Apple under siege: Antitrust probes and product delays ...
Will developer backlash be too powerful for Apple this time?
Apple is accustomed to a few months of over-excited headlines at this time of year, in the build-up to the refresh of its mobile product line, and its iPad 2 should, indeed, turn up next week.
But this week the company is under huge pressure, and negative comments are flying, indicating the new environment in which it will have to work, at least on the mobile side – one where its leadership is being undermined by Android and it will have less power to ignore or dismiss the hailstorm of criticism of its practices.
This week we have seen publishers erupting in fury at its new subscription charges, which have already attracted antitrust probes. Also, there are rumours of a delay of several months to the iPad 2, and a slackening of iPhone sales momentum in the face of Android, plus the ongoing rumblings about the company‘s need to come up with a clear succession plan for ailing CEO Steve Jobs, on his third period of sickness leave.
iPad 2 delays?
The reports of iPad delays come courtesy of Yuanta Securities analysts via Bloomberg, and cite "production bottlenecks" at assembly partner Hon Hai Precision Industry in Taiwan. The research note says that Apple made design changes earlier this month, and these could push the shipment date back from April to June – an increased window for challengers such as Motorola Xoom and Samsung Galaxy Tab 10.1 to get into the shelves ... and the consumers' minds.
"Our checks suggest new issues are being encountered with the new production and it is taking time to resolve them," said Yuanta analysts Vincent Chen and Alison Chen. As a number of Android 3.0 tablets are being launched in April and May, the delay in iPad 2 shipments may give the Android camp a brief window of opportunity. If the two-month delay (from a date that was never confirmed by Apple in the first place) does materialise, Yuanta will reduce its shipments forecast for the device from 30.6m to 23m units. Apple has sold 15 million first generation iPads to date.
In further signs that the Apple machine may be less invincible than it used to be, the iPhone has slipped to sixth place in the affections of the UK, traditionally one of its strongest markets. This is the finding of a mobile tracker survey from uSwitch.com, which shows HTC dominating the smartphone rankings in February to date. The HTC Desire was the bestselling smartphone in the UK on several occasions last year and still tops the uSwitch rankings, followed by its Desire HD upgrade and a third HTC model, the midrange Wildfire. After that comes BlackBerry Curve 8520, Samsung Galaxy S and iPhone 4.
The main factor is the rising number of attractive deals associated with Android handsets, says the tracker, with highly spec‘d smartphones, especially the Galaxy S, being offered for free with two-year data contracts as low as £20 a month. Ernest Doku at uSwitch.com commented: "The competition is taking a huge bite out of Apple's market. And with over 800,000 deals currently giving away a smartphone for free, it's easy to see how consumers are being lured away. HTC has outsmarted the smartphone market by customizing its handsets at a range of price points, as seen by the Wildfire acting as an aspirational Desire.
The subscriptions row
The most serious problem for Apple has been the row over its new content-subscription charging policies and its latest tussle with anti-trust authorities looks set to center on these unpopular arrangements. According to The Wall Street Journal, several US regulators have started to scrutinise the terms and conditions Apple is imposing on iPad content suppliers, and the European Union is monitoring the situation.
Any investigations are at an early stage, and may not progress further, but they are reported to center mainly on allegations of "funnelling". In other words, media firms are encouraged to sell via the App Store, so that Apple can gain its 30 per cent cut of the revenue. The partners are not actually barred from selling in other stores, but they cannot offer a better price elsewhere than in Apple‘s shop, and apps cannot link directly to other content sources.
Re: Think about it
"If you were to go into a shop and pick up a free blank magazine and then you bought all the contents from the publisher direct for a fee then how would the shop benefit? not at all!"
Have you never bought a real, physical magazine? Try it... go to any newsagent, pick up a magazine, pay for it and take it home. You can almost guarantee that, somewhere within its pages, you will find an offer to subscribe to that magazine.
This means that, not only can you subscribe and the original point of purchase gets nothing, but, the subscription will always be cheaper than buying it from the original shop.
Now, can anyone explain how multi-billion-dollar-earning Apple can't go with this business model, but, your local newsagent accepts it and gets on with the business of making a living?
The way Apple works
Apple only gets a 30% share if users buy a sub through the app store. And to ensure that happens they've banned other direct means that an app could use to sign up a customer. An app might previously have directed the user to sign up through a web page or a dialog box. Now it can't. So Apple has graciously forced apps quite capable of managing subscriptions for themselves to give a 30% chunk to Apple.
They've also obliged subscription apps to ensure the App Store price is as low as any offered elsewhere. So there is no way to jack up the app store price to claw back some of the money lost to Apple.
It's horribly monopolistic and par for the course for a platform where Apple has leveraged its position as platform owner to engage in one unfair practice after another.
Those magazines have paid a developer to develop and app to make life easier for Apple Customers.
Apple benefit from that investment because Apple need apps to sell the iStuff.
What your ignoring are the benefits Apple get off the App providers.
You forget the app store was never in the revenue stream, the apps are added benefits to existing subscribers who own hamstrung apple kit.
In your blank magazine scenario you convenientally forget that Apple have been paid handsomely for the blank iMag in the first place.