Apple's Strategy Is Broken
When Android was first out I remember the group of pundits arguing that Google’s open approach would overtake Apple, just like Microsoft’s semi-open approach had done to Apple previously with PCs. For some reason, I couldn’t believe it.
“Apple’s products are far superior!”, I’d tell Android supporters. “Android users don’t spend as much money on apps,” I’d say, arguing that without profitable app developers a platform is nothing. That was only a few years ago. However times have changed and my views are starting to shift. The shift hasn’t been overnight though. Two primary trends are making me change my views though.
The Tablet Explosion
I have to be honest, I was not an avid supporter of tablets early on. I rushed out to purchase the first Apple tablet, and returned it within a day. I didn’t get it. I understood that it was the future, but I didn’t like the initial version. I was perfectly fine with my laptop.
That all changed with the iPad mini though. The smaller form resonated with me as I was able to type much faster. Suddenly I’ve begun bringing my iPad with me everywhere, and for the first time, I’ve made use of Apple iCloud, where I can delete movies locally without fear of losing access to them in the future.
I apparently jumped on board with tablets with all the late adopters. Now when I walk down the aisle of any airplane I’m flying on, literally everybody is using a tablet. Unfortunately for Apple, they aren’t all iPads. The problem for Apple is that there are an increasing number of high quality tablet devices that cost less and provide everything iPads provide, if not more.
Personally, I love my iPad mini (with LTE), but from what I can tell, most people are perfectly satisfied with lower-cost tablets (based on my random sample of people seated on Virgin America flights around the U.S.). Perhaps that’s because it’s difficult to really make the design of a tablet that distinct from one another. Right now most of them look the same (which does not bode well for Apple considering their strength is design).
The Content Wars
The major turning point for me happened this past weekend though. My girlfriend and I had travelled down to San Diego to celebrate her birthday. We stayed in an AirBNB which happend to have a Roku attached to the television. On Saturday we decided to fire up the Roku and watch a movie. Amazon’s Instant Video and Netflix were the only apps available. I couldn’t watch any of my iTunes purchases.
We went with Amazon, rented a movie, and continued the evening. Not without noticing though that Apple had effectively made it inconvenient for us to consume any of our Apple-bought content. Apple’s lock-in model finally became apparent to me. Buy any digital consumption product, including those owned by Apple, and both Netflix and Amazon will have their apps available.
Buy any non-Apple product, and good luck accessing your iTunes content. In the PC-era, Apple adapted and made iTunes available even on Windows products. However now they appear to be using iTunes as leverage to get consumers to purchase Apple products.
This realization angered me. I wanted to rush out and buy an Android product just to support the open approach. Apple co-Founder, Steve Wozniak, highlighted the flaw of this approach in October of last year.
The bottom line: without making iTunes available to all non-Apple platforms, Apple is cutting themselves off from where the world is headed.
The Problem For Apple
It’s ironic to criticize Apple on their tablet strategy since they are the ones who basically invented it. However creating a differentiated product in the tablet space is incredibly challenging (basically it’s a monitor with the ability to install apps).
While Apple is historically incredibly creative when it comes to hardware design, much of the future revolves around software. In a world where software is king, the open-approach (platform independent) is the way to go. Amazon has perfectly demonstrated this strategy and as far as I can tell, it appears to be working!
I’m not sure what Apple looks like 5 years from now. However if I could pick two companies that were going to dominate the future of consumer technology, I’d have to look to Google and Amazon. The open approaches supported by these two companies looks far more compelling.