Bigger than the Beatles

David Braue
22 September, 2008
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It’s not an Apple product, but the HTC phone to be launched this week is nonetheless interesting because it is the first real device to be based on Google’s Android mobile operating system. In so doing, HTC is positioning itself in an ideological juxtaposition to Apple that, I think, poignantly reflects the difference between what I will call The Apple Way and The Open Way.

Anybody who has been using Apple products for any decent amount of time is already familiar with The Apple Way. Apple products work best with other Apple products, and third-party products work sometimes well with Apple products and sometimes not – and, often, not at all.

As companies like Nullriver and Podcaster have found, trying to do things that are incompatible with The Apple Way often ends up in frustration, since their entire business viability depends on being in Apple’s good graces. I think this is one reason why everybody should watch the birth, so to speak, of Android with great interest.

From the start, Android was intended as a great flying-V to the rest of the mobile industry, where incestuous and ridiculously profitable revenue-sharing deals between handset makers and carriers are the norm. Their symbiotic relationships are, supposedly, delivering better-integrated services to customers – but they are also, as in the case of Apple’s relationships with Australian carriers, depriving us of features; just try using Visual Voicemail on your iPhone and you’ll see what I mean.

Just consider: will Skype be ported to the iPhone? I seriously doubt it, at least not in anything more exciting than a text chat, since VoIP would compromise voice revenues for carriers. VLC, the ubiquitous open-source media player that would turn the iPhone into a real media player instead of a locked-in iTunes handset?

Forget about it: the VLC port, vlc4iphone, is apparently out there and in beta, and it certainly plays more types of content than the iPhone – but without being in the Apple-controlled App Store it might as well not exist. And Apple, judging by recent precedent, would be loathe to allow the app because VLC would circumvent its cozy control of what content gets onto the iPhone, and where it comes from. Expect the fur to fly once vlc4iphone gets out of beta and its developers try to get it through the App Store’s bouncers.

From Android’s perspective, at least, VLC, Podcaster, and the million other open-source applications likely to make their way onto Android must very well be OK; Android has been sold from the start on its openness, and if Google starts to get narky about what people post on the Android Market then millions of people – well, lots of people – well, OK, a few tech journalists – will be utterly up in arms. Android must commit to The Open Way or it will lose face from Day One.

I have already expounded on this topic in Episode 38 of the Macworld podcast, but here I will bring this whole discussion to a fine point: Apple wants nothing more than to make money. Lots and lots of money.

OK, OK, so we know carriers and Apple like to protect their revenue streams, and we know Google wants to change the world and would give free Porsches to everybody in the world if it would mean sticking a thumb in Microsoft’s eye. Google wants to make money from ads, Apple wants to make money from content, Microsoft wants to make money from anything it can. Big deal, Braue. What’s your point?

My point is this: since time immemorial, people trying to predict the future of the iPod have continually talked about features they would like to see: FM radio, voice recording and – at least until the iPods got video playback – inexpensive video playback. Competitors already offer these products, and so Apple should be able to add them in relatively easily, right? So why doesn’t it?

There’s a simple answer, fanboy: it doesn’t want to. And, as a corollary, it doesn’t have to.

A few weeks ago, I was describing my dream Apple product: a combination Apple TV-Mac mini that could record TV, play games from the iTunes Store, play Blu-ray discs, run Mac OS X apps without having to be hacked, and feature an iPod touch-like front end (or even, perhaps, a front-mounted docking bay for the iPod touch). It would, in essence, be a PVR a la Apple.

The idealist in me says such a product could be right around the corner; the realist knows it will be a cold day in Hades before Apple willingly adds these features.

Why not? Simple: it doesn’t want to. And it doesn’t have to.

Yes, there is an echo in here.

In an era where cutthroat competitors fight desperately for customer dollars, Apple has the luxury of setting its own agenda for its products: iPhone, iPod, Apple TV, iTunes Store (notice that I don’t mention the Mac, which in this utilitarian theory has become little more than something to run iTunes on). It is a good agenda, and it is one that we have become familiar with, and accept because it suits us – most of the time.

But why couldn’t the iPod suit us even more with an FM radio in it? Because Apple has absolutely no interest in delivering any products that do not offer a way to add to its own bottom line; those piffling efforts are, grudgingly, left for remora-like accessory makers.

As far as content goes, Apple is trying to cover all the bases itself. Forget Blu-ray; Apple offers downloadable HD videos, albeit so far without bonus content (but who really watches the bonus stuff anyway?) Radio? That’s so 1990s; Apple offers podcasts and music for iPhone users, but not FM radio (or Internet radio, for that matter).

The economics of The Apple Way are obvious: the iPhone nets Apple a take from carriers and 30% commission on what is already well over 100 million applications sold through the App Store; the iPod nets it billions from commissions on music sold; the Apple TV is a great way to sell and rent movies to people in their lounge rooms and could, I believe, eventually be the end of the video store as we know it.

It all adds up to a windfall for Apple, and a windfall for many of us. Apple is betting that the average consumer is happy to give up a little bit of that philosophical freedom in exchange for products that work well together, and that happy customers are happy to spend on content. And, so far, Apple is right.

This is why I think Google’s Android could give the iPhone a walloping in the market – but ultimately will fail to do so, no matter how hard Google and others like to talk about the value of openness. In the end, Android will be little sexier than Windows Mobile devices, which have paled beside the iPhone but are still doing OK in businesses because they do what they’re expected to, and little more.

It is also why I think it will still be some time before Apple offers Beatles music through the iTunes Music Store. This other recurring urban myth – the idea that Apple and Apple Records, which owns the Beatles’ music, will bury their long-standing differences and reap squillions by selling Beatles music through the store – pops up at pretty much every iPod launch, and continues to be ignored by Apple.

From a monetary point of view, this is a surprise, since as I said above, Apple is eager to make as much money as it can. But I suspect that, somewhere deep down, Steve Jobs takes pride in knowing that the iTunes Store, and the App Store, and Apple’s other content delivery mechanisms, have been successes without needing to piggyback on the Beatles’ success.

In other words, the success of this whole strategy is based on proving that Apple is, in a phrase, bigger than the Beatles. Those who support The Apple Way will wait, enthusiastically, for the day that Apple succeeds; everyone else can just buy Beatles CDs and rip them into iTunes themselves. And maybe, just maybe, they’ll get so fed up with feeding the Apple machine that they’ll eBay their iPhone and snap up an Android handset so they can live The Open Way.

Let me know how that works for you. Love it or leave it, for most of us, The Apple Way is, in the end, our way too.

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