Success: Openness Not Required
A day doesn’t go by where I don’t read someone proclaim that Apple will fail if they aren’t more open. That the Macintosh is doomed if Apple doesn’t allow third-party manufacturers the right to create licensed Mac clones. That the App Store should not be the only place where iOS device users can download software without first needing to jailbreak their devices. You needn’t look any further than the success of the iPod, iPhone and iPad to see how closed actually works well in Apple’s favor.
In 1995 Apple launched their official Mac clone program with the intentions of increasing the Macintosh’ market share. In return for licensing the Macintosh ROMs and system software, the licensees would pay Apple a flat licensing fee, as well as a royalty for each Mac clone sold. Unfortunately hardware sales were more profitable than clone licenses and royalties, forcing Apple to compete not only with Microsoft and PC manufacturers, but also with their own Mac clone licensees. Upon Steve Jobs’ return in 1997, Apple backed out of the clone licensing deals, fueled by complaints from Apple executives that they were financially unfavorable. In the end, Apple’s attempt to clone the Mac was not a sustainable option.
If open was a big issue with consumers, you might expect a huge backlash against Apple’s iOS devices. Apple is not only the sole manufacturer of iPhones, iPods and iPads, they also decide what apps you can install on your iOS devices. Why is it then that Apple consistently ranks highly on customer satisfaction surveys? For the fifth consecutive year Apple’s iPhone has topped JD Power’s annual smart phone customer satisfaction study. The Apple Mac has also topped the American Customer Satisfaction Index for the seventh straight year. According to customer surveys, it doesn’t appear that the average consumer has taken openness into consideration.
I understand how some people would like the freedom to run whatever software they want on their phones and tablets. How relying on a curated, walled-garden approach could lead to censorship and anticompetitive actions. Unfortunate for these users, their wants fall in the minority. For many users, the App Store offers an easy way to find and install apps on their iOS devices, much like how the iTunes Store made the process of purchasing digital music transparent. By limiting choice, Apple has actually made the experience more pleasant. By creating a better experience, people are more willing to pay a premium to use Apple’s offerings.
Apple is not concerned solely with market share. Seeing how profitable they are with what market share they own I would say they are more concerned with catering to those users with larger expendable incomes. Apple has created reliable devices that are easier to use than the competitions, and this is their competitive advantage. This is their differentiator that supports their devices’ higher price tags, and opening up their platforms would be counterproductive.