Apple's chess moves: Market dominance isn't necessarily the ultimate goal

Apple's chess moves: Market dominance isn't necessarily the ultimate goal

Summary: Some may criticize Apple for not taking the reins of the new App-based Internet to dominate the new market but they forget that dominance isn't always most important for that company.

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The folks over at Forrester Research, including CEO George Colony, have chimed in over the past couple of days about Apple's new subscription model for content app developers. The general conclusion in the Forrester offices: Apple is blowing it.

Colony makes some interesting observations in a post that went up today about Apple's chess moves in this quickly evolving next stage of computing: the world of an App-based Internet. According to Forrester's own research, 39 percent of tablet users spend more time on the Web browser than they do in apps, compared to the 16 percent who spend more time on apps, while 45 percent said they split their time evenly between apps and browser.

Colony argues that the rise of app surfing is creating "formative and critical moments in the development of the App Internet market" where the winners could become dominant for decades. As the dominant player in the app/tablet market, Apple's first moves will have a long-lasting effect on its place in this new ecosystem - and surely Google, with that whole open-source Android platform approach, could come in and take that "dominant player" title away from Apple, just as its done with its smartphone ecosystem.

Colony says that Apple is setting the stage for a repeat of the PC wars of the early 80s - the days where Microsoft left the doors to its development world unlocked while Apple kept a security guard at the door to filter who was allowed to play on Apple's pure playground and who wasn't. Colony writes:

We know what happened -- the world has had to use a lowest-common denominator PC operating system for decades, with excursions into wonderful places like Vista. This time around, Apple's hostile position could result in a 2014 App Internet market that looks something like this: 80% Android, 10% Apple, 10% Other.

Here's the thing: Colony says that like it's a bad thing. Say what you will about Apple's share of the PC market - but the fact is that Apple's lineup of Mac computers are far superior to anything that's running Windows. And increasingly, quarter after quarter, the company notes that its share is growing and that about half of the Mac purchases in a single quarter have been by consumers who switched from Windows.

In terms of business success, there's no argument: Quarter after quarter, Apple blows away everyone - from Wall Street analysts to a growing range of competitors. The company's stock is a darling on Wall Street - and anytime Apple even hints at the mere mention of a news event, the tech world comes to a screeching halt while it speculates and waits for the official word.

But getting back to Colony's suggestion about early winners in the App Internet market becoming the dominant player for decades, he is absolutely right. The thing that he forgets to note is that being the dominant player isn't what Apple is all about. Oh sure, one could argue that the rise of the iPod throws ice all over my argument, but I would counter that Apple wasn't looking to be the dominant player in the portable mp3 player market. It just turned out that way because no one could ever come close to creating the user experience that Apple created. That bar was high - and no one else out there could reach it.

Instead, Apple strives to create quality, premium products - the "best," if you will - and the financial results show that people are willing to pay a premium for the best experiences. How else do you explain iPhone - at least in the U.S.?

If Apple had wanted to own the smartphone game, it could have broken or renegotiated that exclusivity contract with AT&T - which was only holding Apple back because of poor service in many areas - and worked to bring the iPhone to other carriers before Android had chance to lure away potential iPhone owners: guys like me.

Apple could have ruled that world and left everyone else in its dust. But it didn't. Instead, it happily charged a premium for its product, dictated the rules of its app store and created a nice, profitable little ecosystem that produces financial results that continue to wow Wall Street again and again and again.

Is that what a successful business should be doing? A company can make a great product - but if that greatness isn't obvious on the bottom line, how successful has that company really been?

Sure, Apple is taking some heat for that 30 percent cut it wants from content app developers - and maybe that was a bad (read: greedy) call on Apple's part. But this is a game where Apple sets the rules and others play along if they'd like (and they're allowed.)

That comparison to the PC wars of the 80s may be true but for Apple, it seems to have worked out well in the long-run. If the model ain't broke, why would anyone want it fixed?

Also see:

Topics: Operating Systems, Apple, Hardware, Laptops, Mobility, Smartphones, Software, Tablets, Windows

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  • RE: Apple's chess moves: Market dominance isn't necessarily the ultimate goal

    "but the fact is that Apple?s lineup of Mac computers are far superior to anything that?s running Windows"

    Source? Or is that "fact" just opinion? Cus there are others who say otherwise. For instance, it's also a fact that my frankenputer is far superior to anything running MacOSX.
    The one and only, Cylon Centurion
    • Fit and finish, style, design, Apple has everybody beat. Sure, Windows have

      the same processor and memory, but, they are butt uuuugly, and sloppily put together in comparison.
      DonnieBoy
      • RE: Apple's chess moves: Market dominance isn't necessarily the ultimate goal

        @DonnieBoy <br><br>That's debatable again. Take a look at the mid to high end PCs and laptops on the market. ASUS especially.

        PC /= Walmart brand computer. Acer doesn't represent us all.
        The one and only, Cylon Centurion
      • How much money gets wasted on fads?

        @DonnieBoy <br><br>I don't look to my computer or cellphone to be a fashion statement. If they are functional and easy to use, that's what I want, no more no less. I have the same feeling about cars. While I drive a Mercedes, it isn't a fashion statement. It's the only car I've ever owned that has 260,000 miles on the original engine and transmission.
        terry flores
      • They are? Isn't that subjective?

        @DonnieBoy
        You mean that "Sure Macs have the same processors and Memory as PC"
        [i]they are butt uuuugly,[/i] They are? Isn't that subjective.

        [i] and sloppily put together in comparison[/i]. They are? Isn't that subjective, too? None of my PC's have ever fallen apart or anything like that.
        John Zern
      • RE: Apple's chess moves: Market dominance isn't necessarily the ultimate goal

        @DonnieBoy
        Actually it is proven that Windows 7 runs runs better than OSX on Macbooks of all sorts. So what is your claim. Just search on the net and you will find.
        Ram U
      • RE: Apple's chess moves: Market dominance isn't necessarily the ultimate goal

        @DonnieBoy

        Two words-HP Envy.
        MichaelWells
    • RE: Apple's chess moves: Market dominance isn't necessarily the ultimate goal

      @Cylon Centurion 0005
      Try satisfaction ratings from Consumer reports. No company even comes close to Apple.

      If you think your frankencomputer is superior to anything running OS X you're speaking from the minority view of geek's spec-sheet ? ignoring the product's form, elegance, and ease of use.
      BiffTannen1955
    • I've watched Macs run Windows really well.

      @Cylon Centurion 0005, he may have a point. I've seen Macs run Windows 7 better then they run OS X, so he may be onto something there.

      But then again, he's only comparing the low end (Celeron) systems against Apple's top of the line, so of course the Mac will come out better.
      John Zern
    • RE: Apple's chess moves: Market dominance isn't necessarily the ultimate goal

      @Cylon Centurion 0005
      Our shiny new Sony Vaio L Series with Quad Core processor, Blu-Ray, and 24" touchscreen blows away the iMac we bought for around the same price last year.

      The Vaio is screaming fast compared to the iMac which spent most of it's time showing a spinning beachball.
      Stark_Industries
    • RE: Apple's chess moves: Market dominance isn't necessarily the ultimate goal

      @Cylon Centurion 0005

      I just put a second hard drive into two MacPros today. It took me about two minutes.

      [u]http://manuals.info.apple.com/en/MacPro_HardDrive_DIY.pdf[/u]

      The quality of the design starts from the inside. i've never seen another machine like it.
      msalzberg
      • There isn't a company in the world that makes a case...

        There isn't a company in the world that makes a case even approaching the quality and aesthetics of a Mac Pro.

        Please don't link to aluminzed sheet metal Lian Li crap on coasters.
        olePigeon
      • RE: Apple's chess moves: Market dominance isn't necessarily the ultimate goal

        @msalzberg
        I challenge you to change the hard drive in an iMac in under 2 hours. I'll even supply the suction cups.
        dazzlingd
      • I'll do it in 10 minutes...

        <i>"I challenge you to change the hard drive in an iMac in under 2 hours. I'll even supply the suction cups."</i><br><br>I'll do it in 10 minutes, but then again I'm a computer technician.<br><br>Yes, that's 10 times longer than swapping a HDD in an ATX case. But then I'd challenge you to swap the HDD in a Compaq all-in-one.<br><br>I can also swap a HDD in a Mac Pro in about 10 seconds. I'm sure you could do the same with a PC that has hotswap trays, even if they're not as elegant as the Mac Pro.<br><br>The point is each system has its advantages and disadvantages. As it stands, I'll take Macintosh's minor disadvantages in exchange for a very aesthetically pleasing computer. I like the glass, the solid aluminum enclosure, and the intelligently placed and designed ports.<br><br>I also enjoy the fact that when I buy a high-end Macintosh, it <i>doesn't</i> include PS2 ports, parallel ports, and limiting FireWire ports to 400 but not 800.<br><br>I build gaming PCs, and I've yet to find an ATX that is even remotely on the same level of design as the Mac Pro case. Even on websites like Overclock.net you'd find the vast majority of PC enthusiasts pine for a Mac Pro case.
        olePigeon
      • DIY'ers

        @dazzlingd
        "I challenge you to change the hard drive in an iMac in under 2 hours. I'll even supply the suction cups."

        That's funny. Clearly you have no idea who Apple's customers for this all-in-one device are. You like those old guys who used to complain about new cars being so hard to fix, well many people don't like putting their heads inside an engine and figuring out what went wrong. That's OK, Apple knows who they are. Here I'll help you: people who buy iMac's typically DON'T FIX COMPUTERS. OK. These people want to take it home and plug it in and when it stops working they will get a new one if its old or get it fixed by someone who knows what they are doing.
        oncall
      • RE: Apple's chess moves: Market dominance isn't necessarily the ultimate goal

        @dazzlingd

        The difference, of course, is that the MacPro is designed to be user-configurable, the iMac is not. That being the case, the design of the interior of the MacPro is nothing short of brilliant.
        msalzberg
      • RE: Apple's chess moves: Market dominance isn't necessarily the ultimate goal

        @dazzlingd

        I changed the hard drive in my iMac about a month ago. It took about 5 minutes. Granted, I have had the computer apart on a few other occasions upgrading RAM and such, but even a first timer could do it in less then 10. How do you figure it will take more than 2 hours?
        Tigertank
  • You bring up some good points.

    Quality can be valid path to profitability, so can quantity. You rarely find both in the same place.

    Apple's approach will continue to make money for them, as long as the leverage the <b>quantity</b> of edge devices (iPod/iPhone/iPad). If that market share starts moving downward, then it becomes a problem. Competing hardware vendors can be left behind if they all adopt similar proprietary systems, but if they standardize on the same apps platform and market then the volume will exist to attract "quality" apps to both platforms. The other vendors can still compete with Apple on features and price, since the apps can be taken out of the equation.
    terry flores
  • More of the same

    Colony refers to the "lowest common denominator" as if there were some other possible outcome. Anyone who sets out to write an OS that will support thousands of possible hardware configurations featuring doodads from hundreds of vendors, and application software written by vendors from IBM to Midnight Pizza Software Works, is going to end up with a "lowest common denominator" offering. That's the price of giving people all those choices.

    Was that a good thing? Maybe not. A strong case can be made that the 30 years we've spent in the Wintel cul-de-sac have been remarkably free of real innovation. There's been a whole lot of "better-faster-cheaper" incremental progress, but not much to really blow our socks off. When 2001 rolled around, we didn't have HAL 9000. We had Windows XP. Here we are ten years later, and most people -still- have Windows XP. OK, so we're probably pushing back the arrival of The Terminator, but that's all.
    Robert Hahn
  • Virtualization Made Mac What it is Today

    Apple didn't emerge from the doldrums until virtualization made it possible to have your Apple Cake and eat some Windows Cake too:

    http://smoothspan.wordpress.com/2011/02/18/virtualization-made-mac-what-it-is-today/

    Cheers,

    BW
    BobWarfield