Is Apple Becoming Too Successful?
September 11th, 2008
An article by Daniel Lyons in this week's Newsweek shines a glaring light on a topic that I have been wrestling with for the past year or so: Apple's emerging monopoly status. While I didn't agree with everything in the article, it did get me thinking. As quoted in the column: "Steve is a monopolist at heart. He's just like Bill Gates. He just hasn't been as successful." Until recently anyway.
True, Macs and Mac OS X are not anywhere near toppling Windows and PCs from the mountaintop. However, as Steve Jobs told us at the September 9 Apple event, iPods now own over 73 percent of the market share for all MP3 players. In contrast, Microsoft's Zune weighed in at less than 3 percent. And the iTunes Store is now the number 1 venue for obtaining music, whether online or bricks-and-mortar -- besting Walmart, Amazon, and Target.
On a related front, over 100,000,000 apps have been downloaded from Apple's new App Store; the iPhone and iPod touch now figure to be major players in the portable game market. However, you can't download any third-party software for your iPhone or touch unless Apple first approves the software (or you are willing to jailbreak your iPhone). Similarly, vendors for iPod peripherals have a hard time selling their products unless they obtain Apple's "Made for iPod" stamp of approval.
In other words, Apple both possesses a commanding share of the primary products in this market and maintains a vise-like control over third-parties that want hop on board the train.
Apple secures an advantage in other areas as well. Every iMac ships with a built-in display. Most Mac Pros are sold with Apple's Cinema Displays. The end result: the market for third-party displays for Macs is near zero. If Macs were ever to overtake PCs (an idea that is no longer as completely unthinkable as it once was), the display divisions of most companies might well shut down. So far, I have had no problem with this. Indeed, I have often pointed out that one of the key advantages of a Mac over a PC is the Mac's integration of hardware and software. It eliminates all sorts of potential headaches that can occur when a computer is a mix-and-match from several different suppliers. The integration also permits the hardware and software to work together in helpful ways, such as having built-in iSight cameras automatically recognized by Mac OS X.
When I see the success of the Apple Stores, I recall all those now struggling retail outlets that mistreated Apple's products back in their day. Good riddance CompUSA! And who cares if online competitors such as MacMall and MacZone are having problems? It wasn't too long ago that everyone was predicting Apple's death. Let them now eat their words and choke on them. (Whoa! Perhaps I need to calm down a bit here.)
Politically and philosophically (and just about any other way), I am anti-monopoly and against any rigid control of a market. Check out my past columns castigating Comcast or criticizing DRM restrictions -- and you'll readily see what I mean. I have also long been a critic of Microsoft's dominance and near-monopoly status in the computer market. However, as an Apple "loyalist," I still get a guilty pleasure from reading articles that detail Microsoft's recent Vista woes, especially when combined with coverage of increases in the Mac's market share.
My concern is that I have continued to root for Apple, even as its path to success has been transformed into a march towards world dominance. What happens when the iPod section of those pie charts encompasses the entire pie, leaving at best a few crumbs for everyone else? If Steve Jobs had announced this week that iPods accounted for 100% of all MP3 player sales and that Microsoft had just dumped all of their remaining Zunes into a landfill, I would have likely stood up and cheered. At what point should my anti-monopoly warning bells start ringing instead?
In recent months, I have started to question whether my unbridled enthusiasm for Apple should have some limits. As one example, I am already on record as critical of the restrictions on third-party software for the iPhone. Imagine if Apple (or even worse, if Microsoft) tried to place similar restrictions on obtaining software for their computers. There would be roars of "censorship" (and that would be the kindest word used). Yet, surprisingly, these same limits for the iPhone draw very few complaints. Instead, Mac users appear overjoyed that Apple has allowed them to have any third-party iPhone software at all.
Despite all of this, I find it hard to shed my unflinching support for Apple. How do I pull off this feat of cognitive dissonance? I believe there are two reasons:
First and foremost, there is the experience of the 1990's, when it looked as if Windows 95/98 might precipitate the demise of Apple. That was not something I looked forward to...to say the least. As a result, even today, I tend to view every Apple success and every competitor's failure as a welcome assurance that Apple will continue to thrive. In a way, the past 15 years have been like a war -- a war in which there would be only one winner. And I wanted Apple to be that winner, even if it meant destroying everyone else.
Second, Apple continues to make spectacular products, ones that put most of its competitors to shame. Given this, it's been hard to get too upset at the prospect that Apple may sometimes drive its competitors out-of-business.
Still, the times they are a-changing. I believe it is now time for some serious reevaluation of my long-standing attitudes about Apple's status. I never thought I would worry about Apple being "too successful." For the first time, now I am.
Ted Landau is the founder of MacFixIt, and the author of Take Control of Your iPhone and other Mac help books.
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