3, and really caught up five years later, with Windows 95. By then Apple was toast. The reason? The guys at Apple were control freaks; the guys at Microsoft were more open, and left more money on the table for others. Apple is a stronger company today than it was in the 1980s. And controlling all the pieces lets Apple deliver a more seamless experience. It's hard to argue with the results. The company's sales grew nearly 50 percent in the last quarter, and profits nearly doubled. But will Apple still be booming in five years? Or 10? My sense is that unless Apple can loosen up, it'll be left behind once again.