Is this the start of a Mac-lash?
That Apple makes money from apps is not news. But it's the way it works that has hacked off fanboys and disenchanted developers. Ian Burrell examines how loyalty has been tested to the limit
Monday 21 February 2011
Apple is the most respected company in the world, in the eyes of money managers consulted for a poll published this month by Barron's, the influential American financial magazine.
In terms of wealth, it long ago surpassed Microsoft and last month topped PetroChina to become the second most valuable company on earth, trailing only Exxon Mobil. Meanwhile, a survey of young Britons, Project Chatter, revealed last week that the Apple brand was more familiar to them than any other.
And yet never has the business which Steve Jobs has nurtured over the past 35 years had so many enemies – and not just the other technology giants who envy its success. Last week in Barcelona, mobile phone operators lined up to slate Apple for its "walled garden" approach, which requires them to provide the infrastructure for its increasingly luxurious apps without receiving any revenue in return. Then in Berlin, publishers came forward to say how much they liked Google's new One Pass system for charging users for internet access to their content, while others complained about the Apple offering, which was unveiled by Mr Jobs – who's still overseeing the company despite being on medical leave – the day before and demands 30 per cent of all subscriptions sold through its App Store.
The big question is whether this discontent – also prevalent among app developers – will filter down to the millions of people who have until now had a love affair with the unrivalled aesthetics and sheer functionality of Apple's products; the Mac, the iPod, the iPhone, the iPad. There are plenty who think so. "There has been growing dissatisfaction with Apple from publishers, app developers and also Apple users," says Paul Bradshaw, a professor in online journalism at City University London and Birmingham City University.
"I've been a consumer of Apple products for a while and I've very definitely decided not to get an iPad. Apple is increasingly closed and controlling and I think with the iPad they've crossed a line to a place where the usability that Apple is so famous for is being undermined by the lack of adaptability. There are so many things that you can't do with content on an iPad that it makes for quite a poor user experience if you are anything other than a basic user."
In a book published next month, Loose: The Future of Business is Letting Go, the technology writer Martin Thomas will argue that Apple's rigid corporate values are in many ways the antithesis of those prevailing elsewhere in modern companies.
"The basic premise is we are getting to the stage now where you've got to operate in a much looser way," he says.
"The one big exception is Apple, where it's a highly closed and tight model; they are not collaborative and employees don't blog about the business." According to Thomas, Apple's success is almost entirely down to the ability of Jobs and his chief designer, Jonathan Ive, to "keep pulling rabbits out of the hat", by developing products of unrivalled beauty and convenience. But Apple's success is part of its problem in a world where "the life expectancy of technology brands is increasingly short", he says. "I was in the States recently and walked into a café where there were 50 people all on MacBooks. This is a brand that was built on being avant garde, obscure and underground and everybody has now got one. The sheer ubiquity in markets like America means they are leaving themselves open for interesting challenger brands to come through."
Apple introduced the Macintosh with a stunning advertising spot during the Super Bowl 27 years ago, showing a young woman throwing a sledgehammer through a screen in a rebellious act against the masses of drones who used more boring computers. "You will see why 1984 won't be like 1984," ran the voiceover. A later famous campaign was based on the line "Think Different".
Since the ad where the drone leader sinisterly predicted "We shall prevail!", a generation and more have lined up to give homage to Steve Jobs and are happily enslaved by his products.
"The challenger brand is now the big daddy and we are all co-conspirators in this," says Christian Barnett, planning director at the brand strategy specialist Coley Porter Bell. "Apple has brilliantly managed to sew us up in this Apple world, but in some ways they are the most rigid authoritarian leader brand. It's our way or the highway with Apple."
According to the media blogger Alex Benady, "the heady feeling of being part of the Apple Liberation Front swept us along" and blinded users to the fact that "every time you bought an Apple product, the only place it lead you to was somewhere you could buy more Apple products".
He writes: "Buy a Powerbook, you'll need an iPod to go with it. Buy an iPod and the easiest place to fill her up was obviously the iTunes store. It was perfectly ordered integration-in-white for anally-retentive aesthetes. Every Apple product seemed to work perfectly with every other Apple product and imperfectly with any product that wasn't an Apple." But now, as Barnett points out, with the Apple business model facing unprecedented criticism, there is a possibility that dissatisfaction will filter down to users and "you wonder if there's going to be a bit of a Mac-lash".
Last week at the Mobile World Congress in Barcelona, Vittorio Colao, the chief executive of Vodafone, said he wanted to avoid "closed systems", an apparent criticism of Apple's business model, while Telefonica launched its own in-network app store, Litmus.
The Financial Times reported on Wednesday that publishers were also unhappy. The iPad, having been dubbed the "Jesus tablet" for its apparent potential for saving the news media, was being viewed with greater suspicion after Mr Jobs announced that Apple wanted a 30 per cent cut of all subscriptions sold directly through iPads and iPhones. Apple would also withhold information on digital customers unless users agreed to their data being shared with the media companies. In America, the Online Publishers Association (which includes Time, Hearst, Conde Nast and Bloomberg) warned that the model did not provide sufficient flexibility to publishers or consumers.
Explaining Apple's approach, Steve Jobs had said: "Our philosophy is simple: when Apple brings a new subscriber to the app, Apple earns a 30 per cent share; when the publisher brings an existing or new subscriber to the app, the publisher keeps 100 per cent and Apple earns nothing.
"All we require is that, if a publisher is making a subscription offer outside of the app, the same (or better) offer be made inside the app, so that customers can easily subscribe with one click right in the app.
"We believe that this innovative subscription service will provide publishers with a brand new opportunity to expand digital access to their content on to the iPad, iPod Touch and iPhone, delighting both new and existing subscribers."
The FT has been a pioneer in developing methods for charging users for digital content. In a statement it voiced "concerns" that the changes might "compromise our business model" and hinted that it might look to other partners. "We have a fair and open approach for customers whereby we offer digital access to FT journalism for one price and enable access across multiple platforms for no additional fee," it said.
"It is necessary to have a direct relationship with the customer to enable this to happen. The iPad and iPhone are two of those channels, but it is a market that is developing quickly and new devices are coming to the market at an increasing rate."
Later that day in Berlin, Google unveiled its One Pass service and revealed that it was already working with a range of media partners from Associated Newspapers (publisher of the Daily Mail) to the companies behind Stern in Germany and El Pais in Spain. Madhav Chinnappa, Google's head of news partnerships for Europe, is anxious to emphasise the openness of the relationship.
"It's got to be multi-platform so that it works everywhere the user would want it to work," he says. "We have had some very good interest in it. We think this is about experimentation and we wanted to start with a small number of partners to be nimble in that experimentation, get the feedback and tweak the product."
Professor Bradshaw says news organisations are already working on apps that can be adapted for use on multiple platforms, the iPad being just one of them. According to Graeme Wood of the media agency Carat, Apple's innovation has repeatedly allowed it to enjoy a "two-year head start" over competitors, but its share of the smartphone market is already "at the peak".
Consumers will stay loyal to the confines of the Apple eco-system, he believes, whilst the user experience remains superior. "As long as they are delivering products and systems that are so far ahead of the competition, the walled garden is the price people are happy to pay."
But Thomas, who points to the ailing health of Jobs, is unconvinced.
"Apple has been a triumph of marketing and a triumph for the genius at the top of the organisation, but it's not in a sustainable position," he says. "They won't keep pulling rabbits out of hats."
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