Rythie's Blog

Technology and stuff

What Made You Think iOS Was Open?

People are up in arms about the news that Apple will take a 30% cut of any subscriptions. It's not really surprising since they take 30% of everything else, what's most surprising is that they want publishers to charge the same for in-app subscriptions as they do with those made outside. I guess the thinking is that there is still a cost of sale outside the apps through the advertising that is needed.

Apple has been on constant path of closing their products, every iPod, iPhone and iPad they have ever sold has had non-user replaceable battery and memory. In a market where most of the competitors provide such things, Apple is winning. After years of laptops with user-replaceable batteries, Apple gradually updated it's line to make all of them have non-replaceable batteries. Apple tells labels what they can and can't charge for music on iTunes, doesn't let iTunes connect to other manufacturer's players and doesn't let it's iOS devices connect to other music apps. I could go on, however with all these restrictions, people haven't voted with their feet and left for other products. Everything Apple does is becoming more closed and I don't know why people are surprised, did they think somehow that iOS was open?

When Apple launched the iPhone they made a few changes almost immediately, they dropped the 4GB model as people mostly bought the 8GB model and they dropped the price by $200. Clearly Apple made some mistakes there, people showed that they wanted a higher specification phone for a lower price than they anticipated. With the iPhone 3G they started accepting subsidies from carriers as is common with other phones. Andriod phones are starting to hit Apple's potential sales, I'm sure. I must have talked to half dozen people, if not more, whose primary reason to buy a Android phone is that's it's like the iPhone but cheaper. Phones are clearly price sensitive at the volumes Apple wants to sell at.

So what can Apple do about pricing? If they reduce the price of their devices they risk losing margin, Apple doesn't tend to do low margin products, so what to do? It's clear Apple is already working on the solution to this, take a cut of everything it can on it's platform, be that apps/games, music, movies, books and now magazine and newspapers.

Apple's model is much like the games console market, the consoles are cheap, even though the R&D and hardware costs are high. Console games are expensive however but after 30 years of that model consoles more popular than ever. If Apple, as rumoured, release a cheaper iPhone model I think it will be a clear dent in Android and the margin will most likely be made up by cost of apps, music, movies, newspapers etc. on the platform.

I don't think any of this is particularly good, however Apple is showing that they can do this even at this point when there a several competitors, which shows their dominance.

There is still however an open platform, one not controlled by anyone, one that works on many devices and doesn't require you to give anyone a cut, one that works on the iPhone too. It's called the web. Or failing that, Android is lot more open.