Sunday, January 17, 2010
Concerns with Apple’s business model
When Apple debuted the iTunes Music Store in 2003, I enthusiastically signed up and downloaded music. I had a check card with a US billing address that I made gleeful use of. I loved the store. And yet, something didn’t feel right. It took me a while to articulate what.
I was no longer in the US at that time and my checking account was rapidly depleting. Apple wouldn’t accept an international card. Their licensing terms with the music labels only allowed selling music within the US, they said. Fair enough, but something still nagged.
Apple made (and still does make) excellent computers and iPods, but selling music was a different game. It was no longer a one-time transaction for the hardware, but a regular, sustained interaction for your content fix. And US only. iTunes updates now came thick and fast, but my new Indian billing address was no longer welcome. I could only sit by and watch what I could have had access to. Meanwhile, the rest of the iLife suite and Mac OS X felt ignored while all attention went to iTunes.
I knew what was bothering me then. Apple was seeking a tighter and more direct, long-term relationship with their customers, but in the process ignoring anyone in a market where it was too much effort to set up a relationship. This wasn’t how it was with a Mac. Apple’s computers were severely marked-up in India at the time, but you could get one abroad or pay extra and get it locally. Beyond the barrier of price, you would get the exact same Mac experience as anyone else anywhere in the world. All the software there was for the Mac was available to you too.
This would have been a trivial ’plaint about music licensing, but 2007 rolled around and with it the iPhone, sold locked with a carrier contract, US only. Apple once again not just selling a fantastic device, but making the business deals that ensured a great user experience. Where they had no deals, you got no device.
As of Jan 2010, you still can’t buy music from the iTunes Store or buy an iPhone 3G S in India. Apple can’t work out suitable deals, so you as a customer are irrelevant to them. Meanwhile, you can still buy a Mac at a price that is now nearly the same as in the US, and all the apps you want for it are still available. It seems like Apple will have you as a customer only if (a) they can guarantee the quality of the all-round experience, or (b) are willing to abdicate that responsibility. There’s no middle ground.
And this is the crux of it. As Indians, we’re used to technology that isn’t quite right for us, whether it’s the address book that insists you split your initials into “first name, last name”, the app that wants dates in
MM/DD/YYYY format despite your locale settings asking for
DD/MM/YYYY, or in general software that is overpriced in US dollars, compelling everyone to use a pirated copy. It isn’t for us, but we use it anyway and step around the quirks. We’re cool with that. Now here’s an entity that essentially says, “this is very cool, but it’s not for you and we don’t know when it will be, so you’re not getting any of it.” That’s plain arrogance.
Apple has spectacularly bungled the iTunes Store and iPhone’s presence in India. Everyone agrees that they are due to launch a tablet later this month that will be more of the same, with the device’s experience tightly bound to content distribution. I bet they will bungle this too in India.
If there’s a weak spot in Apple’s business model for a competitor to take a stab at, this is it. But Nokia, that elephant in the room, has lost its mojo. If only Google regarded Android as anything more than an engineering wet dream…