Technology That Apple makes money from apps is not news. But it'sthe way it works that has hacked off fanboys and disenchanteddevelopers. Ian Burrell examines how loyalty has been tested to thelimit
Apple is the most respected company in the world, in the eyes ofmoney managers consulted for a poll published this month byBarron's, the influential American financial magazine. In terms ofwealth, it long ago surpassed Microsoft and last month toppedPetroChina to become the second most valuable company on earth,trailing only Exxon Mobil. Meanwhile, a survey of young Britons,Project Chatter, revealed last week that the Apple brand was morefamiliar to them than any other.
And yet never has the business which Steve Jobs has nurtured overthe past 35 years had so many enemies - and not just the othertechnology giants who envy its success. Last week in Barcelona,mobile phone operators lined up to slate Apple for its "walledgarden" approach, which requires them to provide the infrastructurefor its increasingly luxurious apps without receiving any revenue inreturn. Then in Berlin, publishers came forward to say how much theyliked Google's new One Pass system for charging users for internetaccess to their content, while others complained about the Appleoffering, which was unveiled by Mr Jobs - who's still overseeing thecompany despite being on medical leave - the day before and demands30 per cent of all subscriptions sold through its App Store.
The big question is whether this discontent - also prevalentamong app developers - will filter down to the millions of peoplewho have until now had a love affair with the unrivalled aestheticsand sheer functionality of Apple's products; the Mac, the iPod, theiPhone, the iPad. There are plenty who think so. "There has beengrowing dissatisfaction with Apple from publishers, app developersand also Apple users," says Paul Bradshaw, a professor in onlinejournalism at City University London and Birmingham City University.
"I've been a consumer of Apple products for a while and I've verydefinitely decided not to get an iPad. Apple is increasingly closedand controlling and I think with the iPad they've crossed a line toa place where the usability that Apple is so famous for is beingundermined by the lack of adaptability. There are so many thingsthat you can't do with content on an iPad that it makes for quite apoor user experience if you are anything other than a basic user."
In a book published next month, Loose: The Future of Business isLetting Go, the technology writer Martin Thomas will argue thatApple's rigid corporate values are in many ways the antithesis ofthose prevailing elsewhere in modern companies.
"The basic premise is we are getting to the stage now whereyou've got to operate in a much looser way," he says.
"The one big exception is Apple, where it's a highly closed andtight model; they are not collaborative and employees don't blogabout the business." According to Thomas, Apple's success is almostentirely down to the ability of Jobs and his chief designer,Jonathan Ive, to "keep pulling rabbits out of the hat", bydeveloping products of unrivalled beauty and convenience. ButApple's success is part of its problem in a world where "the lifeexpectancy of technology brands is increasingly short", he says. "Iwas in the States recently and walked into a caf where there were 50people all on MacBooks. This is a brand that was built on beingavant garde, obscure and underground and everybody has now got one.The sheer ubiquity in markets like America means they are leavingthemselves open for interesting challenger brands to come through."
Apple introduced the Macintosh with a stunning advertising spotduring the Super Bowl 27 years ago, showing a young woman throwing asledgehammer through a screen in a rebellious act against the massesof drones who used more boring computers. "You will see why 1984won't be like 1984," ran the voiceover. A later famous campaign wasbased on the line "Think Different".
Since the ad where the drone leader sinisterly predicted "Weshall prevail!", a generation and more have lined up to give homageto Steve Jobs and are happily enslaved by his products.
"The challenger brand is now the big daddy and we are all co-conspirators in this," says Christian Barnett, planning director atthe brand strategy specialist Coley Porter Bell. "Apple hasbrilliantly managed to sew us up in this Apple world, but in someways they are the most rigid authoritarian leader brand. It's ourway or the highway with Apple."
According to the media blogger Alex Benady, "the heady feeling ofbeing part of the Apple Liberation Front swept us along" and blindedusers to the fact that "every time you bought an Apple product, theonly place it lead you to was somewhere you could buy more Appleproducts".
He writes: "Buy a Powerbook, you'll need an iPod to go with it.Buy an iPod and the easiest place to fill her up was obviously theiTunes store. It was perfectly ordered integration-in-white foranally-retentive aesthetes. Every Apple product seemed to workperfectly with every other Apple product and imperfectly with anyproduct that wasn't an Apple." But now, as Barnett points out, withthe Apple business model facing unprecedented criticism, there is apossibility that dissatisfaction will filter down to users and "youwonder if there's going to be a bit of a Mac-lash".
Last week at the Mobile World Congress in Barcelona, VittorioColao, the chief executive of Vodafone, said he wanted to avoid"closed systems", an apparent criticism of Apple's business model,while Telefonica launched its own in-network app store, Litmus.
The Financial Times reported on Wednesday that publishers werealso unhappy. The iPad, having been dubbed the "Jesus tablet" forits apparent potential for saving the news media, was being viewedwith greater suspicion after Mr Jobs announced that Apple wanted a30 per cent cut of all subscriptions sold directly through iPads andiPhones. Apple would also withhold information on digital customersunless users agreed to their data being shared with the mediacompanies. In America, the Online Publishers Association (whichincludes Time, Hearst, Conde Nast and Bloomberg) warned that themodel did not provide sufficient flexibility to publishers orconsumers.
Explaining Apple's approach, Steve Jobs had said: "Our philosophyis simple: when Apple brings a new subscriber to the app, Appleearns a 30 per cent share; when the publisher brings an existing ornew subscriber to the app, the publisher keeps 100 per cent andApple earns nothing.
"All we require is that, if a publisher is making a subscriptionoffer outside of the app, the same (or better) offer be made insidethe app, so that customers can easily subscribe with one click rightin the app.
"We believe that this innovative subscription service willprovide publishers with a brand new opportunity to expand digitalaccess to their content on to the iPad, iPod Touch and iPhone,delighting both new and existing subscribers."
The FT has been a pioneer in developing methods for chargingusers for digital content. In a statement it voiced "concerns" thatthe changes might "compromise our business model" and hinted that itmight look to other partners. "We have a fair and open approach forcustomers whereby we offer digital access to FT journalism for oneprice and enable access across multiple platforms for no additionalfee," it said.
"It is necessary to have a direct relationship with the customerto enable this to happen. The iPad and iPhone are two of thosechannels, but it is a market that is developing quickly and newdevices are coming to the market at an increasing rate."
Later that day in Berlin, Google unveiled its One Pass serviceand revealed that it was already working with a range of mediapartners from Associated Newspapers (publisher of the Daily Mail) tothe companies behind Stern in Germany and El Pais in Spain. MadhavChinnappa, Google's head of news partnerships for Europe, is anxiousto emphasise the openness of the relationship.
"It's got to be multi-platform so that it works everywhere theuser would want it to work," he says. "We have had some very goodinterest in it. We think this is about experimentation and we wantedto start with a small number of partners to be nimble in thatexperimentation, get the feedback and tweak the product."
Professor Bradshaw says news organisations are already working onapps that can be adapted for use on multiple platforms, the iPadbeing just one of them. According to Graeme Wood of the media agencyCarat, Apple's innovation has repeatedly allowed it to enjoy a "two-year head start" over competitors, but its share of the smartphonemarket is already "at the peak".
Consumers will stay loyal to the confines of the Apple eco-system, he believes, whilst the user experience remains superior."As long as they are delivering products and systems that are so farahead of the competition, the walled garden is the price people arehappy to pay."
But Thomas, who points to the ailing health of Jobs, isunconvinced.
"Apple has been a triumph of marketing and a triumph for thegenius at the top of the organisation, but it's not in a sustainableposition," he says. "They won't keep pulling rabbits out of hats."
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