Apple Monopolistic? Maybe. Control Freaks? Definitely!

By  |  Sunday, September 7, 2008 at 6:14 pm

Dan Lyons, who used to be best known as Fake Steve Jobs but who now writes for Newsweek under the name of…Dan Lyons, has written a piece called “One Bad Apple” for his new employer. It makes the case that Apple is a would-be monopolist that’s beginning to resemble the Microsoft of a decade or so–the one that wanted to dominate every market it could, and which left smaller companies with only crumbs off the table.

Lyons’ piece starts with an example that that’s not that compelling: Apple TV vs. the nifty movie box from a small company called Vudu. He correctly points out that Apple TV has added features that resemble some of those in Vudu, and that Apple cut Apple TV’s price. But Apple TV predates Vudu and sold for less than it in the first place; you can’t blame Apple for competing in a market when it was there first, and I don’t think you can criticize it for improving its product.

The story also says that Apple is the only company that can sell music for the iPod and iPhone, which is just plain wrong and has been for months: Amazon, Rhapsody, eMusic, Wal-Mart, and Lala all sell MP3s that play just fine on Apple devices; they all have millions of songs and most of them undercut Apple’s prices. That’s because the music market is slowly and surely going DRM-free, a scenario that Steve Jobs expressed support for in his famous February 2007 memo “Thoughts on Music.” Not very monopolistic.

Also mentioned: Apple’s extremely tough dealings with companies that want to sell their products in Apple Stores. It doesn’t sound like a lot of fun for iPod accessory manufacturers, but I don’t think it’s monopolistic–actually, Apple doesn’t make that much in the way of iPod and iPhone accessories, choosing to let third parties make most of them. Yes, its Made for iPod program and the importance of the Apple Store mean that it makes lots of money from other companies’ successes, but it could corner the market on most iPod-related product categories if it decided to, and it hasn’t.

Lyons is on firmest ground when talking about the iPhone’s App Store–Apple is inded the only source of iPhone applications (assuming you haven’t jailbroken your iPhone). It takes a cut of every iPhone application that isn’t free, and it gets to decide which apps can and can’t be sold. Apple would make the case that all this ensures a level of quality control that’s important for devices that use the cell network, and I can accept the notion that it’s not maintaining complete control over the iPhone platform purely out of anti-competitive instincts. But it’s not a great situation for either iPhone users or iPhone developers, and I suspect that at some point Apple will either choose to open up app sales or be forced to by market conditions. (Remember, Steve Jobs started out by maintaining that the iPhone shouldn’t be a platform for third-party apps, period.)

Oddly enough, Lyons doesn’t bring up Apple’s biggest monopoly: Unless you count tiny, vulnerable Psystar, it’s the only company on the planet that sells computers that run its own OS X, and probably always will be as long as Steve Jobs has anything to do with it. For decades, folks have argued that the Mac and Apple would be better off if it let other companies build Macs, and it seems entirely possible that the company would be more profitable at the end of the day if it chose to do so. Instead, it bundles hardware, software, and services together into an experience that it has utter control over, and settles for a small (albeit growing) slice of a very large pie.

And ultimately, I think it’s that control that drives Apple rather than a desire to crush anybody. It wants its experiences to be exactly what it wants them to be; it’s willing to frustrate other companies, and sometimes its own customers, to do so.¬† At its worst, it’s an obnoxious control freak of a company; at its best…well, it’s still a control freak, but one that uses that control to provide the best user experiences in the industry.

That’s my take, anyhow; I’d love to hear yours…


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4 Comments For This Post

  1. Paul Says:

    I agree largely with all that you have said. I also think regardless of whether Apple was in an existing market first or not, if it wants to enter the space it should be allowed to do so without calls of monopoly. No small or large business has a right to own some market. Entries into the market place is good for consumers although it may be bad for Vudu or other small businesses. They don’t however have a right to exist or have a right to protection from larger competitors.

    I could be wrong about this, but I believe Apple has said profit is not its first motive and that shareholders that want soley profit should not invest in Apple. If that is true then I think your argument that Apple would be more profitable if others created hardware for Mac OS X is simply not important to Apple.

    I think while Apple may have a monopoly or literally be a monopoly in some areas, they are legal monopolies. They may not be good for some groups (such as music companies) but are good for others, such as consumers and possibly small artists.

    But Apple need only look after its interests not consumers and not its partners. They should look after their own.

  2. Matt Says:

    What puzzles me about the whole monopoly thing is that there are a great many monopolies. Perhaps too many people out there don’t know the history or have some desire to get back at someone for the trouble MS went though. Now if Apple had deliberately made it so you can’t buy a computer or use a computer other than theirs to do simple tasks I might see this as a monopoly, but you can easily go down to Best Buy and select from perhaps 50+ different models of computers that are not Apple.

    It’s correct that those same machines won’t run MACOS, but then again my Garmin Nuvi can’t have it’s OS and data run on a normal computer either, nor will Sony’s Playstation software run on my Dell. Heck, what about XBOX running on my Dell? What about a PPC version of Windows? The firmware in my HP printer won’t work on a Lexmark printer, does that mean HP is impeding me from printing? NO. Now if one wants to hack those to run on different hardware odds are it can be done, but why exactly does Sony, Garmin and HP or anyone else have an OBLIGATION to make their software run on anyone’s hardware?If a MAC is too pricy for you, buy a Windows machine, they do the same thing. I can write a word doc with either, heck, I can write a word doc on any flavour of Linux even. I can edit images, surf the web, send an email, listen to music and watch a movie on pretty much any computer I pick.

    If I can’t afford an expensive car it’s hardly the manufactures obligation to make it cheaper for you, just buy a less expensive car. It’s not like one car _really_ does anything all that different from another. Its transportation after-all.

  3. Al Says:

    Apple tried selling the Mac OS to other manufacturers. Apple almost went belly up over it, as the other manufacturers undercut Apple’s prices and Apple’s sales and profits dried up.

    Been there, done that. Microsoft gives away Windows and lives off of Office sales while all Macs and Mac clones are undercut by very cheap PCs. Remember, the biggest expense in a $300 PC is the Microsoft Tax.

    Apple’s profits are it’s lifeblood. No profit, no R&D. No R&D, no innovation. No innovation, no more Apple Inc.

  4. Louis wheeler Says:

    This monopoly issue is bogus. Apple is not the Single Seller of computers in the world. Nor is it the single seller of Operating Systems. All it is doing is saying is that people have no right to run its OS on anything other than Apple’s computer hardware. Anyone who installs Mac OSX promises not to install it on Non Apple hardware.

    The people who do are violating Apple’s rights–they are liar and thieves. Why would you have sympathy for them? Are you saying that because you buy the box of software, you have the right to do anything you want with it? Sorry, you don’t.

    Let me remind you a situation from high school. Your mother might have said, “This may be where you live, but it is my house. I make the rules If you can’t live with that, go find somewhere else to live.” Apple owns the Mac OSX Operating System. You buy the right to use it under certain conditions. If you don’t like that, write your own Operating System.