Home » Amazon, Apple, Ebook/Ereader Growth » Why Apple is the stumbling block in Amazon’s ebook transition

Why Apple is the stumbling block in Amazon’s ebook transition

31 January 2013

From Paid Content:

As the ebook transition moves forward, Amazon should worry that Kindle is not going to be the device leading the revolution. Apple and iPad will cut into its growth.

. . . .

U.S. book publishers are reporting slowing sales of adult ebooks: What was once triple-digit growth has fallen to the double digits. The revolution has also been largely limited to text-based titles — adult fiction and nonfiction — and categories like cookbooks and travel haven’t seen nearly as much growth from ebooks.

If the digital market for certain kinds of books is settling, as it appears to be, Amazon will have to find growth in other areas (though it doesn’t have to, and likely can’t, sustain 70 percent ebook growth for long). The company can expand Kindle internationally, as it’s been doing already, and it can still grab a certain number of ebook newbies.

Link to the rest at Paid Content

This article is similar to many commentaries about Amazon and its book sales.

As Amazon or any other successful seller of goods and services grows, its percentage growth in sales becomes smaller because it’s being calculated on a larger base. 100% sales growth from $500,000 to $1 million is wonderful for a $500,000 company, but it’s a different thing than growing from $1 billion to $2 billion or from $10 billion to $20 billion.

Outside of Amazon, is anybody in the book business growing at 70% annually?

Barnes & Noble? Nope, treading water while it closes stores right and left.

Big Publishing? Nope, not anywhere close to 70%. It has no stores to close, but continues to consolidate and lay off employees.

Apple? Definitely nope. iBoostore is stuck at #3 behind Amazon and Nook and is cementing its image with readers as a perennial also-ran. Does anyone know a serious reader who doesn’t have the Kindle app installed on his/her iPad? As PG writes this, he wonders how long it will be before Kobo begins to challenge Apple for #3.

Apple is the most extreme example of the problem a company faces when it tries to maintain high year-to-year growth rates. In terms of sales, Apple is primarily a phone company, but that business is in jeopardy. The iPhone is looking dated next to the latest handsets from Samsung. World-wide sales of Android devices now exceeds sales of IOS devices with the iPhone falling farther behind with each passing quarter.

Apple doesn’t do price competition which is a fine strategy so long as it can find megabusinesses it can disrupt with extraordinary hardware devices that lock in a giant market for associated content. Once a technology reaches the point where price competition becomes a reality (and all technology does that), Apple is in trouble because it can’t support its historically sky-high valuations with commodity margins on hardware sales.

The iPad is a fine device, but it’s nowhere near as large a seller as the iPhone is and unlikely to become such. It’s facing increasingly serious competition from lower-priced devices, including products from Amazon. Just as the iPhone isn’t looking all that much more impressive than Android competitors these days, the iPad is headed in the same direction.

The Apple of today is built upon three genius inventions by Steve Jobs – the iPod, the iPhone and the iPad. Unless there is another presently unidentified Jobs-class genius floating around Apple, it won’t have another invention of this caliber to ride.

The most recent product launches for both the iPhone and the iPad were merely evolutionary and didn’t generate the kind of consumer excitement required for long-term premium pricing. PG believes there is a good argument that the 7-inch iPad was launched without Apple’s best screen in a clumsy attempt to make a sort-of pricing response to Amazon’s tablets.

PG is not alone in his concerns about Apple’s future. The stock market is very worried about Apple, cutting its stock price by about 36% in the last five months.

Once the consumer market moves past the stage where it pays a substantial price premium for a genius hardware invention, Apple’s market dominance will decline substantially. For an example of iPad’s future in 2-3 years, look at personal computers and Apple’s 10-12% market share in this mature market.

Amazon, Apple, Ebook/Ereader Growth

45 Comments to “Why Apple is the stumbling block in Amazon’s ebook transition”

  1. I agree.

    Apple has five profit centers; ipod, ipad, iphone, Mac Computers and software/apps/etc. If they come out with a truely inovative iTV they may add a sixth, but I dont see that happening.

    By comparison Amazon has how many profit centers? I cant begin to count them.

    Apple products are the Air Jordons of the tech/hardware industry. Quality yes, worth the price, not so much.

    • According to Publisher’s Lunch, “Amazon’s total sales for the quarter were about the same as Apple’s gross margin for the same period, $21.06 billion (which yielded operating income of $17.62 billion). In a similar vein, analyst Benedict Evans noted in a tweet that excluding charges, since its birth Amazon has had cumulative sales of $245.5 billion, yielding net income of $1.9 billion (or less than eight-tenths of one percent).”

      Looks like there’s plenty of life left in Apple yet.

      • I’ve said this before but I’ll repeat myself.

        Apple is a hardware company. One with only 5 profit centers.Apples goal is profit from the sale of hardware.

        Amazon is an online retail company first at formost, yet they also have several other profit centers, just one of which is hardware. Amazons goal is market share first, then profit.

        Compareing the two is like apples and oranges, but almost every article you see does it anyway.

        This isnt the place to give out investment advice, but if I did it would be short Apple and buy more Amazon. :)

        Look beyond the numbers. All they tell you is what the company DID, not what its going to be tomorow.

        • No need to repeat yourself, Randall. I heard you the first time.

          But comparing apples and oranges seems to be standard practice when it suits the argument.

          Especially here on TPV where Amazon’s figures are regularly compared to a Big Six publisher like Harper Collins to belittle the publisher. Comparing Amazon to the combined resources of Bertelsmann, News International, etc, would be more relevant.

          But as Amazon don’t reveal their stats we have no idea what profit, if any, Amazon is making from its publishing venture.

          • I agree with Randall, Mark, but you make a good point about comparing Amazon to the US publishers, which are subsidiaries, instead of their parent companies.

            I do think gross comparisons concerning who’s growing overall revenues are a reasonable way of viewing who’s expanding its business vs who’s not. Having formerly worked for a large subsidiary of a very large international media conglomerate, I can tell you that the parent company definitely compared subsidiaries that were in different businesses on profitability, top and bottom line growth, etc.

          • I believe the main reason PG puts up articles comparing publishers to Amazon is that publishers are waging a (barely) undeclared war on Amazon. It’s nice to see how they stack up, even if they aren’t in the same business.

  2. I don’t often think about technology, I just use it. I appreciate it. That being said I’m incredibly happy with my Samsung Android thingy – love it! And I just got my daughter a Windows phone and she’s over the moon. It’s great. I now have a Kindle White, my husband has a Kindle, and my dad is happy as a clam with his Kindle Fire. The only Apple item we have is an old iPod – and it’s beginning to break down. Hmmmm.
    I have no idea if my comment has any relevance whatsoever, but I tend to look for products that are easy to use, update for free and are reasonably priced in the first place.

  3. You know, if you are experiencing “only” double-digit growth, and those two digits are “7″ and “0″–in that order–I think you’re doing OK.

    • Indeed. When I read ‘slowing sales’ I presumed they meant they were selling less, not that they were ‘only’ selling 70% more this year than last.

      Then again, I’m not an MBA, so 70% sales growth in a year still sounds pretty good to me.

  4. Just an interesting factoid: Apple has started paying dividends.

    Growth companies generally don’t pay dividends. Blue Chips — stable, slower growth companies — pay dividends. If they keep it up, they’re paying about what Colgate is paying, a little higher. Maybe more than IBM, less than Microsoft.

    And that makes sense for a company of that size.

    • Good point, Camille. I don’t know how many of us will live to see the day when Amazon pays a dividend.

      • First, Amazon has to make a decent enough profit…

        “Amazon’s net income fell a whopping 96% to $7 million in the second quarter.”
        –http://www.forbes.com/sites/afontevecchia/2012/07/26/amazons-profit-drops-to-a-trickle-as-bezos-goes-all-in-on-the-kindle/

        “Despite rising sales, Amazon, the largest Internet retailer, reported a 57% decline in its fourth-quarter profit due to heavy spending.”
        –http://usatoday30.usatoday.com/tech/news/story/2012-01-31/amazon-earnings/52907866/1

        Apple, meanwhile, reports… “over $41 billion in net income and over $50 billion in operating cash flow in fiscal 2012[.]”
        –http://www.apple.com/pr/library/2012/10/25Apple-Reports-Fourth-Quarter-Results.html

        “Apple sold 26.9 million iPhones in the fourth quarter, which represents a 58 percent unit growth over last year.”
        –http://www.webpronews.com/apple-announces-fourth-quarter-2012-earnings-results-2012-10

        Apple may or may not be a major player in ebooks, but their version of “slow growth,” company-wise, is… Well, Apple’s always been oddball.

        I think that we should assume that people will be reading ebooks on iPhingies — if not via iBooks — for quite some time to come.

        More importantly to us as authors, though, I also think there is potentially an untapped market in the iBookstore of middle-grade books. See, you need a credit card to order from Amazon* & B&N. To get an iBookstore book? You just need money in your iTunes account. For parents well-off enough to get their pre-18-year-old an iPhingie, the kid just needs iTunes gift cards; my kid’s bought at least a couple books that way, and possibly more I don’t know about. (And she definitely downloads anything free that takes her fancy.) If you have a book for pre-18s, you can potentially market directly to the kids, if it’s on iBooks.

        *I don’t know if the new Amazon kid-subscription thing works to fill this niche too.

        • “First, Amazon has to make a decent enough profit…”

          Well, the reason growth companies don’t pay dividends is because they plow them back into the company. As long as Amazon is growing so dramatically, you’re not going to see much profit.

          • Oh, sure. But will Amazon ever make that much profit? I don’t know. Apple probably hit the tipping point of “…what the heck do we do with all this money? Like, before the US Government nationalizes us and pays off the national debt? There’s only so many things we want to bother doing research on!” And ta-da, a dividend!

            And Apple, despite its dividends, appears to still be growing, albeit more slowly. But then, if it kept growing as fast as before, it would turn into a Cyberpunk megacorp and take over the world. That’s no fun.

  5. I agree wholeheartedly with your assessment of Apple, PG. They really do have wonderful devices, however, they are the victims of their own success.

    Just from a standpoint of non-linear film editing, Final Cut was a fabulous program, but because they wanted more consumers to buy it, they “dumbed it down” and as a result removed much of its functionality for the professional. As a result, most professional editors are flocking to other packages, such as Adobe’s Creative Suite instead.

    I recently spoke with a professor friend of mine who said that it costs him three tims as much to outfit his lab with Apple products as it does for Microsoft and other hardware and software companies. When you have pesky things like budgets to consider, you tend to go with the most bang for your dollar. Apple doesn’t care about providing this.

    • I agree. Adobe took, I believe, a much better approach to getting more people to use their products: Make the price point affordable. Creative Cloud, at $50/month, is a lot easier on the budget than playing nearly $2500 to get the creative suite, then $1800 every year and a half later to get updates.

      I think, really, that’s going to be the key that Apple needs to figure out soon. In this day, affordability is much more important than ‘streamlining’ features. If they don’t start to realize this, they’re going to be in trouble.

  6. This article struck me as just another big publishing mouthpiece trying to assure the faithful that Amazon isn’t the juggernaut that it seems to be in the book business. And it doesn’t fly.

    The POV of the article is ebook retailing. Anyone who thinks Apple is going to challenge Amazon in ebook retail is insane. I’m a bit surprised that Apple is still in the ebook retail business (outside of the education market), to be honest. As soon as that business fails to serve the overriding goal (to lock people into the Apple hardware platform), it will be over.

    • I’m a bit surprised that Apple is still in the ebook retail business (outside of the education market), to be honest.

      They want to own the textbook market, and they want to own it internationally. It’s the key to locking students into their platform, and the margins on textbooks are awesome. The rest of the ebook market is secondary, but I don’t see any harm in keeping a toe in it.

      http://www.lhps.org/lhps/Academics/iPadInitiative.aspx

      As soon as that business fails to serve the overriding goal (to lock people into the Apple hardware platform), it will be over.

      Or they could just lower the prices of their devices. A 500 dollar iPad is estimated to generate them 200 bucks in profit. The $800 one rakes in a guestimated 400 dollars. They have plenty of room to move.

      B.

  7. I can’t be the only one who sees “ebook reader” and “tablet computer” as completely separate devices.

    I have an eInk Kindle, an iPad, and a Kindle Fire. All of them get use, but the eInk Kindle and the iPad get way more than the Kindle Fire.

    The eInk is hands-down the best for reading novels (> 90% of my ebook consumption). It’s lightweight, the battery lasts a long time, and it’s cheap enough that I don’t worry about breaking it, losing it or having it stolen.

    The iPad is beautiful for mobile web browsing.

    The Fire is a compromise design, and (to my mind) is not entirely satisfactory for either task. For novels it’s too heavy, the battery doesn’t last long enough, and it’s too expensive for casual banging about in travel. For web browsing, it’s too slow and clunky.

    • The rule of thumb is that the more general-use electronic devices eventually will displace specialized devices. In that sense, I figure the iPad will out compete the Kindle.

      But this article is silly. Amazon is a retailer, & Apple is a manufacturer; that means Amazon’s primary competition is Walmart, not Apple. (If I had to take a position, I’d say Amazon is winning that competition.) And even if a customer picks an iPad over a Kindle, Amazon can still make money: not only does Amazon sell iPads (I just looked), one thing a new owner of an iPad will do is install the Kindle app so she/he can download & read ebooks from Amazon.

      • I own a Swiss Army knife, but I still have dedicated tools for important tasks nonetheless.

        Edit to add examples:

        I take pictures with my iPhone, but it didn’t replace my good camera. It replaced my cheap camera.

        On the other hand, the iPhone did replace my watch (actually that happened with my first cell phone). It didn’t replace the watch for Rolex fans, though.

        • If the iPad is going to replace my Kindle, it’s going to need a crash diet. I can hold my Kindle in one hand for a long time when I am on a reading binge. My iPad gets heavy after a few minutes.

          It’s fun to watch people argue over Apples and Banana Splits. These two things are not comparable.

  8. “I’m a bit surprised that Apple is still in the ebook retail business (outside of the education market),”

    They might make a viable business out of just that, though. iBooks Author is much better than KF8 or even epub3 for the specialized job of textbook production, IMO.

  9. I just want to throw this in there, some anecdotal stuff which may or may not give you cause to ponder other end games…

    Several authors I know are now seeing sales on iTunes outgunning sales on Amazon. It seems, for them at least, that readers are shifting to buying over there. I’m going to put my own stuff up on iTunes and see what happens. As more and more authors get disillusioned by the KDP Select program, more of them will add their books to other sites, and more sales will happen there. Maybe Amazon will fix this or come up with some other way to tie authors to them, but for now, they’re losing exclusivity on a lot of titles.

    From what I’m hearing in my world, iTunes is Amazon’s only competition for ebook sales, and they’re still a distant 2nd.

    • That’s interesting to hear, but anecdotes aside, Amazon is growing like mad while still being first in the market. Apple’s book market has never been a priority to them, nor easy to use. Just the fact that they have so much smaller of a selection puts them miles behind Amazon.

      Their customers are relatively better off, so maybe iBooks shoppers buy books like mad.

    • And some authors do better on the Nook or Kobo. That means nothing. I know some game devs who do better on Windows Phone than iOS. iOS is still a gazillion times bigger market. The question to ask is:

      Of the 25 best-selling ebook titles last year, what was the proportion of sales on Amazon vs. the iBookstore? More than 5-1 for sure. 10-1 or more, maybe. This matters because those 25 titles are, for all intents and purposes, the ebook market from financial perspective.

  10. I’ve always thought Apple was a luxury brand more than an inventor. Yes, they created the popular MP3 player, the popular smartphone, and the popular tablet, but they didn’t invent them. They just made those products sexy and accessible.

    If Apple thinks they’re going to maintain their market position on any of those devices, they’re wrong. If anyone thinks Apple is eating into Amazon’s business… well, they might mistake forward for backward, too.

    PG is right about other manufacturers catching up with Apple. For some time now, Android phones have boasted superior hardware specs, more features (MicroSD card slots, etc, though that is really more about Apple’s content strategy), and still managed to cost less. People continued to prefer Apple because it is Apple and no other reason. I know, because I was selling smartphones two and a half years ago. It was all about the brand.

    Samsung is my favorite company to compare to Apple. Look at one of their latest products, and dang if it doesn’t put Apple to shame. Apple can be the luxury brand, but they’re going to have to accept lower margins and beef up their products.

    • “They just made those products sexy and accessible.”

      Is that all? :-)

      Making the first x that doesn’t suck is an accomplishment in its own right, and one that tends to be rewarded well.

      ” Apple can be the luxury brand, but they’re going to have to accept lower margins and beef up their products.”

      People have been saying that for almost 40 years now.

      • True, people have been saying that about Apple for almost 40 years.

        But Apple was for the bulk of that time period a niche player with only a fractional share of its market – and struggling for a good portion of that time as well:

        http://en.wikipedia.org/wiki/Timeline_of_Apple_Inc._products

        Consumer electronics is an extremely competitive field. Apple has competed successfully the past decade by strategizing for each main product (iPod, iPhone, iPad) on how to take an immediate lead with the highest profit margins and maintain it for as long as possible.

        The iPhone has been the major cash cow of the three, because its own strategy involved an unusual sweet spot of maximizing profit while minimizing consumer cost (carrier subsidies making the phones affordable for people to buy, while the carrier pays full cost to Apple).

        Apple’s main challenge is that there aren’t high barriers to entry for phones or tablets or most other electronics for that matter – particularly when virtually all of the components are developed by other companies (some of whom are Apple competitors). And it’s likely the carrier subsidy model may modify due to the range of competition, and pressure Apple to either accept lower margins, or choose to release lower-cost models, or accept reduced sales. They may choose the latter, although they did release the iPad Mini last year which is a lower-cost alternative to the iPad (framed in a different size factor).

  11. Folks, Apple is not a hardware company, and Apple is not a software company. Apple is in the business of selling user interfaces.

    In 1998, shortly after Steve Jobs came back to Apple (and fired the ‘bozos’, as he called them, who were doing its R&D at that time), the company introduced the iMac — the first computer that dared to do away with the ridiculous tangle of legacy ports, many of them dating from the 1970s, that every PC had been saddled with until then. They consolidated this move by moving other product lines to the same type of design, most notably their highly successful and lucrative laptops.

    In 2001, Apple introduced Mac OS X. Ever since the late 1990s, people have been talking about that magical day when Linux will take over the desktop. It never will, because good UI design is orders of magnitude more difficult than good internal design; it requires regular feedback from non-technical users, carefully interpreted, and a relentless focus on essentials as opposed to the multiplication of features that look good on the spec sheet but only get in the way when added to an actual product. But Linux, after all, is only a FOSS knockoff of Unix; and OS X is Unix — a certified fork of BSD. And Apple had the people, the knowhow, and the desire to do what Linux geeks wouldn’t: to design a commercial-grade UI (and IDE) to mediate between BSD Unix and the non-technical user.

    Of course, OS X was widely derided as a ‘candy-coated’, ‘toy’ OS by people who thought that the spec sheet was more important than the user experience, and (what is much worse) that a good UI was incompatible with good technical design. Such people were soon chagrined to find large numbers of Unix geeks buying Macs because they actually valued the user experience. Even Unix geeks don’t want to spend half their time being sysadmins to their own PCs; they want the machine to administer itself so they can get on with their work. I remember setting up an Apache server on an early version of OS X. After my (non-Apple-fan) webmaster spent 45 minutes futilely trying to configure Apache through the command line, I took the radical leap of consulting the help files, and discovered how to accomplish the task. It meant checking a single checkbox in the ‘Networks’ preference panel. That was it — ten seconds’ work, once anybody bothered to RTFM.

    The same year, they introduced the first iPod. Again, there were scores of competing MP3 players already on the market, but they were clunky, had ridiculously large numbers of physical buttons, poor displays, and (generally) extremely limited capacities; worst of all, they required the user to work within a hierarchical directory structure, and to keep mental track of how his music files were organized, and transfer them from his PC using the file system. The iPod reduced the file system to an unseen ancillary system, and did all visible file management through a database. This was a radical idea in 2001; today, you see it everywhere. Even a humble blog is a database nowadays, searchable by tags, categories, dates, keywords, text snippets — by every criterion except direct navigation of the file system. In other words, everything is organized like an iPod now. But the same people who laughed at OS X laughed at the iPod, because they knew access to data required hands-on access to the file system. How could you navigate anything with just five silly little buttons and a wheel?

    In 2003, Apple opened the iTunes Store, the first place that made it similarly easy to buy music online. The closest thing to a good UI in online music at that time was to be found on Napster and Limewire. It was bad enough that the music labels didn’t want people buying downloadable music. When it was technically easier to pirate it than to buy it, the labels didn’t stand a chance. The iTunes Store turned into a major profit centre for Apple, and showed the way for Amazon and others to launch competing services. In this case, Apple’s key innovation was not technical but administrative — building the infrastructure to see that labels and artists got paid for each song sold, and getting the major labels to go along with it.

    In 2007, Apple released the iPhone. The so-called smartphones of the time were monstrosities — chockablock with features that nobody could figure out how to use, and linked to a so-called Internet that was limited to a handful of curated sites run or sanctioned by the telephone companies themselves. Downloads, in many cases, were charged by the kilobyte at extortionate prices. As with the music labels, Apple used its marketing muscle to force the telcos to accept a change that, in the long run, has been tremendously profitable for them. And as with the iPod and Mac OS, Apple used its UI skills to make the iPhone simple. I use an iPhone 4 today; it has fewer physical controls than any telephone I have ever used, except for a very old party-line model with no dial (‘Hello, Central!’), which my great-uncle’s family still had to use in the early 1970s. But only a fool would equate the iPhone with that old monster.

    In the process of developing the iPhone, Apple created the app business as we now know it — another major profit centre, now effectually merged with iTunes (which was a fair-sized technical feat in itself).

    In 2010, Apple came up with the iPad, largely repeating the usual procedure. This time around, they brought the Big Six publishers to heel, as they had done with the music labels years before. Amazon seized most of the market share in ebooks, but there might not have been a viable market had Apple not been working on those publishing firms for years to crack open their petrified skulls and open them up to the idea of making their products available in ebook form.

    You will notice that the typical lead time between major product introductions has been three years. Around 2000, Apple stock tanked; people were saying the company was a one-trick pony — nothing but Macs — and doomed to wither away. A couple of years later, the stock tanked again; people were saying it was a two-trick pony — Macs and iPods — and doomed to wither away. In the middle of the decade, it had another setback; people said Apple was a three-trick pony, doomed to wither away. In 2009, the same people said that Apple was a four-trick pony, and doomed, I tell you, doomed! And today they’re at it again.

    Doesn’t it seem to anybody that a ‘one-trick pony’ that has developed five new tricks might not be a one-trick pony after all? Of course Apple’s older businesses have largely been commoditized and cannibalized by cheaper providers. They respond the way any inventive company does: they move on.

    If you think that Apple is boxed into its present five product lines, and can’t possibly find any new sources of profit in the future, you are, in effect, admitting that you have no imagination — that, like the legendary patent-office clerk, you think everything has already been invented. Well, it hasn’t; and it’s a bit early to write off Apple yet.

    By the way, far too much is being made of the death of Steve Jobs. While he was alive, he was routinely dismissed as a mere huckster — a technical know-nothing who somehow managed to shuck and jive people into buying products that were obviously inferior. (Just look at the spec sheets! See how much more bang for your buck you would get, if you just ran Linux on your own home-built PC!) Now that he is dead, Apple-haters have transformed him overnight into a technical genius without whose brilliance the company cannot possibly survive. Well, as they say, any stick will do to beat a dog.

    • Apple is in the business of selling user interfaces.

      This is very true. (I just wish they’d sell trackballs designed specifically for me, mind. ;) ) I agree with you 110% here.

      This time around, they brought the Big Six publishers to heel, as they had done with the music labels years before.

      I would quibble that the publishers were not truly brought to heel in the same way the music companies were. The music companies were told, “99c per song, and no ‘if it’s popular, you charge more’ crap, and in exchange we’ll put DRM on it.” Eventually there’s some flex on the DRM — and the price. The publishers, by contrast, were apparently told, “No, we’re not going to try to squeeze you like that big bully Amazon; we want it simple, just like our apps, 70-30 and you set the price, and we want you all on board so we can have a spiffy iBookstore launch. Here, have some comfy pillows.”

      But then, Jobs was more a audiovisual media-contacts person than a text-media contacts person. He probably didn’t want to be bothered — and enough of the publishers were likely linked to companies that’d had the thumbscrews put to them with music that they needed more coaxing to put their other hands in the Fenris Wolf’s mouth.

      More’s the pity, but hey, it still opened the way into Yet Another Market, and as a little mousie, I am all for Yet Another Market that is simple in the pricing. (And, because me an’ the Meatgrinder are BFF, it’s pretty easy for me to get my stuff there.)

      I think the question for the iTVs is going to be whether they can bring that (sub)set of media corporations to heel, or coax them, or what. Right now, I gather that the whole “set-box” proto-industry is a morass of competing and/or DRM-locked formats, causing an ungodly mess of User Interface. If Apple can manage to get themselves wedged into the formatting situation, their UI has… Well, I’d suspect that beating the current devices’ UI is low-hanging fruit. (Though I can’t be sure, since I haven’t set foot in the junk roo… er, media room for years now. It’s scary in there. :( Maybe when the basement is finished, I’ll be able to watch TV again, instead of slotting DVDs into the computer…)

    • Tom,

      I concur in large part with your opinion and a few parts seem a little weird to me. In particular, I see exactly zero evidence that what happened in music is paralleled in the ebook business. We have a lot of evidence that Apple was late to the ebook business, led most of the Big Six into a foolish and doomed effort to retard rather encourage trade ebooks, and completely underestimated the competition.

      The iBookstore/iBooks experience is the worst sort of walled garden. It has to be because it is slaved to the larger goal of selling the iPad. You say that Apple is in the business of selling user interface (more properly a user experience) and I agree. But the only way for Apple to monetize that experience is by selling hardware. They are quite rabid about preventing that experience from being delivered on other hardware.

      • They are quite rabid about preventing that experience from being delivered on other hardware.

        That’s because the experience can’t be delivered if the hardware vendor is free to alter the hardware at will. We keep hearing how much higher the unit sales of Android phones are than of iPhones; but when you look at metrics like app sales and profitability, the iPhone still rules the roost. App sales are a particular tell. By strictly controlling hardware, Apple can make sure that all new customers are using the latest version of iOS, and it can strongly encourage old customers to update to the latest version their hardware will run. Android manufacturers are all over the map; some Android devices are shipping today with OS versions two or three years old. That, plus the variety of underlying hardware, creates a giant headache for app developers. They simply can’t deliver apps that are guaranteed to work on all Android devices, except by sticking carefully to the lowest common denominator. And that damages the commercial potential of the Android platform as a whole. It’s the same hell that Windows went through with device drivers in the 1990s — and there is no way out of it, as long as the OS and the hardware are made by entities that have no obligation to cooperate.

        • This is true. I was a network admin in a design studio at the time that Apple allowed cloned computers.

          They were not the same. The cheapness did not make up for the cost. For another company to make an Apple product it must *become* Apple.

          Arguments that they picked bad license partners or whatever miss the point entirely. The only advantage they had, that anybody can have in this kind of scenario, was lower costs of development and manufacture. And despite being monitored closely, having technical assistance from Apple and having a clear goal to shoot for (Run Mac OS, properly) they COULD NOT DO IT. Because they were NOT Apple.

          • The cheapness did not make up for the cost.

            That was my thought when the company I worked for made me enter bug reports on a Mac around the same time.

            Yeah, it was cheap compared to my Sun workstation, but the Sun was only rebooted for hardware upgrades or power failures, while the Mac would crash six times trying to print out a bug report.

            • Not to be a fanboy, but that wasn’t the Mac. (Although of course pre-’nix conversion Macs could have a system crash related to an app problem just like a PC, and did so with distressing regularity.)

        • I think “free” and “open source” go a long way toward Android’s commercial viability.

          • “Free” and “open source” go a long way to Android’s continued existence — because it will be the OS of choice for any little white-box* manufacturer in China who wants to whip out a cheapie product, fast, and not bother with the OS.

            (* I believe that’s the term?)

            But “commercial viability” and “free” aren’t necessarily the same thing. A freebie for an author can be a loss-leader; try it, you’ll like it, first one’s free! A free OS… Well, Google thought they’d own the eyeballs, with ads and collection of data from the phones. When those white-box manufacturers started stripping out that part, Google got a bit disenchanted, from what I gather.

            And, as Tom Simon says… There are so many versions of Android out there, and so many device versions (different screen sizes, different screen resolutions, etc.), that making “an Android app” is a headache and a half, and frequently less profitable than a similar iPhone app — and the Android app store is generally riddled with malware, increasing the stress on the would-be purchaser. Aaaaaaand then there’s that people who buy cheap Android phones (as opposed to expensive Android phones) are, well, cheap. They don’t buy apps if they can get free ones, and/or pirated ones.

            Android is viable, yes. But so is Unix/Linux/one of those “-ix”s, and that “free” and “open source” haven’t made the “-ix” the dominant OS in computers.

  12. PG, I love and faithfully read your blog. But
    ” the 7-inch iPad was launched without Apple’s best screen in a clumsy attempt to make a sort-of pricing response to Amazon’s tablets”
    Clumsy attempt? I guess that sort of makes the iPad mini another nail in Apple’s coffin?
    Wait–this is the same product The Verge, Time, Macworld, Daring Fireball and Engadget raved about? The one I waited weeks to get, and now that I have it, I prefer to my retina display iPad? The one for which twelve million displays were shipped last quarter?
    PG, please be serious.

    • When the iPad Mini was released, most criticisms or disappointments centered around it being a technological step backwards in screen display because it didn’t include the Retina display.

      It was was likely a decision on Apple’s part to try to get its 7-inch tablet entry at a particular pricing point (still with a certain premium attached to it) while preserving certain profit margins.

      The Mini isn’t the runaway consensus for “best” tablet in its size category. And the other criticism that typically comes up is the price-premium over its competitors and whether it’s justified enough.

      Steve Jobs had apparently not liked the smaller form-factor, and Apple made a pivot to belatedly enter a market that was growing fast for the smaller tablets. Many indications are that the iPad Mini sales are having some erosion effect on iPad sales. A lot of users have noted – as you have – that they prefer the smaller size to the full-size iPad. Apple probably anticipated that the smaller form-factor wouldn’t be carving out its own sales but would expand their participation in the overall tablet market.

      Pretty much all reviewers I’ve seen noted that Apple did a 180 on its “no small tablet” strategy and was responding to the market rather than setting its own offering as the standard-bearer. As you noted, the Mini has received positive reviews. But again, it isn’t considered to be the best out there – and particularly given its price-premium over an array of competitors. They’ll probably figure out a way to incorporate Retina into it this year from a pricing and logistics standpoint. But other tablet makers already do high-res screens at 7-inch.

      Perhaps “clumsy” might not be the best word. But the fact is that Apple’s launches of its other products were meant to carve out new markets and establish their products as the consensus market leaders for everyone else to emulate. The Mini was released much differently – obviously a “response” product and its cachet hampered somewhat by stepping backwards in its display (and this, after Apple had focused so much attention for two iPad generations on branding the Retina displays as setting its tablets apart from others).

      • ‘Cording to my spouse, the reason the Mini didn’t have the Retina was less cost, and more Thickness, Weight, and Battery Life. The Retina display is more power-hungry than the non-retina displays. The small iPhone/iPod Touch display isn’t as affected, but something twice its size would be. This is why the Retina iPad is thicker than the original, non-retina one, heavier, and has slightly less battery life.

        A fat, heavy iPad Mini would really, truly be a clunky step backwards.

        The trick to getting a Retina Mini will be to get a retina display that doesn’t take as much power (or make a battery that doesn’t need to be as fat!); rumors have it that they’re working on a new kind of retina display that’s less power-hungry. However, the new way of making the displays is reputedly low-production right now. They can’t manufacture enough displays yet to meet demand. (I believe this is also why Apple doesn’t use oLED displays, unlike… Samsung, I think? Not a high enough yield for the numbers Apple expects to ship.) When they can… Then there’ll be a Retina Mini.

        For the other part of that… I don’t know if the Mini was in response to the other, smaller tablets; because the market was clearly there despite what Jobs had believed; or because Cook just likes a smaller form-factor himself and didn’t have to convince Jobs to carry a prototype around in his pocket for a month to see if it changed his mind.

        People surely did throw money at Apple once the smaller one got released, though. And I’ve held one; it’s got all the addictive stardust of the bigger siblings. It’s like an iPad, but little and cute! Pity it doesn’t come in pink glitter. :D

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