Apple is an example of how the first-mover advantage offered by great product innovation is insufficient to ensure long-term survival. Since the days of the first Apple computer to the Mac to the iPod and iPhone, Apple have shown they can be first to market with innovative products which people love.
Unfortunately, their strategy is to create walls around their systems and restrict their customers. Time and time again, this results in a loss of market share to the point where Apple become a minor niche player.
Apple is not unique in this — the history of digital technology is littered with the corpses of innovators who tried to restrict, rather than open, their technologies.
Being “open” doesn’t require being open source, it merely means recognizing your technologies are part of a larger world and therefore need to interact with the wider technology ecosystem. Microsoft’s Windows operating systems are open because any hardware manufacturer can use them, whereas Apple’s operating systems are closed because they’re only available on Apple hardware. It doesn’t matter if they are better than the alternatives — being best is not sufficient for survival.
There was a time when the Mac was much more popular than Microsoft Windows. Now there are 10 PCs for every Mac. This didn’t happen because Windows was better — it happened because Apple refused to allow other hardware vendors to use their operating system.
This created a world in which all other PC manufacturers were forced to go Microsoft. By rejecting the world, Apple gave it to Microsoft.
The same thing will happen to the iPhone. iPhone competes with Microsoft’s Windows Mobile and Google’s Android, both of which are available to any hardware manufacturer that wants them. More important, it competes with Nokia’s SymbianOS — which is not just open, but open source, and according to Gartner has 44% of the market compared with iPhone’s 15%.
No one seriously expects Apple to put Nokia, Samsung, HTC and every other smartphone manufacturer out of business. By building a demand for iPhone-like systems, then refusing to permit other hardware vendors to use their system, Apple force them into the arms of their competitors. The best salesman for Google Android is Steve Jobs!
Apple is also making fundamental mistakes with content provision and applications. iPhone does not support Flash. The reason is simple — if you create applications in Flash, they can run on any system.
Adobe thus becomes an alternative platform to the iPhone OS for developers. No more sales of Apple developer kits, no restricting apps to the app store, no control of interactive advertising. Flash on iPhone means the whole world can play without Apple as gatekeeper.
The result — despite user and developer demand — Apple slams the door in the face of their customers. They’d rather control their systems than permit their customers access to a ubiquitous technology. Instead Apple offers HTML 5 — a standard which is still in development and may emerge in a very different shape when its completed in two or three years.
Because it is not finished, Apple can’t support HTML 5 — all they can support is their version of HTML 5. When HTML 5 is finally released, every iPhone app and iAd widget built in Apple’s version of HTML 5 will become obsolete.
Both Netscape and Microsoft tried this in the days of the “browser wars” in the mid-1990s. Each tried to outdo the other by adopting versions of HTML before they were complete. The result was chaos for web developers and a handicapped experience for users.
When mobile phones initially developed web access, phone companies tried to restrict customers to a limited set of websites licensed by them. It was inevitable one phone company would seize a competitive advantage by opening up to the world, and the others had no choice but to follow. Cable companies tried a similar strategy, with similar results. History has shown users want an open web, in which they can connect to anything they want.
iPhone now is where the Mac was in the mid-1980s. The Mac had a similar buzz then to what we see around iPhone now. But Apple’s strategy was the same then as it is now. Last time the result lead to the near collapse of Apple.
The rules of the market haven’t changed: the desire of consumers to connect to everything hasn’t changed, the need for developers to have access to the widest possible community of vendors hasn’t changed and the need for hardware vendors to offer their own alternatives hasn’t changed.
In fact, nothing has changed — Apple is just making the same old mistakes with new products. Unless one of the factors I’ve listed changes, Apple will once again marginalize themselves and become a niche player.
Apple — an example of how to play dumb with clever products.