Steve really doesn’t understand what it means to build a platform. Apple’s deicsion to close the iPone ensures its success only as a niche product. His recent comments about the iPhone are telling – quoting from the MSNBC article here:
“You don’t want your phone to be an open platform,” meaning that anyone can write applications for it and potentially gum up the provider’s network, says Jobs. “You need it to work when you need it to work. Cingular doesn’t want to see their West Coast network go down because some application messed up.”
Its pretty groovy that Cingular (AT&T) has chosen to market the Apple iPhone, but if Cingular was really worried about 3’d party applications running on their network, then they wouldn’t be selling the Samsung Black Jack, Cingular 8525, Palm Treo 650, Palm Treo 680 or Palm Treo 750, Nokia E62, Cingular 3125, Cingular 8125 Pocket PC, BlackBerry Pearl, BlackBerry 7290, BlackBerry 7130c, or BlackBerry 8700c. Others have noted the same thing, for example this item at ArsTechnica from Clint Ecker.
These are all open platforms; 3’d parties are free to write – and monetize – applications for them. This is good for Cingular as well – customers are attracted to their service because their phones can be more usefully than Cingular can make them by themselves.
Being an open platform has long been a key factor in the success of many new products. The first Palm devices succeeded where others failed because they made it easy for developers to write applications and for users to load them on a Palm. Apple has had success here as well – one of the drivers of the early Macs was HyperCard. Lots of people bought Macs so they could run any number of the many HyperCard applications availed. I’ve always belived that Apple killed HyperCard becuas its openness limited their ability to monetize the HyperCard eco system. They had no success with this by making HyperCard part of the Claris applicatoin suite.
One of the things that has made Microsoft successfully is our focus on being a platform. Yes, the Mac OS is a platform as well, but not to the extent of the Windows, Office and Visual Studio franchises. Why? Because we have long know that enabling others to leverage our platforms to make money is of strategic importance. In contrast, Apple only enables others when it suites their purpose.
The advantage of openness from a platform perspective is clear – profitability and scale. The Windows PC business dwarfs Apple – it long has and it will continue to do so. Can Apple remain profitable? Of course! But the business eco system around Apple will always be more limited than the Microsoft eco system because of Apple’s desire to monetize everything.
Just look at the financial numbers for Microsoft and Apple – there really isn’t any comparison. If you add in the Windows based business from other companies such as Dell, HP, Lenovo, AMD, Intel, and thousands of others, the ratios become even more lopsided. The cynics will point out that this disparity is because Microsoft “doesn’t play fair”. I call bullshit on that sentiment – we (Microsoft) have our issues and make mistakes, but we fundamentally “get it” that maintaining a profitable eco system around our products is of long term strategic importance: it builds virtuous circle and leverages network effects. In contrast, apple seemst to go out of their way to avoid these models.
Of course, Apples decision to close the iPhone can be reversed – even in a controlled way at any time. But Steve should be more clear – Apple’s goal is to monetize as much of the iPhone revenue as possible and (for now anyway) this means developing and selling all the applications that run on it and monetizing any recurring services based on those applications. Its the same model as the iPod and Zune and I don’t think it is a model that can sustain long term success.