About 15 years ago, I think it was a Seybold expo in Boston, I was watching a Dell representative demo new PCs to, what looked like from behind, a small group of corporate executives in expensive suits.
Towards the end of the demo one of those executives turned to look around the huge Dell booth and, as luck would have it, saw me a few steps back. He was a former client of mine and someone who could write very big checks for hardware and software acquisition at one of the largest media companies in the world. He came over, with the Dell rep in tow, to chat. Finally, he asked, “What do you think of these Dells?” I don’t quite recall how delicately I put it but my response was something like, “If you don’t care about dealing with a commodity hardware vendor focused on price and an OS provider that neither understands nor cares much about publishing, sure, they are cheaper.”
That was a time when the multitasking Windows NT had begun to siphon off a considerable number of Mac users, even from the erstwhile Apple strongholds in creative industries. Application developers had started to migrate their once Mac-only software to Windows. Then, PCs were considerably cheaper than Macs, but unfortunately Wintel offerings had some some significant deficiencies in design workflow, including font handling, OS-wide color matching, high-res printing, etc.
While Apple did go through very dark times, the mass exodus foretold by the PC camp was never able to deliver a knock-out blow to Macs and Dell soon lost interest in targeting Apple’s creative user base that largely stayed with the beleaguered company. A few years later, Steve Jobs took over Apple and today it’s the third most valuable company in the U.S., over seven times bigger than Dell in market capitalization.
Today, if one listens to pundits and geeks, Apple is again at the cusp of an exodus of developers and losing its primacy in the mobile device space. The latest issue is Apple’s management of the App Store. Fifteen years later, the tone is quite different. I don’t ever recall an Apple competitor signing off a diatribe with a “Go screw yourself Apple” in print then. But today I’m not interested in commenting on Adobe’s naked attempt to agitate its developer base to browbeat Apple in public, but in exploring what choices App Store developers currently have beyond Apple’s “walled garden.”
Many of the App Store developers got into creating products for mobile devices precisely because for the very first time in history the iPhone allowed them to bypass the limits, cost and sheer operational lunacy imposed by telecom carriers. In less than a couple of years, Apple created an online distribution monster of 185,000 apps and 3.5 billion downloads. The fact that no other app store clone has been able to even approach that ought to tell developers something about the magnitude of the efficacy of the App Store. The grass isn’t greener elsewhere.
Fifteen years ago Dell and Microsoft found out that selling beige boxes on the cheap to Mac users wasn’t as easy as it would appear on a spreadsheet. Beyond cookie-cutter hardware and simple OS services, these users demanded a frictionless ecosystem. Today’s iPhone OS user base is much larger but just as discerning. What they represent, as marketing demographics, is historically unique. Just as Dell now realizes that ‘marketshare-at-any-cost’ is indeed a ruinous business model, it’s not the number of users but the demographics of that user base that counts:
- No other vendor can boast an ecosystem of 100 million devices (from phones to gaming devices to tablets) unified under a single OS, app/media store and a reliable and proven schedule of innovation pipeline.
- No other vendor has ever put together the depth and breath of an ecosystem of music, videos, TV, movies, podcasts, games, apps and soon books, magazines, comics and newspapers like the iTunes store.
- No other vendor can match Apple’s global base of 100 million users with iTunes credit card accounts, with 49% of iPhone users having a college education and 67% earning more than $70,000 a year.
- No other vendor’s user base is as diverse or as engaged: while 3/4 of Android users are male, iPhone OS users are nearly equally divided. iPhone OS devices’ share of browsing traffic is twice the rest of the industry combined. Also iPhone users buy apps at about twice rate of Android users’.
- No other vendor has anything like the iPhone touch. While 78% of iPod touch users are under 25, only 24% of Android users are, and as a Flurry report aptly summarizes:
when today’s young iPod Touch users age by five years, they will already have iTunes accounts, saved personal contacts to their iPod Touch devices, purchased hundreds of apps and songs, and mastered the iPhone OS user interface. This translates into loyalty and switching costs, allowing Apple to seamlessly “graduate” young users from the iPod Touch to the iPhone.
- No other vendor dominates mobile games like Apple now. With over 50,000 games in the App Store, it has 10 and 20 times what Nintendo and Sony offers respectively, and this before Apple’s Game Center has even shipped.
- No other vendor offers the ease of use of a single click “purchase & install” capability as smoothly as Apple. In fact, just finding an online store on other platforms to purchase an app appropriate to one’s device can be a chore.
- No other vendor markets its app store clone as pervasively or obsessively as Apple, by featuring how apps are actually used.
- No other vendor actually makes any significant profit from its app store clone, and when there’s no profit vendors usually lose the incentive to focus on products.
- No other vendor has been as capable of patiently educating its user base to adopt new technologies and usage patterns, like multitouch computing, one-click transactions, in-app purchasing, virtual typing, casual games on phones, etc.
The escape clause
These are among what developers would leave behind if they choose to abandon Apple for uncharted and unproven platforms of other vendors. Users do not follow esoteric open/closed platform politics, they vote with their money for convenience, reliability and value.
In order to become a better garden for developers, it’s not enough for other vendors to offer something that iPhone or iPad doesn’t. They have to match and better Apple’s current iPhone OS driven devices across all fronts. webOS had multitasking but no content. Nokia has market share but no direction or excitement. RIM caters to enterprise but not much else. Motorola still thinks it’s enough to manufacture handsets and leave everything else to ‘partners’ that turn around and stab you in the back. Android may be open but is currently a geek ghetto with nothing to match iTunes store. And, let’s not kid ourselves, Google is there not to ‘help’ but to commoditize hardware manufacturers by funneling them to compete against each other on Google’s platform largely on price.
Over the years, it must have been embarrassing for Steve Jobs to swallow his contempt every time he had to invite an executive from Microsoft or Adobe to the stage at a keynote event to explain why their Mac product was behind schedule and inferior to their Windows version.
However, 2010 is not like 1994. Apple has money, mindshare and the hottest platform to no longer having to beg. Today, Apple is more concerned about having to re-live its recent history — getting jerked around by Microsoft or held hostage by Adobe — than what it thinks would be manageable damage by a few developers that may leave its platform. Some may regard that as being arrogant. For Apple it’s the price of being in charge of its own destiny. To capitulate at the height of its newly found vigor would be suicidal. Suicidal Apple is no longer.