It will be interesting to see what happens if Amazon, Sony, Borders or Barnes and Noble make the app store purchase available reflecting the cost of the 30% cut that Apple is insisting on. What do you think most consumers would do under those circumstances?
Generally I find the whole thing fascinating. I have no doubt that it is entirely legal, I have no doubt that it is within the contract language of Apple's contract with developers for Itunes, I have no doubt that at the margin it may make the Apple platform less valuable for end users. At the margin such practices will spur more sales of Kindles, Nooks, Sony Readers and Android tablets. The practice would be particularly pernicious if there were no other distribution markets available...but there are.
Some stores carry a product with no mark up just to get people in the door. I guess apple would have to determine the value of that for themselves. That would include loss of sales due to people buying nooks etc, and giving up retail space that they could use for other items.
It certainly is fascinating as you say. In fact I find your entire post logical and to the point. If the app store was the only game in town it would be pernicious.
I agree completely. Android is going to lay waste to iOS by year end.
Apple is making the exact same mistake it did with Microsoft and desktop computing. Exact.
Apple is determined to be a boutique technology company under Steve Jobs.
Naive nonsense.
Apple are not and never have been about Market share, they have been about profit which allows for a massive r and d budget which keeps them, constantly, ahead of the competition - the same competition who have been playing catch up since the original iMac. Where are all this iPod killers of ten years ago? The same place the iPad killers will be in the next four years. Samsung galaxy tab anyone?!
Would you rather own shares in apple or google?
A boutique company who are the second most cash rich in the world! What rock are you living under?
Anyone can give away their product to achieve Market share. Not a great business model though, is it?!
I don't think it unreasonable for developers that profit from the App Store to contribute to its upkeep.
If you could download the app directly from Amazon, Apple would have no relationship in the transaction at all. The user's iPad and Amazon would have an exclusive relationship without Apple. Since Apple's App Store is the only way for Amazon to deliver the original FREE app, Apple has forced itself into the relationship that normally would be exclusively between Amazon and the end user, which I'm sure most users would prefer. Although some people might like a three-way , I personally think that there should be exceptions to the App Store for mega corporations like Amazon offering free apps.
Nothing more; nothing less, besides everyone knows you cannot buy an eBook inside the app itself- it throws you into Amazon's website via Safari.
Only the regular Amazon app allows you to make purchases for everything and anything. Does Apple get a cut of Amazon, Best Buy, Ebay, etc?? I don't think so.
Once the app is on my device (you know, the one I bought with my dollar), why can't I source my data for it elsewhere? Apple are artificially imposing themselves in the relationship between me and the vendor.
Apple is not imposing themselves. You have to choose to use in app purchase for that to happen. Apps can still maintain their own payment methods, if you choose to use it.
Apple is unequivocally repeating their mistakes of the past.
They would have gotten away with it too if it wasn't for Google. Steve had the right plan to take down Microsoft, RIM, and others... but I truly believe he was blindsided by Google directly competing against their walled pen strategy with an open range strategy.
Now, it's just a matter of time. Apple is going to be laid siege to by content providers. Will they continue to extort, or will they become flexible. Has Apple already pushed too hard too fast and alienated the rest of the industry?
Remember, ego nearly destroyed Apple before.
Superior technology / user experience & commanding market share didn't win out over free market last time - it is a GAMBLE to assume they will this time.
Look for Google and RIM to surge this year. Apple will remain strong - look for iad to be scrapped or completely revamped.
Good lord I don't even know where to begin with this! Ego? You are way out in left field playing soccer on a baseball diamond. There was no free market "last time" in whatever fevered and distorted universe you draw that from. Apple has been under siege by content providers locked into their own draconian business models from the inception of the iPod - or did you miss that bit of product history? RIM will not surge and Google is gaining marketshare from the featurephone segment, not raiding the other smartphone competitors. They will drive cheaper "smartphones" to get as many Android devices as they can into the product stream and erode down the featurephone segment. Marketshare doesn't dictate success, profitshare does, as the major PC brands are discovering as they race to the bottom price-wise.
What you have described doesn't functionally exist in reality and your references are highly in error. Apple has never been the majority in the smartphone segment, over-shadowed by either RIM or Nokia, depending on which numbers you wish to view. Whether it is Android or RIM in the top spot doesn't affect Apple's decisions or how it does business. Which is obvious to anyone who is actually looking at what is going on and not taking as writ what the tech blogs are throwing out there.
Once the app is on my device (you know, the one I bought with my dollar), why can't I source my data for it elsewhere? Apple are artificially imposing themselves in the relationship between me and the vendor.
You can source your data elsewhere. Music, pitcures, video and books. They just need to be in the formats that the iOS supports so epub etc. Nothing stopping you getting these and syncing them from your computer. Apple are exercising their legal right to run THEIR store as they see fit under the clear guidelines that are available to all developers. No one is forced to buy apple or use the app store. You buy a diesel car, you need to run it on diesel... Is that anti-competitive?
I agree completely. Android is going to lay waste to iOS by year end.
Apple is making the exact same mistake it did with Microsoft and desktop computing. Exact.
Apple is determined to be a boutique technology company under Steve Jobs.
Google is merely giving away software in the hopes of creating an ad platform. Guess who pays a cut for this? We do!
In advertising, VIEWERS are the product, Google is the iTunes Store, and advertisers are the buyers. WE PAY THE 30% CUT to use Android phones by wading through all the ads.
Apple has set up an alternative to free-for-all adware. We pay for good hardware designed to work well, we buy apps a very low prices, and developers give Apple a cut of their profits to maintain the sales and marketing of their software and content through iTunes. THEY PAY!
People keep taking about Apple's 30% cut like its some sort of extra tax. Do they have no idea how profit margins work? When you improve or finish a good, or add a service or some other layer of value, you get a piece of the action. Apple deserves its cut. It doesn't make things cost more!
The bottom line is that Apple is adding value: creating the iPhone, developing the iTunes Store, making devices people want and services people will pay for. Google may be including its software on devices being dumped in China and sold as BOGO by Verizon, but it isn't creating the same value and so isn't earning the profits Apple is. And it doesn't deserve to.
Nope, not damage control. Just introducing clear fact where others are spreading FUD. Can Sony developers not read? Are they that stupid? They didn't follow the submission guidelines. The app was rejected. What damage is there to control?
explains quite a bit your reaction. You apparently have not run very successfully any sort of business operation. Let me provide an example:
A firm purchases land and use rights to create a very nice bit of shopping mall. They have well-paved carparks, lot's of green space, convenient services, nice events, nice seating for weary shoppers, areas where children can amuse themselves while parents rest and chat. Perhaps they blend in some entertainment, perhaps some nice amusement rides, theaters, music venues, etc. They then advertise to retailers to come and set-up shop, picking and choosing a few good established and popular retailers to anchor and then opening up smaller more affordable space for more cutting-edge, adventuresome or simply different retailers to try out being in business there. The firm is responsible for maintenance, crowd control, and upkeep on the property. In order to do this they ask for and receive a small portion or percentage of the intake by the retailers above the standard rental for the storefront. They are in this for the long-haul so they keep everything reasonable and fairly affordable for most. They will object however if a retailer puts up a large sign that sends its customers to another , cheaper retail storefront to do the purchases when the customers are in the mall, thus circumventing the per cent charge required for operational overhead and what little profit the firm may get out of that fee. That's the App Store and that's the apps using the App Store for the retail space and customer base.
Nice example, but where does the mall owner get a fixed percentage of all sales made by the retailer? Not sure how 30% is "reasonable and affordable". The "overheads" argument falls flat as 1) the books aren't hosted by Apple and 2) a £13 book should have the same overhead as a £5 book.
Overall, looks like Apple wants to make sure someone doesn't do to them what they did (with the help of iTunes) to Windows. If it wants to become serious about being the provider for books, maybe they'll broaden their selection.
Where are ebooks located, where can you buy the ebooks (a clue, not on Kindle App)
You should get a clue. There's nothing in Apple's policy that stops Amazon's kindle app from using their own webstore. Only thing they require now is provider users the option of using in-app purchase through Apple.
That's a very generouse policy in fact. In the real world, if you want to setup advertisment stand in stores to direct business your way, the store owners demand a cut, in the form of a fee, regardless of whether the customer actually make any purchase at all. If you place ads on Google, you have to pay Google for click through, or even just impressions. Where's your outrage then?
Nice example, but where does the mall owner get a fixed percentage of all sales made by the retailer? Not sure how 30% is "reasonable and affordable". The "overheads" argument falls flat as 1) the books aren't hosted by Apple and 2) a £13 book should have the same overhead as a £5 book.
Overall, looks like Apple wants to make sure someone doesn't do to them what they did (with the help of iTunes) to Windows. If it wants to become serious about being the provider for books, maybe they'll broaden their selection.
The mall owner charges rent. The walmart in the mall takes a commission from each product sold in the form of a mark up. It's not a difficult business model to understand. The OP explained is very well.
Does no one here have any retail or business experience! Slme of the comments this evening are beyond naive and show a complete lack of how retail works.
Additionally, apple are trying to broaden their book selection, unfortunately anti-competitive deals by companies such as amazon are forcing publishers to decide between apple or amazon, yet I dint see anyone criticising amazon fir blackmailing publishers - you sell on apple, you don't see with us as well... Now THAT is anti-competitive.
Because it is common courtesy. Apple sell you the platform and then you should be able to choose how you want to use it.
Let's look at the mac then. Why should apple let you install software on your mac that is not from the mac app store where apple gets a 30% cut. EXACTLY the same.
To play Devil's Advocate here, it's not exactly the same. Apple isn't paying anything to host the Mac app on a third party site. Apple isn't marketing or featuring the third party app at all.
Apple is hosting the Sony app. It costs Apple money to have the Sony Reader app on their store.
Nice example, but where does the mall owner get a fixed percentage of all sales made by the retailer? Not sure how 30% is "reasonable and affordable". The "overheads" argument falls flat as 1) the books aren't hosted by Apple and 2) a £13 book should have the same overhead as a £5 book.
Overall, looks like Apple wants to make sure someone doesn't do to them what they did (with the help of iTunes) to Windows. If it wants to become serious about being the provider for books, maybe they'll broaden their selection.
I agree. If Amazon sells 1 million $10 books through Apple's channels, Apple just made $3 million. Multiply that by millions more and Apple gets to rake in some serious cash. I don't think if costs quite that much for Apple to maintain the overhead that the Kindle app creates on the App Store.
Apple really wants to profit off of this, and hey, that's business. But for people to use the overhead argument is mostly nonsense.
Apple is starting to adopt a very high risk strategy with certain partners. Obviously Apple is in a great position right now with the popularity of its iOS devices, but they certainly don't have an insurmountable lead. If they start driving the likes of Amazon away from supporting iOS devices, that will quickly start lessening the appeal of owning an iPhone or iPad.
Let's face it. The risks are already sky high building applications for iOS. The approval process is basically a lottery where rules may or may not be rigorously applied depending on the mood of the person reviewing your application on a given day. If you start making the risk to reward even less enticing, you will eventually drive talent away to building solely for other platforms.
Apple is not imposing themselves. You have to choose to use in app purchase for that to happen. Apps can still maintain their own payment methods, if you choose to use it.
I think you're really splitting hairs there. If you have to offer the in-app purchasing, even if there are alternatives (like skipping out to the web to buy the item yourself), then they are definitely imposing themselves.
You'd be kidding yourself if Apple will allow apps to provide an incentive (such as a price differential) to induce the purchase outside of the ecosystem.
Comments
It will be interesting to see what happens if Amazon, Sony, Borders or Barnes and Noble make the app store purchase available reflecting the cost of the 30% cut that Apple is insisting on. What do you think most consumers would do under those circumstances?
Generally I find the whole thing fascinating. I have no doubt that it is entirely legal, I have no doubt that it is within the contract language of Apple's contract with developers for Itunes, I have no doubt that at the margin it may make the Apple platform less valuable for end users. At the margin such practices will spur more sales of Kindles, Nooks, Sony Readers and Android tablets. The practice would be particularly pernicious if there were no other distribution markets available...but there are.
Some stores carry a product with no mark up just to get people in the door. I guess apple would have to determine the value of that for themselves. That would include loss of sales due to people buying nooks etc, and giving up retail space that they could use for other items.
It certainly is fascinating as you say. In fact I find your entire post logical and to the point. If the app store was the only game in town it would be pernicious.
I agree completely. Android is going to lay waste to iOS by year end.
Apple is making the exact same mistake it did with Microsoft and desktop computing. Exact.
Apple is determined to be a boutique technology company under Steve Jobs.
Naive nonsense.
Apple are not and never have been about Market share, they have been about profit which allows for a massive r and d budget which keeps them, constantly, ahead of the competition - the same competition who have been playing catch up since the original iMac. Where are all this iPod killers of ten years ago? The same place the iPad killers will be in the next four years. Samsung galaxy tab anyone?!
Would you rather own shares in apple or google?
A boutique company who are the second most cash rich in the world! What rock are you living under?
Anyone can give away their product to achieve Market share. Not a great business model though, is it?!
I don't think it unreasonable for developers that profit from the App Store to contribute to its upkeep.
If you could download the app directly from Amazon, Apple would have no relationship in the transaction at all. The user's iPad and Amazon would have an exclusive relationship without Apple. Since Apple's App Store is the only way for Amazon to deliver the original FREE app, Apple has forced itself into the relationship that normally would be exclusively between Amazon and the end user, which I'm sure most users would prefer. Although some people might like a three-way
Where is Amazon's iOS app located? Is it not inside the Apple's App store?
Where are ebooks located, where can you buy the ebooks (a clue, not on Kindle App)
Only the regular Amazon app allows you to make purchases for everything and anything. Does Apple get a cut of Amazon, Best Buy, Ebay, etc?? I don't think so.
I can really see Apple letting that idea fly.
Once the app is on my device (you know, the one I bought with my dollar), why can't I source my data for it elsewhere? Apple are artificially imposing themselves in the relationship between me and the vendor.
Apple is not imposing themselves. You have to choose to use in app purchase for that to happen. Apps can still maintain their own payment methods, if you choose to use it.
Apple is unequivocally repeating their mistakes of the past.
They would have gotten away with it too if it wasn't for Google. Steve had the right plan to take down Microsoft, RIM, and others... but I truly believe he was blindsided by Google directly competing against their walled pen strategy with an open range strategy.
Now, it's just a matter of time. Apple is going to be laid siege to by content providers. Will they continue to extort, or will they become flexible. Has Apple already pushed too hard too fast and alienated the rest of the industry?
Remember, ego nearly destroyed Apple before.
Superior technology / user experience & commanding market share didn't win out over free market last time - it is a GAMBLE to assume they will this time.
Look for Google and RIM to surge this year. Apple will remain strong - look for iad to be scrapped or completely revamped.
Good lord I don't even know where to begin with this! Ego? You are way out in left field playing soccer on a baseball diamond. There was no free market "last time" in whatever fevered and distorted universe you draw that from. Apple has been under siege by content providers locked into their own draconian business models from the inception of the iPod - or did you miss that bit of product history? RIM will not surge and Google is gaining marketshare from the featurephone segment, not raiding the other smartphone competitors. They will drive cheaper "smartphones" to get as many Android devices as they can into the product stream and erode down the featurephone segment. Marketshare doesn't dictate success, profitshare does, as the major PC brands are discovering as they race to the bottom price-wise.
What you have described doesn't functionally exist in reality and your references are highly in error. Apple has never been the majority in the smartphone segment, over-shadowed by either RIM or Nokia, depending on which numbers you wish to view. Whether it is Android or RIM in the top spot doesn't affect Apple's decisions or how it does business. Which is obvious to anyone who is actually looking at what is going on and not taking as writ what the tech blogs are throwing out there.
Try again.
I can really see Apple letting that idea fly.
Once the app is on my device (you know, the one I bought with my dollar), why can't I source my data for it elsewhere? Apple are artificially imposing themselves in the relationship between me and the vendor.
You can source your data elsewhere. Music, pitcures, video and books. They just need to be in the formats that the iOS supports so epub etc. Nothing stopping you getting these and syncing them from your computer. Apple are exercising their legal right to run THEIR store as they see fit under the clear guidelines that are available to all developers. No one is forced to buy apple or use the app store. You buy a diesel car, you need to run it on diesel... Is that anti-competitive?
I agree completely. Android is going to lay waste to iOS by year end.
Apple is making the exact same mistake it did with Microsoft and desktop computing. Exact.
Apple is determined to be a boutique technology company under Steve Jobs.
Google is merely giving away software in the hopes of creating an ad platform. Guess who pays a cut for this? We do!
In advertising, VIEWERS are the product, Google is the iTunes Store, and advertisers are the buyers. WE PAY THE 30% CUT to use Android phones by wading through all the ads.
Apple has set up an alternative to free-for-all adware. We pay for good hardware designed to work well, we buy apps a very low prices, and developers give Apple a cut of their profits to maintain the sales and marketing of their software and content through iTunes. THEY PAY!
People keep taking about Apple's 30% cut like its some sort of extra tax. Do they have no idea how profit margins work? When you improve or finish a good, or add a service or some other layer of value, you get a piece of the action. Apple deserves its cut. It doesn't make things cost more!
The bottom line is that Apple is adding value: creating the iPhone, developing the iTunes Store, making devices people want and services people will pay for. Google may be including its software on devices being dumped in China and sold as BOGO by Verizon, but it isn't creating the same value and so isn't earning the profits Apple is. And it doesn't deserve to.
Nothing more nothing less.
Nope, not damage control. Just introducing clear fact where others are spreading FUD. Can Sony developers not read? Are they that stupid? They didn't follow the submission guidelines. The app was rejected. What damage is there to control?
Do you feel its fair for Amazon and B&N to directly profit from the App Store while contributing nothing back to the App Store?
Do you feel its fair for Apple's iTunes to directly profit from Windows users while contributing nothing back to Microsoft?
explains quite a bit your reaction. You apparently have not run very successfully any sort of business operation. Let me provide an example:
A firm purchases land and use rights to create a very nice bit of shopping mall. They have well-paved carparks, lot's of green space, convenient services, nice events, nice seating for weary shoppers, areas where children can amuse themselves while parents rest and chat. Perhaps they blend in some entertainment, perhaps some nice amusement rides, theaters, music venues, etc. They then advertise to retailers to come and set-up shop, picking and choosing a few good established and popular retailers to anchor and then opening up smaller more affordable space for more cutting-edge, adventuresome or simply different retailers to try out being in business there. The firm is responsible for maintenance, crowd control, and upkeep on the property. In order to do this they ask for and receive a small portion or percentage of the intake by the retailers above the standard rental for the storefront. They are in this for the long-haul so they keep everything reasonable and fairly affordable for most. They will object however if a retailer puts up a large sign that sends its customers to another , cheaper retail storefront to do the purchases when the customers are in the mall, thus circumventing the per cent charge required for operational overhead and what little profit the firm may get out of that fee. That's the App Store and that's the apps using the App Store for the retail space and customer base.
Nice example, but where does the mall owner get a fixed percentage of all sales made by the retailer? Not sure how 30% is "reasonable and affordable". The "overheads" argument falls flat as 1) the books aren't hosted by Apple and 2) a £13 book should have the same overhead as a £5 book.
Overall, looks like Apple wants to make sure someone doesn't do to them what they did (with the help of iTunes) to Windows. If it wants to become serious about being the provider for books, maybe they'll broaden their selection.
Do you feel its fair for Apple's iTunes to directly profit from Windows users while contributing nothing back to Microsoft?
Do learn the diffence between a software resale channel and an operating system.
Where are ebooks located, where can you buy the ebooks (a clue, not on Kindle App)
You should get a clue. There's nothing in Apple's policy that stops Amazon's kindle app from using their own webstore. Only thing they require now is provider users the option of using in-app purchase through Apple.
That's a very generouse policy in fact. In the real world, if you want to setup advertisment stand in stores to direct business your way, the store owners demand a cut, in the form of a fee, regardless of whether the customer actually make any purchase at all. If you place ads on Google, you have to pay Google for click through, or even just impressions. Where's your outrage then?
Nice example, but where does the mall owner get a fixed percentage of all sales made by the retailer? Not sure how 30% is "reasonable and affordable". The "overheads" argument falls flat as 1) the books aren't hosted by Apple and 2) a £13 book should have the same overhead as a £5 book.
Overall, looks like Apple wants to make sure someone doesn't do to them what they did (with the help of iTunes) to Windows. If it wants to become serious about being the provider for books, maybe they'll broaden their selection.
The mall owner charges rent. The walmart in the mall takes a commission from each product sold in the form of a mark up. It's not a difficult business model to understand. The OP explained is very well.
Does no one here have any retail or business experience! Slme of the comments this evening are beyond naive and show a complete lack of how retail works.
Additionally, apple are trying to broaden their book selection, unfortunately anti-competitive deals by companies such as amazon are forcing publishers to decide between apple or amazon, yet I dint see anyone criticising amazon fir blackmailing publishers - you sell on apple, you don't see with us as well... Now THAT is anti-competitive.
Because it is common courtesy. Apple sell you the platform and then you should be able to choose how you want to use it.
Let's look at the mac then. Why should apple let you install software on your mac that is not from the mac app store where apple gets a 30% cut. EXACTLY the same.
To play Devil's Advocate here, it's not exactly the same. Apple isn't paying anything to host the Mac app on a third party site. Apple isn't marketing or featuring the third party app at all.
Apple is hosting the Sony app. It costs Apple money to have the Sony Reader app on their store.
Nice example, but where does the mall owner get a fixed percentage of all sales made by the retailer? Not sure how 30% is "reasonable and affordable". The "overheads" argument falls flat as 1) the books aren't hosted by Apple and 2) a £13 book should have the same overhead as a £5 book.
Overall, looks like Apple wants to make sure someone doesn't do to them what they did (with the help of iTunes) to Windows. If it wants to become serious about being the provider for books, maybe they'll broaden their selection.
I agree. If Amazon sells 1 million $10 books through Apple's channels, Apple just made $3 million. Multiply that by millions more and Apple gets to rake in some serious cash. I don't think if costs quite that much for Apple to maintain the overhead that the Kindle app creates on the App Store.
Apple really wants to profit off of this, and hey, that's business. But for people to use the overhead argument is mostly nonsense.
Let's face it. The risks are already sky high building applications for iOS. The approval process is basically a lottery where rules may or may not be rigorously applied depending on the mood of the person reviewing your application on a given day. If you start making the risk to reward even less enticing, you will eventually drive talent away to building solely for other platforms.
Do you feel its fair for Apple's iTunes to directly profit from Windows users while contributing nothing back to Microsoft?
Yes it is fair. It's not like you download iTunes from Microsoft's servers. Microsoft doesn't have to pay anything to let you run iTunes on your PC.
You do, however, download the Sony Reader app from Apple's servers. Apple is paying for hosting the app and the bandwidth to allow you to download it.
Apple is not imposing themselves. You have to choose to use in app purchase for that to happen. Apps can still maintain their own payment methods, if you choose to use it.
I think you're really splitting hairs there. If you have to offer the in-app purchasing, even if there are alternatives (like skipping out to the web to buy the item yourself), then they are definitely imposing themselves.
You'd be kidding yourself if Apple will allow apps to provide an incentive (such as a price differential) to induce the purchase outside of the ecosystem.