Stephen Foley: Apple's days in the sun are numbered as Google's freedom fight gains pace
Saturday 19 February 2011
US Outlook: President Barack Obama was able to get Eric Schmidt, chairman of Google, and Steve Jobs, founder of Apple, round the table for dinner this week, but that was a photo op, not peace talks.
Since Mr Schmidt's resignation from the board of Apple 18 months ago, the two companies have been conducting the equivalent of the Phoney War. And just days before the presidential glass-raising, the pair had ordered the start of the real fight.
The victor will be the company who can attract the richest and most alluring collection of apps for the smartphones and tablet computers that use their respective operating systems. To my mind, it is not a question of whether Google will prevail, but how quickly. It could be sooner than anyone realises.
At this point, you might be forgiven for thinking, 'duh, Apple and apps are synonymous'. Its iPhones and iPads are magical devices, capable of doing hundreds of things that were impossible, even unimaginable, three or four years ago, thanks to the thousands of developers who have built apps for the Apple iOS system. Most recently, the iPad has brought about a whole new way to read newspapers and magazines, as apps rather than inky-printy products. Google has long been closing the gap in quantity, if not in quality. Its Android system is used by a lot of rival handset and tablet makers, and is now on more US smartphones than the Apple iOS. The number of Android apps available is on pace to overtake the number of iOS-based apps by the middle of next year, according to a study published yesterday by Lookout Mobile Security.
But the same study shows that there are still many more developers working for iOS, many of them small, start-up outfits lured by the cachet of working with the coolest gadgets around. From this creative ferment, the best ideas are still coming – at the moment.
Till now, smartphone users have typically paid a one-time fee to download an app. Developers – and particularly publishers, such as newspaper or magazine companies, who regularly update the content of their app – have been calling for an easy subscription model that would give them ongoing fees. This is the first big battleground of the war.
They say battles are won and lost before they are fought, as the generals move their troops into position.
Apple fired the first shot, introducing its subscription model on Tuesday, giving publishers basically nothing of what they wanted. It will take a whopping 30 per cent cut of subscription fees and won't routinely share data on who is downloading a publisher's app – data that magazines used to get directly from subscribers to their print editions, and on which they rely for selling advertising.
Google introduced its model on Wednesday, giving publishers almost everything they want. Its fee will be no more than 10 per cent, and subscriber information will be passed along.
Apple scores more column inches and more cool, but Android will win on the numbers. Publishers and business-savvy app developers will quickly put more effort into Android apps than they do into iOS apps.
This is more than just a price war, it is a clash of philosophies. Totalitarianism versus freedom, if you'll allow me to push the World War II metaphor a bit further.
Apple operates a tightly controlled system, vetting and censoring apps and ensuring that they can only be sold through its App Store. I think such systems are fundamentally anti-consumer, anti-competitive and – most importantly -– doomed to collapse, but I do have some sympathy with Apple's stance. At the moment, iPhone and iPad owners feel they are Apple customers first and foremost, so everything that happens on an Apple device has the possibility to affect Apple's reputation, both for technical competence and for moral probity. Its decision not to automatically share subscriber data puts it on the high ground in the ongoing internet privacy debates.
Google is on the side of freedom. Android has been an open source project from the start. People buying an Android phone are not buying a Google phone – they are buying an HTC phone or a Motorola phone, or whatever – so it doesn't have to worry so much about protecting its brand, or its high margins in device manufacture, or making profits as a digital retailer. Its main motivation is still to get people to surf the web more. Android apps are going to be available all over the place, not just from a Google store but also from Amazon.com.
The one upside for Apple from the end of the Phoney War and the start of major territorial battles is that it ought to get the regulators off its back.
Competition authorities across the world are looking at its practices, and are receiving an influx of complaints from publishers. The launch of the hated subscription model this week has triggered new scrutiny.
Governments would certainly have to step in to break up Apple's closed system if the company reached a monopoly position in mobile devices – but it no longer looks like that is going to happen.
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