Apple is Doomed

iPhone 4's "flawed" antenna design
iPhone 4's "flawed" antenna design

I’ve now had an iPhone 4 for about a month (as you no doubt recall, I queued for a product on launch day for the first time in my life) and my (apparently) free bumper case is in the mail (it’s in Netherlands orange — so much for my plans to bask in reflected glory).

A friend of mine used to joke that if Microsoft ever released a version of Word that actually worked it would go out of business. Word is the very heart of Microsoft’s revenue stream: people buy PCs (and thus Windows) to run Word, not the other way around. People upgrade their PCs to run newer versions of Word they hope might address their current problems with Word. So it follows that once people have a version of Word they’re happy with, Microsoft would be in big trouble.

Word hasn’t become a perfect product, but it’s good enough and Microsoft’s record of improving it is bad enough that no-one feels very compelled to upgrade. But Microsoft isn’t in trouble. The fact is that a lot of computers are out there and they die fairly often, so just based on the need to maintain the fleet, Microsoft will make money for a long, long time, but its days of giddy expansion are behind it. It’s gone from being the phone company of the late 19th century (rapaciously devouring competitors) to being the phone company of the 1950s (fat and happy and utterly dominant).

The iPhone 4 just works. Forget the baloney about its “flawed antenna design” — no-one who has one cares. It has awesome battery life, runs as fast as an iPad, is a better camera than a point-and-shoot (except for lacking optical zoom), feels like a piece of jewellery in your hands, and is rock solid (yeah you can smash one if you drop it on concrete). And here’s the kicker — it’s price competitive with its shoddy plastic rivals that run “free” open source software (developed by an advertising company to spy on its customers and deliver ads to them). All this, and Apple’s margins are almost certainly higher than its rivals’, which means that in a race to the bottom, Apple won’t bother competing.

It follows that Apple is doomed. The original iPhone was a great idea for a device, crippled by lousy battery life and a slow CPU, that became enormously successful in chief because its rivals were so incredibly worse (kind of like Word vs. Wordperfect). Of course, what Apple is doomed to is becoming a fat happy complacent company raking in cash for generations.

I hope the title of my post drives down Apple’s stock price a little bit further, but I’m not holding my breath.

Democracy comes to credit cards

I’ve just set up an account with Google checkout and also with Square. For years, I’ve been using Kagi to handle orders for various software products I’ve developed, notably QuickMP3 and RiddleMeThis. I also give away a bunch of stuff on my website, including tools that people are using for commercial projects, such as Particle Accelerator and Alphaville — which I give away because the hassle of setting up registration systems and the like outweighs any revenue I’d get from them, and — if I’m not going to make any money anyway — I’d rather people use stuff I’ve written than not.

My experiences with Kagi have generally been good. Great even. But their prices seem to keep going up while alternatives (such as Paypal) are cheaper, and also more convenient. RiddleMeThis tends to sell in fits and gasps; it’s pretty irksome to be charged money by Kagi even when I’m not selling anything (but the alternative is to give Kagi an even bigger slice of each sale).

Bottom line: Kagi’s rock bottom cost is 5% (there’s also a minimum charge, but it’s hard to find on their website right now), Google’s price is 1.9% + $0.30. Square and Paypal are a little more expensive. Back when I was selling a $5 product (QuickMP3) Kagi was charging me over $1 per sale.

The really interesting thing about both Google, Square, and (of course) Paypal is that they all operate both ways. Each account lets you buy and sell goods, or simply move money around. Take a common situation we’re all familiar with — splitting a check at a restaurant. The old model: restaurant won’t split your check and not everyone has cash, so someone pays with plastic and everyone gives that person cash or “will pay them back”. The new model: anyone can split the check by accepting credit card payments from the other people at the table. (It may not be socially acceptable to suggest this right now, but it’s perfectly feasible technically.) Square even provides you with a (free) widget for swiping other people’s credit cards.

Interesting times.


Apple is playing right out of Microsoft’s playbook—and it’s one they complained about a lot

Someone named David Balto, quoted in the Wall Street Journal.

Microsoft feared all of these technologies because they facilitated the development of user-oriented software that would be indifferent to the identity of the underlying operating system.

This is quoted from the findings of fact in the Microsoft anti-trust lawsuit.

Here’s a brief rundown of the Microsoft playbook:

License DOS from a small company (because you have no in-house capability to do something similar yourself) and then license that code to IBM. When the resulting property becomes incredibly valuable, screw over the original developer.

It’s widely rumored that Microsoft deliberately broke Lotus 1-2-3 with upgrades to DOS on two occasions (DOS 2 and DOS 3.31), but it looks like someone did some detective work to show this is probably not the case. (DOS 2 did break Lotus 1-2-3’s floppy-based copy protection, but this may have been inadvertent; DOS3.31 broke both Excel and Lotus, but that seems to just be incompetence.)

When Microsoft was publicly beta-testing Windows 95 it inserted code in the loader to detect programs compiled with Borland compilers and insert an error message, making it look as though any program produced using Borland products was not to be trusted. Microsoft initially denied this was deliberate, then claimed it had a legitimate reason for doing so (but couldn’t supply one).

Microsoft did its very best to undermine all efforts at making file formats open and interchangeable in an effort to protect its monopoly on desktop office software.

It’s probably instructive to look at the findings of fact from the Microsoft anti-trust lawsuit as well. If I may summarize:

  • Microsoft created its own, incompatible implementation of Java in an effort to undermine it, and then induced third parties to use it over Sun;’s version
  • Microsoft gave away a free alternative to NetScape, “rewarded” third parties to target or distribute it over NetScape, and did its best to undermine NetScape in other ways.
  • Microsoft did its best to damage rival multimedia platforms (QuickTime and RealNetworks).

It’s not like these are isolated incidents in an otherwise unblemished record. Microsoft has consistently acted in a predatory and underhanded manner — e.g. it’s hard to think of a major release of Windows that didn’t put several third party developers out of business with clones of their products given away. Remember Stac? Lots of pundits conveniently forget that Microsoft’s $150M cash injection into Apple in 1997 in part settled a very embarrassing lawsuit (which involved, among other things, Microsoft stealing source code from Apple and then threatening to pull Office for the Mac when Apple called them on it).

Based on the above, I’d have to say that Apple’s moves resemble Microsoft’s in one important way (it doesn’t want cross-platform middleware to make its platform irrelevant) but that’s about it. The differences between the two are much greater than the similarities.

First of all, Microsoft’s platform lock-in was based on the difficulty of porting software from a technical standpoint. There was pretty much no end-user benefit involved, since Microsoft didn’t tend to differentiate its platforms with any real innovations (more like, hey our new OS copies some more stuff from our rivals and fixes these glaring deficiencies). Microsoft wasn’t afraid its superior user experience would be marred by a generic, ugly, non-standard UI running on a cross-platform runtime (although in the case of Java this would have been a legitimate fear). On the contrary, it was simply afraid that people would be able to develop equally good, or even better software that ran on anything.

The one case where Microsoft really tried to innovate its way to success was probably Internet Explorer. The main way to entice websites to support IE over NetScape was to provide superior development platforms and APIs. Most notably, Microsoft added AJAX and .NET. But even with IE, Microsoft couldn’t resist doing Evil stuff on the way, such as trying to “embrace and extend” both Java and JavaScript to death, and halting the progress of web standards once IE became dominant (IE6-8). Only now, as IE’s position is threatened on the mobile web, is Microsoft once again trying to produce a good browser, rather than a container for its proprietary technologies.

Does Safari represent part of Apple’s platform lock-in? Does it support proprietary web extensions (such as .NET or ActiveX) that would result in websites that only work properly in Safari running on a Mac? On the contrary, Safari is open source and standards-based. Anything written to run well on Safari will run well pretty much anywhere, including on IE9. And, in any event, webkit has been adopted by both Google and Adobe, so it’s hardly affording Apple much of a platform-specific advantage.

Microsoft didn’t ban third-party development tools, instead it tried to undermine them and sabotage them based on strategic business imperatives. Apple, instead, has stated that it wants to offer users a first-rate native experience and has explicitly barred all tools which (in its opinion) violate this. It’s not like Apple has tricked developers into building tools for the iPhone and then pulled the rug out from under them; instead it has made it very clear it doesn’t want third-party platforms running on the iPhone and makes its wording more explicit every time someone finds a loophole.

And, finally, Apple isn’t in a monopoly position (except maybe in the music player market, which isn’t the question at hand). When Microsoft did all this it had over 90% of the desktop computer market (and it still does). Right now, Apple isn’t even dominant in the “smart phone” market (except, perhaps, in Japan). In the cell phone Apple has large rivals with significant market share who are free to compete with Apple either by eschewing its tactics or embracing them.

It seems to me that if we want to complain about the cell phone market, we really ought to be complaining about Android. After all, why can’t we buy Android handsets that automatically keep up-to-date (or, at least, allow us to keep up-to-date) with the latest OS? In Google’s lust for market share, it has allowed handset makers and carriers to do anything they like with Android, and what they like is locked in customers with crippled phones. In a choice between crippleware and a walled garden, users are opting for the walled garden — wouldn’t it be nice if we actually had a choice between a real open platform and the iPhone?

Would you like Chrome with that?

Another iTunes victim

Apple gets lambasted all over the place — and deservedly so — for bundling iTunes and/or Safari with QuickTime. As my reader knows, I’ve been an Apple fan[boi] long enough to have used the phrase “bleed in six colors” and yet I am not a lover of iTunes — even on a Mac. For a start it killed QuickMP3 overnight, and that was earning me serious “occasional Chinese takeout” money. My issues with iTunes are that (1) it keeps on freaking launching (but then so does iPhoto, (2) is amazingly sluggish for what ought to be a simple program, (3) is stupidly inflexible about where you put your music, and … well it goes on and on. It does work fairly well once it launches (but I understand the Windows version crashes more often, and of course has that “faux Mac look” Apple likes to infuriate Windows users with).

I am downloading Google Earth right now and guess what I’m getting as a free, unasked-for “bonus”? Yup, it’s Chrome. After downloading all that shizzle, the installer intelligently informed me that — it’s already installed!

One of the things I hate about Microsoft is that it competes destructively — it doesn’t just want to make lots of money from its products, it doesn’t want anyone else to if it can help it. E.g. Microsoft has no 3D strategy at all. At one stage it bought SoftImage (one of the big 3D platforms used by Hollywood studios). Initially they used the purchase to force SGI to commit seppuchu (by porting everything to NT and allowing Intergraph to eat its lunch), but long after SGI was circling the drain they slashed XSI’s prices — causing devastation in the 3D industry — and then sold the company to Autodesk Avid (it is now owned by Autodesk). Wonderful. Recently, Microsoft bought Truespace and then started giving it away for free. Good luck to you indie 3D software developers on the Windows platform.

Do you think Apple couldn’t behave similarly if it wanted to? Apple gets pilloried for doing stuff like Dashboard (superficially similar to another useless product, but much more efficient) and iWeb (they warned (correction: hinted to) Karelia that Sandvox would have a free competitor, Karelia ignored them and released Sandvox, Apple delivered, Karelia whined publicly — in the interests of full disclosure I own Sandvox and iWeb and consider both to be flawed beyond usefulness). A lot of Mac-folk would love Apple to clean Adobe’s clock (“Welcome to iPhoto 2010 — it’s Aperture 3! Oh and 10.7’s Preview has layers, gaussian blur, curves, CMYK, HDRI, Lab Color, and 16-bit channel support.”), but it steadfastly refuses to do so.

Google seems to be of the same mindset as Microsoft. It’s not just content to make money, it wants to casually mangle anyone in its vicinity, subsidizing this antisocial behavior with unending ad revenue. Microsoft makes chump change out of netbooks — let’s give away an OS just to mess with them. Flickr seems like a neat idea, let’s borg that and half-assedly integrate it with gmail. It’s one thing to launch businesses that have no real profit model but are innovative and have some hope of owning a valuable future market — that’s what innovative companies do. It’s another entirely to come into a profitable niche where someone — not even a competitor really — is making a little money with a free clone of their product (cross-subsidized internally) and just do massive damage. That’s actually illegal — it’s called dumping and — sorry to break it to you — it’s Google’s Standard Operating Practice.

And these are the “good” guys.