Is Apple more or less vulnerable than ever?

The Apple logo with a black backgroundI hate to be blogging about Apple again, but it has been quite ubiquitous of late and given that I own an iPhone, an Apple TV, a Mac Mini and a MacBook Pro, I cannot help caring.

From a PR standpoint, the last few months have been mixed at best for Apple (more on that later), and yet from a financial standpoint it has been pretty much blowing right through this recession, announcing just last month the best non-holiday quarter in the company's history. What's going on here?

I grew up very much a PC guy. My first computer, in 1994, was a 75MHz Pentium I with 8 megs of ram and a 500 MB hard drive running Dos and Windows 3.11. I was 14, it was by far the coolest thing I'd ever owned, and the internet was just getting started. Sometimes when I'd go visit a school buddy of mine, I'd take a peek at his dad's Apple PowerPC which, he liked to remind me, was much more expensive and cooler than my PC. It also wasn't compatible with mine. It never would be. Apple actually cultivated that difference, it thrived on it: remember 'think different?'

From that point until about a year and a half ago, I discarded Macs as over-priced, over-engineered rounded cubes without a delete key or a right-click button, designed by and for intellectual snobs.

Fast forward 15 years and I find two facts remarkable:

  • I now use Macs almost exclusively, at home and at work
  • Apple switched to Intel

The two are of course very closely related. Apple switching to Intel enabled software developers to easily make software that worked in Windows, Linux, and OSX as desktop and cloud applications. This made Apple more a part of the greater ecosystem. Now the lines in between Mac and PC users weren't so clearly defined.

I think it's fair to say that the switch to Intel was mostly a financial decision, and one to everyone's best interest since it takes a lot of capital to put out high quality hardware and software. But the bottom line is Apple is still exclusive at heart. It still wants everyone to do things their way. That's exactly why the iPhone still only has one App Store, one browser, and why it considers that people who want to play with the guts of the hardware they paid for are threats to national security.

So Apple is now more inclusive than it used to be thanks to the Intel switch. It even gave up on the DRM battle, a move which I personally believe it disagreed with from a philosophic standpoint but just had to do for PR reasons. Moves like this sometimes give the impression that Apple wants to play nice with the other kids, but that is simply not the case. The last few months have happened to highlight of a lot of its core values:

To those saying that #1 and #5 are AT&T's doing, even if it is (I think it's more complicated than that) you can't have a partnership when it's profitable that you then denounce when it's not convenient from a PR standpoint. It's too easy.

Now you have high-profile bloggers like Om Malik and Michael Arrington that are quitting their iPhones and the whole tech press is upside down over the Google Voice controversy. But like I said, Apple has always had this 'do it my way' attitude. Sure they like innovation, but only so far as it benefits their advancement.

So then one may ask, is all of this bad press hurting the company's bottom-line? It may be a little early to tell, but I would be willing to bet they'll do fine next quarter, and will hit it out of the park again during the holiday quarter. I think there are a few reasons for this.

First, Apple gets about half of its business from the international market. The issues they are having as a consequence of the partnership with AT&T (Google Voice, poor call quality, MMS) are simply not factors abroad.

Second, what makes the phone most useful to a lot of us are all of the 3rd party apps: Remember the Milk, Evernote, Air Sharing, games... Once you're hooked to the system you start depending on it, and that brings an additional, hidden factor against switching that most users will be well aware of once their contracts expire and they need to make a decision on which new phone to get.

Last, and most importantly, Apple's biggest asset is its ability to create envy in consumers. It is a delicate balance of software design, hardware design and marketing that so far Apple has been the only one to strike. But they remain an advocate of a 'complete Apple solution'. Your phone, hardware, software, everything should have the Apple brand. If you're trying to mix and match, you will always run into the rougher edges of the company's philosophy.

At the end of the day, it's a matter of how much of your freedom as a consumer are you willing to give up. This makes the technological world delicate to walk into as you are always locking yourself into contract, or buying devices that are really the foot into the door of a much larger structure that will keep you hooked for many years.

2 comments - leave a comment

August 6, 2009 3:45 p.m. by Al:


• Sling and Skype could take up a lot of bandwidth over 3G. Apple busted ass to get unlimited data for the iPhone from AT&T. Allowing bandwidth hogs on a fragile 3G network hurts everyone including the iPhone owner.

• The Pre still syncs with iTunes using third party apps. Palm products always have been able to sync with iTunes over third party apps.

• The approval process is poor and arbitrary. Who knew the app thing would be so successful. OS 3.0 with it’s app rating system will help with adult oriented apps and so called adult content.

• When Sony, Nintendo and Microsoft open their consoles to software written by anyone who want’s to program for them, we can talk about iPhone/iPod touch software restrictions. Until then…

• The Google Voice app is in direct competition with both Apple and AT&T. It breaks the App Store guidelines all to hell. Besides, it can work on the iPhone through the cloud. There is no need for an app.
It could also be a red herring just to keep the anti-trust guys at bay by showing that Apple & Google are not in cahoots together.

So, the App Store approval process got out of hand. Everything else is under control. Most of the negative press and blogs have been under the guidance of rival smart phone providers and carriers.

August 8, 2009 3:48 p.m. by BlackRoot:

The Apple DRM battle was all with the Record labels. They forced the DRM on Apple and allowed other online music stores to sell DRM free songs and albums. This wasn’t Apple decision, it was complying with the record labels and they fought to not have DRM songs in iTunes.
I don’t want to point the finger at the record labels but they were never that fond of the iTunes store and wanted to keep a tight leash on it.

They started to see how popular iTunes was and is and even saw the revenue it was generating. So after hearing all the negative press and watching what was happening when other music stores were selling DRM free music. They allowed Apple to sell high quality songs without DRM. It helps everybody. Although the songs and albums are DRM free, they still keep some data in them (namely the user’s email address) attached to the song.

So I think it’s not that Apple hasn’t been playing nice with the others, it more like it wants to play nice but due to some limitations it looks like the bad guy. And they don’t want to seem like they are quisling but numerous blogs have taken to bashing Apple at a moments notice. Just like the dictionary app that used an online dictionary app that contained urban derogatory words, Apple rejected the app stating that they could wait till the parental guidance came out. They did explain that the app referenced words that were not suitable for certain age groups and once they released the parental guidance feature the app would be approved. Some blogs jumped on this and tried to rally against Apple saying this didn’t make sense that a dictionary app was rejected and this didn’t make sense. Once the full story was told it made more sense.

Even the Palm Pre is a little over blown. I know Apple changed the way the iTunes sees the Pre, but other devices were connecting to iTunes without any problems. What Apple didn’t like is that the Pre was pretending to be an iPod one of it’s devices. With a software release the Pre is back to syncing with iTunes. There is one things to say that they did this out of spite or that they didn’t like a device that iTunes thought was an iPod but wasn’t. That could lead problems were you could spoof a device to be an iPod and take songs from other’s libraries. It is their store and when a device connects it should be show what that device is and have certain limitations to protect the music and film organizations, which Apple has deals with not to help with file sharing. And remember that the Pre was using a very old code that was predating iTunes to get it to seem like an iPod and they didn’t collaborate with Apple on syncing with iTunes.

It’s like your neighbor found a key to your shed and keeps walking over and unlocking your shed and borrowing tools without even asking.

If you ask me Palm is doing this for the publicity. It knows it comes out on top if Apple does anything to stop syncing and if Apple didn’t they still get to taut how their phone syncs with iTunes.

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