Is Apple the New Microsoft?

[larryziegler]

from Computerworld

Interesting role reversal description here.

Is Apple the New Microsoft?

Don't look now, but the role of the industry's biggest bully is increasingly played by Apple, not Microsoft.

Ten years ago, Microsoft was the company everyone loved to hate.

The most vociferous Microsoft haters slammed the company for being a greedy industry bully that used its monopolistic, clunky, copycat operating system to force software on users and coerce partners into unfair licensing deals.

Don't look now, but the role of the industry's biggest bully is increasingly played by Apple, not Microsoft. Here's a look at how Apple has shoved Microsoft aside as the company with the worst reputation as a monopolist, copycat and a bully.

Apple the Monopolist
The core complaint about Microsoft in the 1990s was that its Windows market share gave it monopoly power, which it abused in multiple ways. Attorneys General and others zeroed in on the "bundling" of the Internet Explorer Web browser, which they claimed was forced on users because Microsoft offered it as part of Windows.

People love iPods (including me; my family of four has purchased 12 iPods in the past few years). But iPods come bundled with iTunes. Want to buy music from Apple? Guess what? You must install iTunes. Want an Apple cell phone from AT&T? Yep! ITunes is required even if you want only to make phone calls. Want to buy ringtones for your Apple phone? ITunes.

Apple not only "bundles" iTunes with multiple products, it forces you to use it. At least with Internet Explorer, you could always just download a competitor and ignore IE.

Not fair, you might say. Any hardware device that syncs data with a PC as part of its core functionality has software to facilitate that syncing. True enough. But operating systems have browsers as part of core functionality, too. Doesn't Mac OS X come with Safari? Doesn't the iPhone?

And "bundling" works. Steve Jobs bragged this week that Apple has distributed 600 million copies of iTunes to date. The overwhelming majority of those copies were iTunes for Windows. And iTunes for Windows' popularity isn't driven by software product quality. ITunes is the slowest, clunkiest, most nonintuitive application on my system. But I need it because I love my iPods.

At least with Windows, you could reformat your PC and install Linux or any number of other PC-compatible operating systems. Can I reformat my iPod and install something else? Can I uninstall iTunes but keep using the iTunes store and my iPods? Apple strongly discourages all that, claiming that the iPod, the iPod software and iTunes are three components of the same product. But that's what Microsoft said about Windows and IE.

Sorry, Dad
Here's a scenario for you. A consumer walks into a local retail outlet to buy a Christmas present for dad. The Apple iPod "section" of the store dwarfs the section where all the also-ran players are displayed. IPod is clearly the trusted standard. The consumer buys a shiny new "Fatty" iPod nano with video.

Dad opens the present and is excited. He follows the directions, installs iTunes and immediately splurges on a few dozen songs at the iTunes store. He loves it, and is an instant convert to portable digital music.

The only downside is that he works out every day at the gym, where cardio machines face TVs that broadcast sound over FM radio. Six months later, when his iPod is stolen, he goes to buy another player -- this time, he hopes, with an FM radio in it. Several competitors offer this feature, but not iPods. He's about to choose a new player with an FM radio when it hits him: None of his files -- now totaling 300 songs and 50 movies -- will play on the new player. He bought and paid for all this content, but it only works with iPods and iTunes.

Apple has an iPod customer for life. Microsoft never had this kind of monopoly power. Sorry, dad. I should have bought you a tie.

Sticker Shock
Another clue that a company has monopoly power is when you find yourself suffering sticker shock. How many times have you stood in line at the theater megaplex and marveled at the chutzpah required to charge $4.50 for a soft drink, when the same beverage is one-third the price at the quickie mart 50 feet outside the theater doors? But -- so sorry! -- no outside food or beverages are allowed in the theater. The theater has a monopoly on soft drink sales, and you'll pay what they charge.

That same shock rippled through the iPhone enthusiast community yesterday when Jobs announced with a straight face that iPhone ringtones based on iTunes songs would cost the full price of the song, plus 99 cents extra. What? The full song costs 99 cents! How on Earth can Apple seriously charge the same amount again for the ability to hear just 30 seconds of the song -- the same length as the free iTunes "samples"?

Apple fully understands the power of monopoly pricing. The company has sold the 8GB iPhone for two prices in its short, three months of existence: $599 and, now, $399. When the iPhone was the only way to get the whole multitouch, big-screen, Wi-Fi iPod experience -- when the product had no alternatives -- the price was $599. One analyst estimated Apple's cost to build an iPhone is $245.83. I don't know if that's true but, if so, more than half the user cost was profit. That's theater soda pricing. But as soon as Apple introduced an alternative to the iPhone -- the iPod Touch -- Apple dropped the price by one-third.

Imagine if another company were allowed to compete in the OS X media player market. These players would all drop to below $300. Don't hold your breath, though; it'll never happen. Apple has the power to exclude all others from software than runs on its media players. Microsoft could only dream of such power.

Apple the Copycat
Ten years ago, Microsoft haters complained that Windows followed the Mac OS to market as a graphical user interface, copying the Mac's features such as folders, trash cans, resizable windows and other elements. That complaint was repeated with each new version of Windows -- Apple was the innovator in the operating system space, and got there first with a host of key features. Microsoft just came along later, duplicated features that Apple pioneered, and reaped the benefit because of its monopoly power.

But who's innovating now? The LG KE850 was winning awards for its full-screen, touch-screen, on-screen keyboard before Jobs even announced the iPhone.

The best thing about the iPhone and iPod Touch -- the warm-and-fuzzy multitouch UI with gestures -- wasn't new, either. Various labs have been demonstrating similar UIs for more than a decade, and even Microsoft demonstrated a fully realized 3G UI in May, well before Apple shipped the iPhone. Microsoft will ship its tabletop UI, called Microsoft Surface, in November, and Apple will likely enter this space with a 3G UI months or years after Microsoft does.

And Wi-Fi in a media player? Ha! Microsoft's funky Zune had that almost a year before Apple did and SanDisk's Sansa Connect with Wi-Fi was released last June. Apple even stole the name for its iPod Touch product, according to HTC, which sells a touch-screen smart phone called the HTC Touch.

Don't get me wrong. I think Apple's execution of these features is far better than its competitors'. And it would be horrible decision-making to not build the iPhone simply because others pioneered key features. But that's not what I'm talking about. I'm talking about Apple doing what Microsoft did: dominating the market with features other companies had first. If it was fair to slam Microsoft over Windows, it's fair to slam Apple over the iPhone and iPod Touch.

Apple the Bully
Microsoft used to be the big bully, pushing everyone around and dictating terms to partners. Microsoft has lost its edge in this regard -- most of Microsoft's major resellers brazenly hawk Linux. Even Intel -- the "tel" part of "Wintel" -- is powering Macs these days. Microsoft is still profitable, but it has lost control -- and has lost its reputation as the bully nobody can say no to.

Meanwhile, Jobs has suddenly become the most feared man in Hollywood, bragging Thursday about Apple's scary dominance in digital media sales. Apple has sold more than 3 billion songs and 95 million TV shows via iTunes. While music CD sales crash and burn, almost one-third of all music sales are now digital. As Jobs euphemistically said yesterday, "iTunes is leading the way."

Although full details haven't been revealed, NBC apparently wanted more "flexibility" to charge higher prices for its TV shows on iTunes. Apple said no, and NBC was sent packing. NBC now plans to sell shows on alternative locations, such as its own Web site and on Amazon.com. Prediction: NBC will come crawling back to Apple and beg the company for inclusion, and on Apple's terms. Why? Because iTunes is increasingly becoming the only venue in which media companies can succeed selling music and TV show.

Jobs rules like Bill Gates never did. If you want to succeed in the digital music or downloadable TV business, you'll do things his way.

Why I Support Apple
After reading my preceding comments, you may be surprised at my next statement: I come not to bury Apple, but to support it.

You see, my point isn't that Apple's growing bad reputation is deserved, but that Microsoft's wasn't. All that evil monopoly hype, court cases and public posturing directed for so long at Microsoft drained energy and resources from the entire industry. The market, however, corrects issues such as that. In the case of Microsoft's "monopoly," Linux, Firefox and now Apple prove that customers always had choices.

The same goes for Apple.

As pundits, bloggers, users, politicians, Hollywood big shots, regulators, lawyers and competitors increasingly bash Apple, accuse it of unfair play and call for legal and regulatory action, I will defend it, as I defended Microsoft. It's fun to slam big, powerful companies that are dominating their markets. But in the final analysis, Apple has earned its growing power and influence, just like Microsoft did.

Is Apple a monopolist, copycat and bully? Yes, and deservedly so. And if anyone thinks Apple's success is a problem, well, bringing in the lawyers wasn't the solution for Microsoft, and it won't be the solution for Apple.

Mike Elgan writes about technology and global tech culture. Contact Mike via e-mail or his blog, The Raw Feed.

[callisto9]

my only real gripe with apple products has been with the owners themselves. many (not ALL) seem to emit this pretentiousness about owning an apple product that you simply don't see elsewhere. it's like their apple products define them. and while that's fine, er, i guess, i just don't like the vibe i get from some of their owners and their recent "mac vs. pc" ads.

apple isn't superior and microsoft isn't better. they are moderately different when it comes right down to it. it really depends on what you're looking for when you're shopping for an ipod vs. other mp3 player or mac vs. pc. it's all about personal needs and each one can fit each person differently.

both apple and microsoft have plusses. honestly, i get really sick of the debates, the fanboys, the name-calling, the overhype of the iphone, the uninspiring update to windows (vista)...all of it. at the end of the day, it's just plastic and metal and parts and if that defines you, well, that's kinda sad.

[Toad]

And iTunes for Windows' popularity isn't driven by software product quality. ITunes is the slowest, clunkiest, most nonintuitive application on my system.

Thank god I'm not the only one who thinks that.

You better watch your larry, mac people on this board are fierce. I'm just glad there's articles like this that show that most mac people that love apple are just puppets and are enjoying a company's success for the same reason they loathed it's main competitor a few years back.

But I know for certain, this isn't gonna change the minds of any brainwashed apple zombies on this forum.

[callisto9]

Originally Posted by Toad

You better watch your larry, mac people on this board are fierce.

i'm waiting to get flamed as well. bring it.

oh, and jose, i think the article is entirely written by someone else, not larry.

[Toad]

Originally Posted by callisto9

my only real gripe with apple products has been with the owners themselves. many (not ALL) seem to emit this pretentiousness about owning an apple product that you simply don't see elsewhere.

Hey Erin, I bet this page will make you chuckle.

[Toad]

Originally Posted by callisto9

i'm waiting to get flamed as well. bring it.

oh, and jose, i think the article is entirely written by someone else, not larry.

I know, but they'll flame on the OP, and anyone who agrees.

[callisto9]

Originally Posted by Toad

Hey Erin, I bet this page will make you chuckle.

it does.

[Maggadog]

It made me chuckle, too. It takes 2 sides to have an arguement.

[macdave]

I think Apple is the new Warner Bros or Geffen which is what MS is also trying to be(WB tried charging Apple to carry its catalog, Apple offered to drop them and WB backed down.)

They will both kill off the old media distribution dinosaurs.

You can use your ipod without itunes, you just can't buy music from apple without it(I think there is a Linux App that works with the itunes store)

[Toad]

Originally Posted by macdave

You can use your ipod without itunes, you just can't buy music from apple without it(I think there is a Linux App that works with the itunes store)

I dont use itunes with my shuffle (which was a gift, i would never buy an ipod), i just key-j's python script to update the library.

But other than the shuffle, your SOL if you don't want to shell out like another $40 for a non-itunes ipod manager for windows. I dont remeber the name, but I remeber it coming out way back when with the 1g ipods which were firewire only and apple didn't support windows with them. I beleive they are still in business, and have a good base of customers. But why would i spend $300 on a media player, just ot shell out more money to put music on it, just because i dont want to use itunes? I'll buy something else. The sad this is, mostly everything else uses windows media player, and i'm not too fond of using that either. looks like i'm never gonna go any bigger than a small flash player. But I don't mind, because that would make the 24-bit dac in my cd player very un-happy.

[Lmhansen]

Wow, Mike. Welcome to 5 years ago...

[PhoenixRising]

Ehh. I happen to love Apple, and it's sort of a blind love, but I know it.

What matters to me, in the long run, is, well, a long run. I went through too many PC'S (and all with Windows), and have not had the same bad luck with Apple.

[Fowvay]

I don't know why Mac users get so defensive when you call them idiots. I mean, Apple is a company that has built its entire user base around the fact that its users can't do simple things like turn their computers on. Hell, most Mac users can't even talk without using their hands, which ranks their intelligence somewhere between a simian and hog poop

hehehe that makes me giggle.

[gilligan]

Apples are junk.
And yes I have one right along side of my trusty windows machine.
Makes a good $5000.00 radio though.

[larryziegler]

Originally Posted by Toad

Thank god I'm not the only one who thinks that.

You better watch your larry, mac people on this board are fierce. I'm just glad there's articles like this that show that most mac people that love apple are just puppets and are enjoying a company's success for the same reason they loathed it's main competitor a few years back.

But I know for certain, this isn't gonna change the minds of any brainwashed apple zombies on this forum.

I don't hold any ill will towards owners of Apple products. This is a country of choice afterall and in my household, we do happen to own a Nano and Shuffle, in addition to a Zune here....and 3 Dell Computers (2 laptops and a desktop). I liken it to the old days of Ford vs Chevrolet in discussing bragging rights. For me, Apple won't work, because I work in an industry whose technology is framed around Microsoft, but I have clients whose businesses are run more efficiently using Mac technology. The one different distinction not mentioned in the article, betwen MS and Apple happen to be in the distribution rights of peripherals for these 2 platforms. MS seemed to license anybody (for a fee, I'm sure) for other development of software/hardware that integrates into the MS scheme, whereby Apple seems to hold everything close to the vest, so to speak, giving Apple the more true monopoly of its technology. In the end, what works best for you, is whats best to use. Competition in the end, does make for a healthier environment. We all just like to seemingly boast that our side of the technology choice, whichever it may be, is the best choice. I like choices rather than no choices myself.
As much as I may express my opinions, I also pride myself in keeping an open mind about the choices that are available and the reasonings people make for making those choices. In the end, a little debate is healthy for everybody.

[wawalker]

Originally Posted by callisto9

my only real gripe with apple products has been with the owners themselves. many (not ALL) seem to emit this pretentiousness about owning an apple product that you simply don't see elsewhere...

I agree. Don't forget owner arrogance. Really, it's almost a character defining trait to me anymore when someone is pro-Apple, anti-PC--I know more than 1/2 the time I'm not going to like them personally. Really, I could care less about computers, software, etc., if my wife didn't come with a computer I'd probably still not have one. I'm someone who graduated from college in 1995 only having used MS Word, and then didn't touch a computer for 4-5 years. I blame eBay for my demise and then I happened on this site...

[dgoldbe2]

Thank Jebus the Linux users haven't chimed in yet. You think the Apple v PC debate is bad ...


At any rate, everyone knows that the best computers run real Unix.

[mrbeetlebrain]

Wow - feel the hate people! Personally the mac vs PC thing is sooooo nineties.

I kind of don't know what I feel about that article - if I have an Sony Ericsson phone and I have software to install in order to use it does that make it evil? Would it be better if Ericsson just said, Nah, you can figure out how to put songs on it - we don't want to be a monopoly. The average user would think that was junk.

Basically if Apple of a victim of their success, well so be it.

By the way, my next PC will be a Mac running Vista or XP wait does that now NOT make them a monopoly????

[mrbeetlebrain]

Originally Posted by dgoldbe2

At any rate, everyone knows that the best computers run real Unix.

is Darwin real *nix?

[callisto9]

Originally Posted by wawalker

if my wife didn't come with a computer I'd probably still not have one.

your wife came with one.

i am open to apple products (i even own one), but what i didn't like when trying out a mac (YES, FOR FIVE DAYS, PAUL) was the little clique i felt like i was joining. like i was part of this "community" of mac users. the community, generally, i found not to be too friendly when you had a question or disliked something about the mac. granted, i only tried a mac for about a week (PAUL ) and even though it wasn't for me, i found the "community" a little too elitist and snobby for my likes. they were al for you wanting to own an apple product, but once you decided it wasn't for you, some people turned up their noses at you.

i would like to own another mac someday (when picasa's available for it! ) but i'm in no rush. my currrent pc does all a mac does and for half the cost.

and don't even get me started about the farking iphone. god forbid you say it's incapable or someone might lynch you. i belong to an cellphone forum and oh my gawd, it got brutal when that thing came out. and i wanted to own an iphone, too, but the $500 price tag (for a phone that didn't do all the things my year-old sony ericsson did) seemed too steep.

either way, i don't CARE if someone loves the iphone (though some users i've experienced are a bit too spazzy about it) and i don't care if you hate PCs. but this whole "mine's better than yours" pissing contest gets old.