Originally Posted by Stevie
Everything you say is true of competitive markets. The concern is that the app market may be dominated by a player who is using that domination to eliminate competition. Without competition, there are no "welcoming arms".
That is a danger when one or a few companies dominate a market.
That is the basis of the investigation.
What is left unstated in your position is that Apple is this dominant force in the Apps market and that it will then use its domination to impose its will in other mobile computing ecosystems
First, let us consider the nature of the phone industry.
- By its very nature, especially in the US, no phone manufacturer can simply sell its phone product. It requires the approval of or at least compatibility wih the technology of the telecom carrier. The carrier therefore exercise more power than any phone manufacturer. A case in point, Nokia has been the most dominant phone manufacturer but it could not only not gain any headway in the North American market, but actually losing marketshare. Similarly, if past reports were true, Verizon rejected Apple's iPhone because Steve Jobs would not accept Verizon's conditions when Apple approached Verizon ca 2005/2006 or thereabouts. For this reason, Apple had no recourse but to accept the exclusive deal with Cingular (later on AT&T, after the merger), in order to for Apple to have free will in developing what was to become the iPhone.
- The long term goals of the telecom carriers are not likely to be in "lock-step" with those of the phone manufacturers. Thus, it is unlikely that any telecom carrier would allow any phone manufacturer to become its sole or dominant phone supplier. This will happen because of the powers of any telecom carrier, as noted in the aforementioned point.
If you will state that this lack of competition is due to the nature of the telecom industry, you will get my vote.
Now, let us consider the history of Apple's entry to mobile computing.
- As noted above, the Apple iPhone might never have been, had no US telecom carrier agreed to carry the iPhone.
- Do not forget the mockery of Steve Ballmer: Windows Mobile? Millions! The iPhone? Zero! Even six month after the iPhone was announced, the computer industry was skeptical that the iPhone would make it. The phone manufacturers were similarly skeptical. Today, we assumed it was a success. However, let us not forget that some Apple's products, e.g., the Cube, and Apple TV, did not make it. The iPhone could have suffered the same fate.
- Apple entered market where there are already predominant phone manufacturers -- Nokia (the uncontested dominant phone maker at the time), RIM, Motorola, and all the phone manufacturers in the Asian tiger countries -- China, Taiwan, South Korea, Japan (I am surprised no such stronghold in Singapore). Then, you have the might of the true monopoly: Microsoft with its Windows Mobile.
It is not as if. the iPhone was a big secret before 2007. Any or all of the aforementioned parties could have done something to thwart the yet untested competition from Apple. But, everyone was caught flat-footed because of the ingrained belief that Apple iPhone would just attract Apple "fanbois",
The reality was that they should have learned their lesson with how Apple entered the digital music market. Let me point out here however that in the digital music industry, Apple dominated eventually because it created an ecosystem -- the ease of use of the iPod, the iTunes, the payment system, the Apple aura of chic and perhaps even technology, which many Zune apostles would very vehemently dispute. The other key factor in the eventual domination of the iPod was that it did not have a gatekeeper, as the iPhone is subjected to, in the form of the telecom carriers.
Now, the history of the Apps.
- It seened as if it had been ages ago, but the Apps store is barely two years old. Let us not forget too that Apple did not, in fact was initially a reluctant player in what was to evolve the Apps Store, in the Apple iPhone OS ecosystem.
- It was individual developers, who saw the potential of the iPhone OS, that clamored for Apple to allow them to participate. And, it succeeded even beyond Apple's expectations.
- What was good about Apple was that it was able to recognize early the significance of the Apps Store in the success of its mobile computing strategy. Thus, it focused on improving the ecosystem further. And improved it more systematically -- unlike Microsoft's efforts with its own mobile computing and digital music efforts.
- Further, rather than being greedy, Apple provided a very generous sharing (70-30) with its developers. Contrast this with prior terms of Microsoft and Amazon, and even the subsequent efforts of other companies. As important, it continued to support the SDK and provide other innovations to help each developer derive income from the Apps they create.
Which came first, the hen or the egg?
If ever Apple was generous with its developers, Apple was not being altruistic, it realizes that it could sell more iPhone OS mobile devices, if there are more Apps created for it.
In a sense, the developers "can break Apple", if there is enough of them to object to Apple's policies and flee to more welcoming ecosystems. But, let's be brutally frank, as confessed by Spiers(?), one of the developers who grandstanded in his proclamation to not develop for Apple Apps Store again. Not a year later, he was just as pompous to announce why he had to swallow his own words. They would only do this for as long as the iPhone OS ecosystem remains a viable strategy.
To my knowledge, I have not heard any policy that Apple would ban any developer that will develop.
Similarly, Apple, in spite of its own strick policies, did indeed make changes to avoid mass exodus among developers.
Equally important, the Apps would be a selling factor only if the users of iPhone OS mobile devices accept them. They have the final say.
This triumvirate within the Apple ecosystem -- Apple, developers and consumers -- offer some checks and balances within. And, this works only because the developers and consumers do have choices.
Let's not forget that there are indeed very viable and formidable competitions. Among these is the Google Android ecosystem. I already posted elsewhere why the Android ecosystem may overtake the phone competition of the Apple iPhone mobile devices, in terms of marketshare. It remains to be seen though whether any or the combined Androids will overtake Apple's profitability.
We should be reminded also that no one has thought of the Android as a formidable competition, just a year or so ago.
By the same token, there is nothing to prevent any company from simply coming out of the blue, to challenge the kings of the day.
What is certain, for as long as Steve Jobs is at the helm of Apple, the company would simply rollover.
Steve Jobs/Apple remain a vital force, not from unfair practices but because they do create products that are game-changers and able to persuade consumers to buy them. As such, many other companies cannot help but try to emulate them.
Certainly, Google, considering all the insights that Schmidt gained as a member of Apple Board, has the technical power and resources, to learn from how Apple developed its iPhone OS ecosystem. But, so far, has not taken the steps to create a better ecosystem. This can be said of other companies.
This, I think, is what made the difference. Instead of meeting the challenge, they simply keep on crying: "Foul" Or, at least their acolytes do.