Response to Jason Calacanis’ Case Against Apple

25 Aug

As many of you may be aware, and as I discussed on VexedTech, Jason Calacanis of Mahalo fame (as well as other ventures and who may be referred to as a new-media socialite), wrote his dissertation against Apple entitled, “The Case Against Apple-in Five Parts” to his email subscribers (link to blog post version). ¬†Below is my response to his email.

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Jason,

I’m glad you opened up this dialogue, because I think there are many in the tech community who think like you, but haven’t been able to articulate it quite as you have.

That said, there’s a fundamental issue I have with most of your argument regarding Apple. If you believe in free market, which I know you do, how do you ignore that the market has spoken and chose Apple?

Let’s begin with MP3: If you recall the dawn of the MP3 player, Apple was not the inventor. There was iRiver, Creative and about 200 little Chinese and Taiwanese manufactures in the space. Attending CES back in the 90s, I remember all sorts of tiny, innovative players. My company even considered marketing a few of these, but in every single interaction with these products, the same issue came up; all these units were a complete pain in the ass to load up and modify music playlists. Companies like Creative were not new to the computer space, yet completely ignored the user experience. All of these companies approached their product/software mix as that of a techie/hobbyist, when a majority of the public couldn’t even figure out how to set their VCR’s clock.

Fast forward to iPod and Apple uses their skills at design and usability to create a compelling combination, using their “digital hub” concept. First and only on the Mac, then a year later on Windows. A year! And yet, no one in the space could come understand what made the iPod sell. In my opinion, this is truly a case of bizarre corporate ignorance. When iTunes launched for Windows, Apple had a tiny bit of market-share compared to iRiver and Creative, who I believe were the leaders in the space at that juncture. Even Sony, the innovator of the Walkman, couldn’t figure out how to make a digital player a compelling purchase. Over and over I would tell people, “it’s the software, stupid!” and yet, year after year I’d attend CES and shake my head in disbelief, watching companies throw millions at product development with no usability advantage.

Anyone could have eaten Apple’s lunch in portable media player space, but they were asleep at the wheel.

So the market spoke and Apple’s player becomes number one. Subsequently, they convince the record companies to sell music digitally–a deal no other organization had been able to close upon previously. It’s a runaway success. Again, the market spoke–even laden with DRM.

If Apple is so evil, why wouldn’t they keep DRM active? Seems to me, DRM would keep people locked in and using iPods if they buy iTunes music, right?

iTunes the app is free and so are many other applications that do similar functions, including Microsoft’s own Windows Media Player. People can still buy digital media players from Sandisk, Creative, Sony and Microsoft, but they stick with Apple. They can buy their music digitally from Napster, Amazon, Real and eMusic. They can buy physical discs at many outlets.

How is their choice to use Apple’s iPod and Apple’s iTunes jukebox application to consume content monopolistic when there are so many other choices?

Your argument against opening up iTunes is not in the interest of Apple. They don’t sell iTunes and they don’t make much on music. They simply sell devices. If you don’t like the device, then you’d use another application. The Zune application doesn’t work with iPod or the Sansa–should Microsoft be called a monopoly for this action? Apple’s building a complete solution and non-techie people really appreciate a computer, no, a consumer electronics device, that actually works without a whole lot of tinkering–just like their DVD Player, television and microwave.

I think the iTunes part of your Case Against Apple is as ridiculous as the continual bullshit EU-legislation against Microsoft for Internet Explorer. Just because Microsoft was better at gaining market share for an OS, they shouldn’t be spanked down for it, unless they used monopolistic practices to get there. Last time I checked, Apple never forced anyone to package iTunes or iPods with other products by giving them discounts or creative incentives. They simply built a better product and the market responded.

The iPhone/AT&T tie-up thing is another argument oft-debated. Here’s what I think many people miss, including Leo Laporte who often preaches that Apple should’ve released the iPhone as Nokia has the N95 (which has sold like gangbusters in the USA, right?): Apple knew nothing about making phones when it began the iPhone project–it needed a carrier partner to reinvent the mobile phone. How does a company, with no experience in the mobile phone space, suddenly develop a mobile device that performs among the best in the business? It has to align with a partner. It needs help with field testing, co-developing software on both sides for a new style of voicemail and creating a quick and easy purchase experience at its retail stores. None of this, particularly the latter, could have been accomplished by simply developing a phone and throwing it onto the market. Look at the G1 for example. The G1 is a phone built by an experienced mobile manufacturer, but lacks on so many levels compared to nearly every other smart phone, that it’s a total dog. Abysmal battery life, mediocre call quality and slow operation are all things I’ve heard about the G1. Adam Curry mentioned that his G1 was a great device, it just sucked at being a phone.

I believe that Apple’s focus was to build the best phone it could–great call quality, great audio, great purchase experience and to reinvent every other stupid element of most mobile phones (that we just sort of accepted for years). With that directive, and being relatively naive to the space, it found a partner in AT&T to roll it out. Who else would they have chosen? Verizon, with it’s nearly unused-worldwide CDMA network? T-Mobile, arguably the #3 carrier in the States? Sprint having both CDMA and being smaller going against it. Verizon also suffers from the “build it our way or we won’t offer it” mentality–by disabling Bluetooth data and “genericizing” interfaces on many of its devices.

Do you really think that Apple truly believed their phone, at $599, would be the runaway success it has become? Steve Ballmer certainly didn’t! Do you think the wizards at Apple marketing thought they would achieve such amazing market penetration in such a short time? Lambasting Apple for choosing a carrier partner in the USA to help it with R&D and subsequent launch, growing pains and all, is ludicrous. The product has only been out for just over 2 years–give ’em a break!

Apple built a better mousetrap, the market spoke once again and now they are a monopoly?

By the way, carrier agreements and locking phones to a particular carrier is nothing new, so I’m not sure why people are so vocal about the iPhone. I can’t take a Blackberry from Sprint to T-Mobile. I can’t currently use a Palm Pre on AT&T. Carriers and manufacturers make these deals to get a product to market and make money (gasp). There are other choices, Jason. The aforementioned Palm Pre, Windows Mobile devices, RIM devices and Android phones do the same thing as the iPhone–they make calls, go on the Web and read and write email. So why is everyone so pissed at Apple?

It’s like a bunch of people in the tech space with entitlement issues, wanting their iPhone and their carrier choice, too. If open platforms were truly better and compelling to consumers, wouldn’t Linux be the number one OS by market share? Wouldn’t Og-vorbis be the choice of audio format? Opening a platform is a techie-guy, community-based ideal, not in the best interest of Joe Consumer, who wouldn’t know what to do with the open-platform to begin with.

The App Store discussion, I’m almost in total agreement with you on. In Apple’s defense, I’m going to cite growing pains and I’m guessing they are as surprised as some of us are regarding what’s transpired with it over the year it’s been around. That being said, I think it’s been poorly managed and needs more transparency, especially with its developer partnerships. It’s just bad PR, too. I keep thinking, “when’s someone in Apple’s PR department going to raise their hand and say, ‘we need to fix this before it becomes a PR disaster’.”

Flash: I think Flash, like all other Adobe products, has become a hog–a resource hog in this case. On Windows or Mac, my fans whir up like crazy when I watch a lot of flash content. If watching Flash means my battery will die in 30 minutes, I don’t want Flash on my phone–I don’t even want the choice. I’d like to see Flash be used less and less in the market–I think it’s not good for the consumer and I bet if you polled consumers, they rather not deal with it. Other than live video, most people I know hate flash content on sites.

Finally, I think Apple is a very sturdily run company. They are not evil, but they are not nice. They have rules and those rules can be quite rigid. (that’s why the App Store seems to go against their “here are the rules” line of thinking). Overall, I think Apple is a well-managed business, that has built a tremendously loyal following, which has snowballed over the last few years. This snowball effect proves that Apple’s following is not because of a bunch of geeky fanboys chanting “Steve! Steve!” every time Apple does something. The momentum gain is due to great products, that work together well–almost easily–and the market has responded. Once they get a taste of, “you mean there are computer products that work well together and have integrated software and hardware?” they end up buying more of those products. The halo effect, indeed.

I don’t agree with everything Apple does, as I don’t agree with everything Microsoft does (really guys, you’re going to stay with this multiple-version of Windows 7 thing?). I’ve spent hours talking about Microsoft’s stupidity and how they are destined to crash. Many of my friends work at Microsoft–the stories are laughable. MS has become an unmanageable behemoth that is so fragmented, few people within the organization know what direction the organization is going. Sort of reminds me of another company that in the 1990s that rested on its laurels and was so fragmented it almost went out of business.

That company of course, was Apple.

Don’t you love the free-market economy?

Thanks for the conversation.

Best,
Paul Salzman

PS: Not to pander, yet I want to mention that I truly respect your business acumen and impressed with you accomplishments.