Here’s How Much Amazon’s Dis Will Cost Apple and Google

15 November 2015

From The Motley Fool: recently kicked Apple‘s  digital streaming box, along with Alphabet‘s Google Chromecast streaming stick, out of its online store.

The move comes right when all three companies have updated their streaming devices just before the critical holiday sales season. It’s a clear attempt for the online retailer to increase sales for its own Fire TV and Fire TV stick products at the expense of Apple TV and Google’s low-cost USB-dongle media player.

It’s not an unprecedented move, but it’s a rare one for Amazon, which is staying in business with its two rivals for other products — even tablets where iPad and Nexus devices compete with its Kindles. Even though Amazon is firing this shot, one could argue that the war was started by Apple and Google, since neither Chromecast nor Apple TV offers Amazon’s Prime Video app.

. . . .

“Over the last three years, Prime Video has become an important part of Prime,” Amazon said in the email. “It’s important that the streaming media players we sell interact well with Prime Video in order to avoid customer confusion.”

. . . .

In the short term, the loss in sales barely impacts Amazon’s bottom line, but hurting its relationship with the major companies could come back to bite it with consumers.

“This has the potential to hurt Amazon as much as it does Apple and Google,” Barbara Kraus, an analyst at Parks Associates, told Bloomberg. “As a retailer, I want to give people a reason to come to me. When I take out best-selling brands, I take away those reasons.”

While its logic is sound, when it comes to Apple TV and Chromecast, Amazon is also taking a risk by pursuing this strategy.

“Fewer than 20% of Amazon customers are Prime members,” Wedbush Securities Analayst Michael Pachter told Bloomberg. “What about the 80% who want an Apple TV to stream Netflix? I think that the excuse of avoiding customer confusion is a not-so-veiled attempt to favor Amazon first-party products over third-party products, and think it was a bad move.”

Link to the rest at The Motley Fool

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Apple Thinks It Can Win This Case at the Supreme Court

5 November 2015

From Fortune:

It’s no accident that the petition Apple submitted to the Supreme Court last week begins with a reference to Leegin Creative Leather Products, a manufacturer of fancy cowboy belts. Or that the case known as Leegin v. PSKS comes up 81 times in the 250-page document.

Apple’s appeal rises or falls on Leegin. And Leegin, it turns out, is a precedent this Supreme Court knows well.

Seven of the nine justices who would hear Apple’s appeal were sitting on the high court in 2007 when Leegin was decided. And five of them saw things Apple’s way—or so the company believes.

Leegin raises the question at the heart of Apple’s antitrust defense: Whether the actions of a vertical player in a price-fixing conspiracy must be judged by the same antitrust rules that govern the activities of horizontal players who, by law, are supposed to compete with one another.

. . . .

“Leegin, a manufacturer of leather apparel, concluded that its interests would be best served by opting out of a price war ‘race to the bottom,’ focusing instead on quality and brand cachet. Accordingly, with specific exceptions, it decided to refuse sale to retailers if they intended to discount its products below their recommended retail price. Five years after this policy was introduced, Leegin discovered that Kay’s Kloset was violating the policy by marking down the Leegin products by 20%. When Kay’s refused to comply with Leegin’s policy, Leegin cut them off. PSKS, the parent company of Kay’s, sued charging that Leegin had violated antitrust laws when it entered into ‘agreements with retailers to charge only those prices fixed by Leegin.’”

. . . .

It’s not a perfect fit. Leegin was a manufacturer cutting deals with retailers. Apple was an e-book distributor, negotiating contracts with publishers. Leegin was well-established in the leather-goods trade. In the e-books market, Apple was a new entrant.

But in both cases federal judges rejected the defense that their respective deals were procompetitive, given market conditions. Their actions were found illegal per se—on the face of it. No ifs, ands, or buts.

In Leegin, the Department of Justice and the Federal Trade Commission recommended replacing the per se rule with the rule of reason, a legal framework that takes market conditions into account. The Supreme Court agreed.

Link to the rest at Fortune and thanks to JR for the tip.

Apple spins impressive narrative of success, but are there holes in the story?

4 November 2015

From The Guardian:

Like clockwork Apple announced their quarterly results on Tuesday and Tim Cook spun out his narrative of Apple’s ever-increasing, ever-impressive numbers. And as usual the market responded by largely agreeing that the skies are bright in Apple’s land. Analysts have declared that the high-flying stock is still undervalued, making it feel like there’s an indefinite upside ahead.

But there are some interesting auguries in this latest set of numbers – details from Cook’s narrative that Apple aren’t emphasizing, that make one wonder if that’s really true. What if instead of standing on the precipice of ever larger successes, we are instead standing at Peak Apple right now? And might that actually be a good thing?

. . . .

Apple is the most profitable company on the planet today, and growing at about 30% annually – with numbers like those, who could see anything wrong?

Well, there are signs, if you are interested in looking for them. The numbers this quarter look great, but the number of iPhones sold actually fell short of the street’s projections. That doesn’t sound so terrible, except that for a number of years Apple has beaten the street’s numbers, sometimes by a shockingly large amount. Apple doesn’t usually simply make its numbers – it exceeds them, and when the question is trends, that matters.

Exacerbating this is that Apple has, through success, effectively become a one-product company. iPhone sales dwarf the rest of its offerings, to a distorting degree – the revenue Apple makes from everything that isn’t an iPhone is easily outweighed by that one device.

. . . .

Apple traditionally breaks out its Mac, iPad and iPhone sales. It used to break out the iPod, but it effectively cannibalized that business with the iPhone, and it no longer breaks them out – it made that change last year. It instead created an “Other” category, which is where the Apple Watch currently lives as well – it means we don’t really know how Apple’s chronometer is doing, but if the news was truly fantastic we’d be hearing about it … and very little was said at the last quarterly phone call.

The iPad is a device Apple probably wishes it had an excuse to hide numbers on as well – it has been shrinking year-over-year for quite some time. Apple’s language on the iPad has evolved – once spoken of as the post-PC device that would change the nature of computing forever, now that it has been selling less and less of them this kind of revolutionary rhetoric has vanished. With Macs holding steady as a beloved niche product at around 10% of their income, it’s notable that services, such as the App Store and Apple Pay, made almost as much for Apple as selling Macs did this last quarter.

. . . .

We now know the iPad wasn’t the next device that changes everything, and increasingly the Apple Watch looks like a similar product – something nice to have, a signifier of disposable wealth and social status, but not necessary in the way that a phone and a laptop still are. If Apple’s second-largest growth area is services, it reminds one of a different company in an earlier time – much of Microsoft’s empire was built out of services. That’s like not what Apple is today, but when much of the company’s energy is spent chasing an initiative such as Apple Music, which has no real innovation behind it but leverages size and marketing to recreate something that already exists … well, it doesn’t feel like the Apple we’ve known. 

Link to the rest at The Guardian and thanks to Julia for the tip.

Why Apple took its e-book fight to the Supreme Court

31 October 2015

From Fortune:

Having maintained its innocence throughout the federal district court trial, which it lost, and in the appeal, which it lost in a split decision, it should surprise no one that Apple is taking its e-book antitrust case to the highest court in the land.

Accompanying Thursday’s 250-page petition was a brief statement to the press:

“When Apple launched the iBooks Store in 2010, we brought choice to consumers and innovation to ebooks. We have always acted in the best interest of customers and content creators of all sizes. We did nothing wrong, and stand by our principles. At this point, our only recourse is to take this to the Supreme Court.”

 There’s no guarantee the Supreme Court will hear the case. And with two strikes against it, the odds of a favorable outcome for Apple are steep.

But that may not matter to Tim Cook and company.

With its war chest of cash, Apple can afford to wage quixotic fights. Especially if they are fights Steve Jobs started. Especially if a large segment of its customer base is inclined to see the case its way.

This is Apple “thinking different” to the bitter end.

Link to the rest at Fortune

For the benefit of those who may not have been visiting TPV during the extended legal battle of Apple and five major New York publishers against Justice Department antitrust charges, this was not a close case, just plain old price-fixing which has been illegal in the US since the passage of The Sherman Antitrust Act in 1890.

Apple may be sophisticated in product design and marketing, but it, and the big publishers involved, were crude and stupid when it came to violating antitrust law.

Apple is turning iOS into an iTunes-like mess

28 October 2015

From ZDNet:

[W]hile Apple can still come up with innovative new features for its mobile platform, it’s not able to integrate these into the platform in such a way as to make them visible to the end user.

Wi-Fi Assist – a feature that switches your iDevice to using your cellular data plan if you happen to be in a spot where Wi-Fi coverage is poor – is one such feature. The only reference to this feature is buried at the bottom on an obscure page under Settings in such a way that only the informed or highly determined will find it.

If you want to find it, you have to take a trip to Settings > Cellular (called Mobile Data in some regions) and then scroll to the bottom of a very long page. Oh, and the default for this feature is on, so when you’re inhabiting spots with poor Wi-Fi, your iPhone or iPad is burning through your data plan.

And this is only one of hundreds of features that are buried behind a thick, near-impenetrable wall of menus and options in iOS.

. . . .

I remember when iTunes was a sleek and simple music player, but over the years it’s had so many new features thoughtlessly bolted onto it that it’s not a long-winded, tortuous muddle.

Unless Apple gets a better grip on how features are added to iOS, this is the future that awaits iPhone and iPad users. And the slip-slide into chaos is already on the way. You can’t just keep on bolting new features into the OS and then scatter those settings far and wide throughout the settings app without creating a usability timebomb that’s will one day explode in the face of the users.

Apple clearly knows that there’s a discoverability problem because in iOS 9 it made the options within the Settings app searchable, but that’s only any good if you know what you’re searching for. That’s not going to be any good to you in tracking down why your iPhone or iPad is burning through more cellular data since you upgraded to iOS 9.

Link to the rest at ZDNet and thanks to Julia for the tip.

Apple Music, iTunes Movies and iBooks finally land in China, days after release of iPhone 6S, 6S Plus

1 October 2015

From the South China Morning Post:

Apple has launched Apple Music along with iTunes Movies and iBooks in China and said the cloud-based music streaming service will roll out on Android phones this fall.

Apple will offer Apple Music subscribers access to a vast library of songs for 10 yuan (US$1.57) a month after an initial three-month trial membership, the company said in a statement.

. . . .

Movies on iTunes will start at 5 yuan for renting in high definition and 18 yuan for buying new releases in high definition, the company said.

Paid iBooks will start at 0.5 yuan.

Link to the rest at South China Morning Post and thanks to Michael for the tip.

Summary Judgment Motions Filed in E-book Price-Fixing Suit

23 September 2015

From Publishers Weekly:

Could another e-book price-fixing case against Apple soon head to trial? After a quiet period, summary judgment motions were filed last week in a case in which three defunct e-book retailersclaim that the 2010 conspiracy among Apple and five publishers to fix e-book prices forced them out of business.

The suit, first filed by Australian upstart DNAML in September of 2013, and later joined by Lavoho, LLC, a “successor” to the Diesel eBook Store and Abbey House Media, formerly BooksOnBoard, alleges that the fledgling e-book businesses were harmed “directly and as a proximate result” of the 2010 price-fixing scheme executed by Apple and the five agency publishers (Hachette, HarperCollins, Simon & Schuster, Macmillan and Penguin). In the retailers’s bid for summary judgment, filed last Friday, they argue that the facts of the case—already adjudicated by the court in Apple’s case and affirmed on appeal—are sufficient for Judge Denise Cote to grant summary judgment to DNAML “on the element of liability.”

The retailers contend that the 2010 agency switch “devastated” their nascent business models, which were based on bundling and other discount-driven promotions.

At press time, Apple’s and the publishers’ briefs supporting their motions for summary judgment were not yet public. Both the publishers and Apple have previously argued, however, the nascent retail businesses were hardly players in the e-book market, and could have folded for many reasons.

. . . .

 Cote held that the retailers could pursue the case. It is “more than plausible that a discount retailer was harmed by a conspiracy to remove retailers’ ability to discount e-books,” she found, adding that the retailers were “indisputably competitors in a market in which trade was restrained.”

Link to the rest at Publishers Weekly

PG thinks you shouldn’t hold your breath on this one.

Will the Supreme Court Take Apple’s E-Book Appeal?

19 September 2015

From Andrew Albanese at Publishers Weekly

As expected, Apple attorneys this week confirmed that they will be seeking a Supreme Court review of Judge Denise Cote’s 2013 verdict finding them liable for a conspiracy to fix e-books prices. The question now is: will the Supreme Court take the case?

“I think, and have always said, that the Supreme Court taking the case is very unlikely,” says Christopher Sagers, law professor at Cleveland State University, and a close follower of the case. Sagers reiterated what he told PW this summer after an appeals court affirmed Cote’s ruling: “It’s a fact case, and I can’t imagine what the circuit split will be,” he said.

. . .

Apple has brought on some major firepower to help with its appeal, hiring Seth Waxman, the 41st Solicitor General of the United States, and a familiar figure before the Supreme Court.

. . .

In June of this year, a three-judge panel of the U.S. Court of Appeals for the Second Circuit strongly affirmed Cote’s “per se” handling of the case, calling the decision “amply supported and well reasoned.” But, in a headline-grabbing dissent, one member of the appeals panel, Judge Dennis Jacobs, sided with Apple.

. . .

If the Supreme Court ultimately rejects Apple’s petition for cert, its liability finding would be considered final under a 2014 settlement with 33 states and a consumer class, triggering $400 million in consumer rebates.

Link to the rest at Publishers Weekly

Posted by Vacation Substitute Blogger Bridget McKenna, who predicts we <i>will</i> see the last of Apple appeals if the Galactic High Court refuses to hear the case.

‘Machine’ shows Steve Jobs’ dark side

6 September 2015

From USA Today:

The latest chapter in telling the story of the late Apple co-founder Steve Jobs’ life focuses on the dark side.

The tagline for “Steve Jobs: The Man In the Machine,” is “Bold. Brilliant. Brutal.”

Spend two hours watching this film, and you’ll see a lot of “brutal.” You might feel pretty icky by the end of the showing.

We know that Jobs is revered as one of the most dynamic business leaders of our lifetime, our generation’s Walt Disney. He gave the world the most beloved tech products of our time — from the original Macintosh computer to the iPod, iPhone and iPad. He could sell them more effectively than anyone or any company.

You see some of that in Gibney’s film.

But when all is done, you walk away learning that the man was a revered monster, horrible to most everyone around him, someone who skirted the system, cheated credits and made his products as cheaply as possible, in inhumane conditions so horrible some responded with suicide.

. . . .

The Jobs family and Apple declined to cooperate with Gibney, so he interviews former Apple execs, journalists, academics and Jobs’ former girlfriend, the mother of his first child, Lisa.

. . . .

Jobs was almost God-like in his press portrayals when he was alive, and even more so since, so it’s natural that Gibney set out to present a warts-and-all treatment of the former Apple co-founder.

Which is fine, but it’s not a complete picture.

. . . .

“He made you want to work with him to change the world,” says Andy Cunningham, who worked with Jobs from 1983-98 as his publicist. “He was not a very nice person, he could be humiliating and demanding, and there was anger involved, but he was an incredibly inspiring person, and that made you want to be on his train.”

Link to the rest at USA Today and thanks to Dan for the tip.

Apple’s mistake was hooking up with the book-publishing cartel

1 July 2015

From Fortune:

An appeal court’s decision finding Apple guilty of collusion with publishers reinforces just how cozy a cartel the industry was.

Apple may be trying to keep the spotlight on its latest foray into the streaming-music business, but it is also still trying to clean up the mess caused by its ham-handed entry into an earlier market: book publishing. A federal court on Tuesday rejected the company’s appeal of an earlier ruling that found it guilty of orchestrating a conspiracy with the major book publishers, in what the court said was a successful attempt to artificially inflate the price of e-books.

As Fortune‘s Jeff Roberts reports, the court found Apple engaged in collusion with what amounted to an oligopoly—namely, Harper Collins, Penguin, Simon & Schuster, Hachette and Macmillan—and that its actions were a clear breach of antitrust law. Apple argued that the deal it cut with the publishers was necessary to blunt Amazon’s dominance in the e-book market, but the appeals court didn’t buy that argument. Judge Debra Ann Livingston wrote:

“Competition is not served by permitting a market entrant to eliminate price competition as a condition of entry, and it is cold comfort to consumers that they gained a new ebook retailer at the expense of passing control over all ebook prices to a cartel of book publishers.”

One reason the court failed to buy this argument is that the major publishers clearly had zero interest in actually competing on price—in fact, they wanted to do exactly the opposite. Their interest in doing a deal with Apple stemmed from a desire to maintain the existing favorable price structure for books, which allowed them to milk the market for high-priced hardcover versions of new novels before eventually releasing cheaper versions. Amazon’s low-priced e-books were a threat.

. . . .

The fact that the book industry was a cozy cartel is reinforced by the court’s description of how the publishers behaved even before Apple came along: They “operated in a close‐knit industry and had no qualms communicating about the need to act together,” the ruling says, quoting from the lower-court decision: “On a fairly regular basis… the CEOs of the [Big Six] held dinners in the private dining rooms of New York restaurants, without counsel or assistants present, in order to discuss the common challenges they faced.”

Since the publishers didn’t compete with each other on the basis of price, the appeals court decision says, “publishers felt no hesitation in freely discussing Amazon’s prices with each other and their joint strategies for raising those prices.”

. . . .

After strong-arming Amazon into accepting the new “agency pricing” model—in which the publishers got to set the price for their books, rather than allowing the retailer to do so—the book industry got exactly what it wanted. According to research by the Justice Department, the price of newly released books rose by an average of 24% and bestsellers climbed by 40%.

It says a lot about the book-publishing business that doing this actually caused book sales to drop fairly dramatically across the board: research done by another expert using data from Random House showed that publishers who switched to the agency model sold close to 15% fewer books than they would have otherwise. So the industry was effectively willing to trade a short-term decline in sales for the increase in power that they got over pricing as a result of the deal with Apple.

Link to the rest at Fortune and thanks to Michael for the tip.

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