Saturday, August 29, 2009

Apple's encouraging semi-openness

I find really encouraging the big iPhone App Store news this week, i.e. Apple’s decision to allow the rival Spotify music service. I think it marks a crucial turning point in the degree of proprietary control that Apple will exert over the iPhone/iPod/iTunes ecosystem.

Apple has been playing an odd game for 30 years. Its quandary over proprietary control vs. the need for third party complements sends mixed messages to third party suppliers. Sometimes it wants 3rd parties, sometimes it begrudgingly allows them to compete, and sometimes it tries to stomp out third party competition for its end-to-end control of a complete system. (IBM in the 1970s, DEC in the 1980s and Microsoft in the 1990s were even more hostile to certain third party competition).

Of course, I have a very biased perspective, since I spent 17 years making money by allowing third party printers to connect to Apple’s Mac OS computers. For the first decade, our clients competed with Apple’s hardware (until they discontinued their printers in 1998). At times, Apple worked against its interests as a platform owner to hinder competition and protect its printer product line.

Maybe Apple’s latest App Store move is under the gun of an FCC threat (including an empty threat of litigation). Still, I find it encouraging.

Both as a product strategy, and as a nod to government competition policy, this points to a much better Apple strategy, defined in two parts:

  1. Make a great end-to-end solution; but
  2. Allow point replacement at any point within the modular design.
This sort of modularity and consumer choice is consistent with many technologies of the past decades. My first stereo was a Kenwood receiver, Advent speakers and a Teac tape recorder. Later on I used a Harmon-Kardon tape recorder with the Sansui amplifier — and did not have to use a Sansui tape recorder or a HK amp. Although I own some Yamaha speakers, in general the makers of the best speakers didn’t make electronics.

Of course, such open modularity is the DNA of the Internet: What would a Mac be if it only allowed use of email, or a Windows machine if it only supported hotmail and MSN? Shouldn’t Android phones allow use of SaaS sites not owned by the Monster of Mountain View? Or if Outlook could only send email to other Outlook clients?

Apple’s point products are pretty darn good, so it shouldn’t be afraid of competing with its ISVs and IHVs. If it is afraid — and uses technical means to block third party competition — it’s no better than 1990s Microsoft, back in the Bill Gates days when it was crushing 1-2-3, WordPerfect, and DR-DOS.†

I don’t think Apple is done opening up, and I have no illusions that it’s going to end up as open as Mozilla or Eclipse. Still, it’s a great start.

† Charles Ferguson makes a convincing argument that Netscape was at least partly culpable for its own fate.

1 comment:

Kenneth M. Kambara said...

I had no idea you were such a hard core audiophile. I was waiting to read about your B&O turntable.

I think you hit the nail on the head regarding open modularity. What Apple needs to be careful of is worrying too much about optimizing the consumer experience for them. I haven't followed VG consoles in years, but it seems like Sony was on to a good thing with the use of 3rd. parties for SW dvel. for the PS2. Create and control the ecosystem and keep the "crumbs" from each transaction.

That said, I wonder how much Spotify would take away from iTunes sales, as I wonder from from a consumer behavior point of view if the two are compartmentalized differently. Even so, why not allow third parties to compete on the platform even with apps that are similar to Apple's own? It is a balancing act determining how to optimize users' experience, choice, and positive brand associations versus capturing revenue streams from internal projects.