Apple can monopolize developers

  • Posted: 06 November 2011 09:53 PM

    Here is my best idea for apple.  I believe it was the CFO that has been quoted several times as saying iTunes is basically a break even service and that is intentional.  Its well known that developers make far more money off of ios apps than android due to android users unwillingness to download paid apps.  Why doesn’t apple simply offer a better deal to exclusive app developers.  Apple has exclusive deals with many of its manufacturing partners so why not offer similar deals for developers.  Apple could offer between 85-100% of revenues to developers who are exclusive to ios instead of the typical 70%. The only drawback would be a public perception that apple is a bully but this is going to be unavoidable as apple grows.

         
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    Posted: 06 November 2011 10:48 PM #1

    Sorry, no.

    All the developer lock-in you need are millions and millions of iOS users being added every quarter, who actually pay for apps.

    Market forces are pretty nice that way.

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    Posted: 06 November 2011 10:54 PM #2

    Mav with a TKO in the first round! grin

         
  • Posted: 06 November 2011 10:54 PM #3

    But the most popular IOS apps are usually also released on Android even if it’s only an afterthought.  A lot of less tech saavy users will buy an android phone thinking they can get most of the apps they want even if they never download any of them. e.g. my brother in all had always had a grudge against Apple considering them bullies who sell overpriced goods.  He wouldn’t even let my sister by an iphone.  But when the ipad2 came out he had to buy one simply because for a graphics designer there was no alternative.

         
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    Posted: 06 November 2011 10:56 PM #4

    ChasMac77 - 07 November 2011 02:54 AM

    Mav with a TKO in the first round! grin

    Chas, be nice.  rolleyes

    Andrew, if I were an iOS developer I’d consider porting to Android too.  That’s also a product of market forces.  Apple should not and will not prevent developers from developing for other devices/platforms be it via incentive or disincentive.  That’s more of a Microsoft thing to do, and I think that about says it all.

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    Posted: 06 November 2011 11:04 PM #5

    AndrewLing - 07 November 2011 02:54 AM

    But the most popular IOS apps are usually also released on Android even if it’s only an afterthought.  A lot of less tech saavy users will buy an android phone thinking they can get most of the apps they want even if they never download any of them. e.g. my brother in all had always had a grudge against Apple considering them bullies who sell overpriced goods.  He wouldn’t even let my sister by an iphone.  But when the ipad2 came out he had to buy one simply because for a graphics designer there was no alternative.

    I agree with you.  It is now at the point where it does not matter weather you have and iPhone or Android phone.  They both have the same big apps.  I run into this all the time.  Every app I show off they have the equivalent.

    This is why Apple is trying to kill Android via the lawsuits.  The process of capturing market share and watching the manufactures race to the bottom will take another 20 years.

    Apple needs to come up with something to reward the winners of the best apps and discourage them from going to Android. Give them an offer they can’t refuse.

         
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    Posted: 07 November 2011 12:04 AM #6

    Never gonna happen. Apple doesn’t bend to the wind of the market. Imagine if they did that. Anticompetitive issues notwithstanding, they would set a precedent for pricing that they couldn’t go back on. Also, just because these apps are on Android, it doesn’t mean people are buying them. Developers will always come to Apple first if that’s where the bucks are.

    I respectfully disagree. (just for you Mav grin)

         
  • Posted: 07 November 2011 12:46 AM #7

    AndrewLing - 07 November 2011 01:53 AM

    Here is my best idea for apple.  I believe it was the CFO that has been quoted several times as saying iTunes is basically a break even service and that is intentional.  Its well known that developers make far more money off of ios apps than android due to android users unwillingness to download paid apps.  Why doesn’t apple simply offer a better deal to exclusive app developers.  Apple has exclusive deals with many of its manufacturing partners so why not offer similar deals for developers.  Apple could offer between 85-100% of revenues to developers who are exclusive to ios instead of the typical 70%. The only drawback would be a public perception that apple is a bully but this is going to be unavoidable as apple grows.

    Beyond the perception there’s regulators and members of Congress. This won’t happen. It would be considered anti-competitive behavior and since iOS devices make far more money for developers than Android devices, Apple would be throwing away distribution fees for no valid reason. Only a fraction of Android devices actually compete with the iPhone.

         
  • Posted: 07 November 2011 09:10 AM #8

    How about a different tack - just start buying app developers and give them long lock up periods.  Create a large app developer organisation that is run separately from Apple, but owned by them and ensure they don’t port their apps to Android.  Nothing illegal with that.

    Might be a good defensive use of a portion of Apple’s cash hoard?

         
  • Posted: 07 November 2011 09:21 AM #9

    Yes I think that would give Apple great bang for the buck.  There are so many acquisitions Apple could make which would strengthen their position and weaken Android.  Netflix, Nuance, Nintendo.  I think Apple sticks to small acquisitions because with bigger ones you always end up buying businesses that you dont want.  As in the case of Motorola.  I particularly like nintendo since they have a unique set of games and havent yet entered the smartphone market.  But since Apple seems unwilling to make large acquisitions I think giving developers incentive to go exclusive would be the next best thing.  Another tactic but be to have a marketing partnership where exclusive developers get mentioned in iphone commercials.

         
  • Posted: 07 November 2011 09:36 AM #10

    Sorry, but the entire premise of this thread is another brutally bad idea. Let me count the ways:

    1. Anti trust as mentioned

    2. How would other developers feel about Apple competing directly against them?  Especially in the thriving game ecosystem, which is doing just fine. The answer is obvious.

    3. If a “chosen” developer gets a better deal, what do you think their competitors would do?  Take a much harder look at Android that’s what.

    4. Apple gets knocked now for their app approval process as being arbitrary. Can you imagine the uproar if another degree of arbitrariness was added - better financial terms for some developers and not others?  The ensuing PR nightmare would be huge.

    5. A few extra points will not convince the best developers to go exclusive anyway.

    Apple playing big brother in the manner suggested has no upside and all downside.  Apple should keep doing what they are doing - build the best ecosystem possible, and stay away from amateur hour ideas like this.

         
  • Posted: 07 November 2011 10:04 AM #11

    I think you underestimate the upside, Lstream.  As a poker player you should realize the zero sum aspect of the market share gains that could be acheived by denying Android of its developers. 

    Apple’s iphone sales growth has been stellar because it’s on par with overall smartphone growth.  Apple has made only minimal market share gains this year.  When smartphone growth begins to slow and competitors like RIMM are driven out it will become more of a zero sum game between Apple and Android.

    How can a company that exerts such complete control over it’s entire supply chain take such a Laissez-faire atitude when it comes to apps?

         
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    Posted: 07 November 2011 10:05 AM #12

    If it isn’t broke, don’t fix it.  The metrics all say it works.  Android may have all the apps but they have yet to display the customer satisfaction and loyalty which will result in future sales.  Despite all the press Android is not a single market force, but rather a bunch of manufactures fighting for their existence and most of the players have no dog in the app store fight other then knowing they need to include apps on their handset.  Developers are businesses so they will go where they can make a living.  If anything Apple can help with discovery.

         
  • Posted: 07 November 2011 10:16 AM #13

    Well in this industry by the time it’s broken it’s often too late to fix. Case and point with RIMM and Nokia. The years of ATT exclusivity gave samsung and HTC a huge window to make share gains against Apple.  Now they have some momentum and are presenting serious competition.  Treffis is a good example of the consensus that intensifying competition will lead to margin erosion.  With 200% of my net worth in Apple stock I have to sell large lots at the first sign of trouble!

         
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    Posted: 07 November 2011 10:51 AM #14

    AndrewLing - 07 November 2011 02:16 PM

    Well in this industry by the time it’s broken it’s often too late to fix. Case and point with RIMM and Nokia. The years of ATT exclusivity gave samsung and HTC a huge window to make share gains against Apple.  Now they have some momentum and are presenting serious competition.  Treffis is a good example of the consensus that intensifying competition will lead to margin erosion.  With 200% of my net worth in Apple stock I have to sell large lots at the first sign of trouble!

    Your statement is confusing, Apple may represent a large portion of your gains but 200% of current net worth?  As far as HTC & Samsung, I think they gained at the expense of Nokia and RIMM IMO.  If we look over the life of the iPhone, Apple’s results have been based as much on how many units they chose to manufacture in a model year vs some competitors performance.  Apple looked at the market secured a level of commitment for key suppliers and sold every unit they built until the most recent qtr where it appears they had excess capacity and failed to move units due to the delay/announcement of iPhone 4S.  Will this continue in the Dec Qtr, I doubt it, TC already said they will set a new record so they obviously increased manufacturing and most of the units are already accounted for through carrier sales, they are just awaiting manufacture.  The real question is how many will they make this qtr.  The competition will not begin IMO until 2nd qtr 2012, after the rollout to all carriers/countries.  If sales falloff before then we have real issues.

         
  • Posted: 07 November 2011 12:39 PM #15

    AndrewLing - 07 November 2011 02:54 AM

    e.g. my brother in all had always had a grudge against Apple considering them bullies who sell overpriced goods.  He wouldn’t even let my sister by an iphone.  But when the ipad2 came out he had to buy one simply because for a graphics designer there was no alternative.

    You’ve already outlined the real problem in your post.  If you want to change the perception of Apple as bully then coercing developers in any direction wouldn’t be the way to go about it.  Tools and opportunity has served them very well to date.  I think your net worth is quite safe.  (at least from any so called Android threat)

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