Today’s Wall Street Journal has a big article about a new renegade competitor that is challenging Apple’s App Store and in the process whetting the appetites of IP lawyers. With all due respect to the legal eagles involved, technology and the global supply chain should make this debate moot.
The deal is this: Cydia’s founder is an application developer who, like many, doesn’t see himself as an enemy of the cool company of Cupertino. He does, however, want to have other app developers able to get to market and get paid for their IP. Apple, however, stands to lose some pretty serious margin contribution (30% commission on estimated 2009 sales of $800M, according to Piper Jaffray) and, arguably, a degree of control over the cherished User Experience. The legal issue is that Cydia’s apps work only on “jailbroken” iPhones, a process (or crime) that involves installing software written to modify the operation of the device. Cydia’s founder, Jay Freeman, claims 1.7 million iPhones have installed this software to date. Apple, understandably, sees a copyright infringement. Lawyers see an irresistibly interesting case pitting the little, ironically named Freeman, against the sinister controlling monopoly—almost like the famous 1984 Apple Super Bowl ad being shown in reverse.
The interesting thing for technology and supply chain folks, however, has less to do with the potential precedent-setting debate surrounding this matter than with the design, production, and distribution strategies that a smart company like Apple can come up with to put the issue to bed. Apple is number 1 in our Supply Chain Top 25 (by the way, supply chain professionals are welcome to vote in our 2009 Supply Chain Top 25), and not because of their lean or six sigma discipline. The secret sauce is in how industrial design, software design, and electronic design weave together into an irresistible whole. In recent years, Apple has added another layer to its supply chain innovation—retailing. The Apple stores, not to mention the AT&T distribution deal for iPhones, puts this once totally vertically-integrated computer manufacturer squarely in the business of relating to consumers all the way from concept to profit.
Defending the App Store will ultimately depend more on technical and business decisions made in component supplier collaboration, retail promotion, and technical support systems than decisions in the courtroom. Good lawyers will buy time to let Apple’s strategists work out the best way to protect its cash relationships with consumers. Hopefully, this will also allow creative types like Mr. Freeman to get paid for their creative work. But as the music industry learned the hard way with Napster, IP law is not enough to protect a business—physical supply chains must be part of instantiating control.