Monday, April 14, 2014

Apple lock-in strategy

A major part of Apple's success has been its ability to lock-in customers. The NY Times explains:

Apple generally offers proprietary software and services that run only on Apple hardware. For example, iMessage is Apple’s free text messaging service offered only for iPhones and iPads. Analysts have called this approach Apple’s “lock-in” strategy to keep customers loyal, a term that has been described as cynical because it has a connotation of imprisonment. But in his e-mail, even Mr. Jobs recognizes that Apple’s goal with its cloud services is to “tie all of our products together, so we further lock customers into our ecosystem.”
There is a lot of confusion about Apple's success. Some people think that Apple invented the iPod, or that it was easier to use or better than the competition. There were several portable mp3 players before Apple. The Apple iPod did not sell very well at first.

Apple managed to take over the market for two reasons. First, Apple pumped 100s of millions of dollars into advertising its iPod as the cool trendy product. The market at the time could not really justify that kind of advertising, but Apple did it anyway because it was promoting its company image, and driving people into its stores to buy Macintosh computers. None of the other companies could compete on ads.

Second, Apple managed to find a digital rights management (DRM) scheme that satisfied the record labels and that its customers accepted. The customers were locked into Apple products in a way that customers of other companies would not accept. Somehow Apple customers like being locked in to Apple.

I found competing players easier to use. I could buy non-DRM music from Amazon, and just copy it to the player just like files. I like the players made by Sandisk. They have a history of offering many useful features not available from Apple, and sell at about a quarter the price. The are other good brands also. Most people call these players ipods, whether made by Apple or not.

A startup company is offering a player for higher quality music, but the Apple fanbois are very upset that a product would be so technically superior to Apple. Here is a typical Si Valley columnist badmouthing it:
Yet, despite the enthusiasm surrounding it, Pono is an anachronistic and ill-considered solution to an all-but-nonexistent problem.

The service is modeled on how people used to listen to music five or 10 years ago, not how they listen today.

By and large, consumers are replacing stand-alone digital music players like the iPod with smartphones. And instead of plugging those players into their computers to sync their music, they're getting music on their smartphones wirelessly -- either by syncing their songs over Wi-Fi or, increasingly, streaming them from services such as Spotify, Pandora or iTunes Match.

Pono would have consumers step back in time. They would have to carry around separate phones and music players again. And they would pay $400 for that music device -- which, in an increasingly connected world, is resolutely disconnected. The only way to get music on it is by transferring it from a computer over a USB cable.

You can't buy a song when you're away from your computer and you can't stream it to the device. The company's not even working on a smartphone app that might be able to offer Pono customers some connectivity or instant gratification.
Yes, most people might be happy with low-quality audio on their smart phones. That streaming music is usually significantly worse than FM radio, while the Pono promises something much better.

This review is like telling people not to buy a Tesla car because you won't be able to buy cheap used parts at you local junkyard. The whole point to buying a Tesla is to get something much better than what is in that junkyard.

Apple's biggest success was with the iPhone, which partially stemmed from iPod success. But the iPhone is not as dominant as some people think, as Android phones outsell it about 5 to 1 worldwide. The competition is described in Dogfight: How Apple and Google Went to War and Started a Revolution. What is not so well known is that Google announced its amart phone before Apple did, and Apple copied Google as much as Google copied Apple. Steve Jobs went into a vindictive rage against Google, and Google removed the only features that supposed copied Apple. Apple has sued several Android phone makers, but has not sued Google.

The Apple iPhone strategy is also all about lock-in. You get locked into carriers, contracts, app store, etc.

Update: The Apple emails became public because it is losing a lawsuit for locking in its employees.

Update: Here is another foolish rant from someone who cannot believe that a non-Apple product could have superior quality music:
Digital music wouldn't have taken off the way it did if sound quality was a widespread concern. ...

Am I saying you shouldn't buy FLAC files from Neil Young's new store? No, I'm saying you should literally go back to buying CDs. ...

For research purposes, I went on a $50 shopping spree and came away with 14 albums, all downloaded in the same high-resolution format that Neil Young wants you to start buying at exponentially higher prices.
No, that is incorrect. Young will be selling music in a higher resolution than CD. It will sound about the same on cheap equipment, but that is why Young is selling a better player.

Here is an Apple fanboi giving up on the iphone: Why I'm making the jump to Android

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