Apple to Split into Apple Computer & Apple Electronics
Remember back when the US government tried to split Microsoft apart? They wanted the company to be divided (at the very least) into two separate entities. One that produced an operating system and another that produced applications that would run on that OS. Unfortunately for all that didn’t happen, but for a while there it didn’t look good for Gates & company. Ultimately the government caved and the public never got to experience the software that such a breakup could have effected.
Fast forward to the here and now. I am about to propose that a major player in the computer market split apart, and amazingly enough, it isn’t Microsoft, it is Apple. Yes, Apple computer, maker of the Mac, the iPod and other such wonderful products. Apple, who is currently riding high atop record setting sales. Apple, innovator supreme. Yes, that Apple. It needs to be broken up, and sooner rather than later.
Now, I don’t think it should be split apart along a hardware/software line. That wouldn’t do anyone any good. And this split has nothing to do with licensing OS X or authorizing clones to be built. Rather this split should separate Apple’s computer business from it’s consumer electronic business.
Note: I didn’t say Apple’s iPod business or its media business, because those two things are just pieces of a bigger picture. Do you know what Apple actually sells? I mean, what they really and truly sell? It isn’t computers. It isn’t software. And it most certainly isn’t MP3 players. No, those are just the components most people notice first. What they really sell is an experience. They package up the whole deal and from start to finish they are there, and they make sure everything goes smoothly.
Welcome to the new digital age. This is the time when features aren’t as important as usability. This simple truth has been proven by the iPod’s continuing dominance in its field. Steve Jobs knows this. He also knows that the key to Apple’s success in the future is to ride this trend as far as it will go. And to do that he is going to have to concentrate all his energy on one of two projects, Apple’s computers or Apple’s electronics. My bet is that he will choose the latter.
I think that in the next two years Jobs will put Jonathan Ive in charge of Apple’s computer business so that he can focus his energies on turning Apple Electronics into the premier personal electronics supplier. The iPod is just the tip of the spear. Imagine Jobs churning out every device needed to truly connect the digital home. Apple Electronics can be what Sony should have been had they remained innovative. Give it time and Jobs will allow you to buy any type of media you desire and use it on a custom Apple device, elegantly designed, expertly made and wildly popular.
Give it time and you will see, Apple is destined to become two companies.
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Comments
1. It creates a tying arrangement to ipod.
2. It is probably true to say that they have obtained their monopoly by monopolistic competition.
3. It will only benefit them in the long-term to have an open DRM since when their monopoly is eventually broken up, production will swap to other companies who will otherwise all be using microsoft’s version.
I agree.
Sadly, trying to get any Macheads to see this despite the obvious parallels to Microsoft is an exercise in futility. Apple could own 99% of the market and refuse to license their DRM and you’d still have people arguing that you have a “choice” because of that other 1%.
Apple is about the whole thing, the whole experience, start to finish.
Again, this is exactly the same reasoning Microsoft used to justify tying their browser in the OS.
It’s an okay practice IF you’re not a monopoly. But MS is a defacto monopoly in the OS market. Apple is a defacto monopoly in the portable mp3 market. Tying one product to another becomes a bigger issue at that point.
As for the monopoly thing - pfff! There are countless PMPs out there, working with countless musicstores. You have plenty of options.
There are countless operating systems out there too. Does that mean that Microsoft is NOT a monopoly?
In short they stifled consumer access to competing products by closing off the most effective distribution channels.
Kind of like what Apple is doing by not sharing Fairplay.
Success in the market by itself is not a criminal act.
No one said it was.
But if Apple’s success in either iTMS or iPod is due entirely to a better product, then why not license Fairplay to other music stores or other portables? If their product is so much better and if consumers would choose an iPod or iTMS given an actual choice, then what is the downside? What is Apple afraid of?
Beetlebrox:
When you buy a Windows computer or a shrinkwrap box of Windows, you don’t find iTunes preloaded and all other music download players excluded.
Apple does not have any agreements with any retailers that in anyway prevents the retailers from selling products that compete with Apple.
This is what I mean by saying Apple does not close off its competitors’ distribution channels the way MS does (or did).
Apple is perfectly within their rights not to license Fairplay. Does not licensing Fairplay make the music inaccessible? No. You can go get the music from the other music download services.
But the other download services are so crummy! Well, isn’t that really the reason why iTunes is so dominant? And not because of MS-type restrictive contracts?
What would you say of a law that forces Honda to supply engines to any car manufacturer who wants a Honda engine? And yet you think Apple should be forced to license Fairplay to anyone who wants it?
Apple does not have any agreements with any retailers that in anyway prevents the retailers from selling products that compete with Apple.
Apple’s monopolistic “agreement” is directly with consumers. In that sense, it’s actually more egregious than Microsoft’s. MS bullies other vendors. Apple bullies its own customers.
Apple: “If you want to use iTMS with a portable music player, you have to buy our iPod. No other player with work. And if you want to use an online music store with the iPod, it had better be iTMS. Yahoo and Napster songs won’t play on it.”
You can go get the music from the other music download services.
None of you Apple-apologists seem to want to answer this question: If the mere existence of an alternative disqualifies Apple from being a monopoly, why doesn’t the mere existence of alternative operating systems mean that Microsoft is not a monopoly?
After all, the consumer has always had the choice to buy a Mac or load Linux onto existing PC hardware. If that’s the amazingly low standard you’re applying to Apple, why doens’t it apply to Microsoft?
But the other download services are so crummy! Well, isn’t that really the reason why iTunes is so dominant? And not because of MS-type restrictive contracts?
Again, if that’s the case, then what harm would Apple face by licensing Fairplay? If they’ve achieved a monopoly simply by being the best, then what exactly are they afraid of?
What would you say of a law that forces Honda to supply engines to any car manufacturer who wants a Honda engine?
Jeebus H Cripes on a pogo stick. You drones are so clouded to reality it’s beyond amazing.
This is really simply, folks. Honda does not own 80% of the flippin’ auto market. Do I honestly have to point out such a simple fact that completely invalidates your analogy?
Lordy.
None of you will adequately counter those like Beeb who whine about Apple’s dominance without first admitting that the antitrust cases against Microsoft were _also_ unjust. Without doing so, you are clearly contradicting yourself out of blind devotion to Apple (and hatred for Microsoft).
Those who complain about Standard Oil forget that they lowered the price of oil substantially. Antitrust is not about protecting the consumer - it’s about protecting the competitors. Notice how the majority of antitrust cases are initiated by businesses - it’s a slimy way to get to the top, but they’ll have it coming when their competitors use the same tactics on them.
I agree with you to a large extent, Oskar. And while I do agree with you that antitrust often benefits competitors rather than consumers (as was certainly the case with the Netscape-led case against MS), I do believe that healthy competition ultimately does benefit consumers.
That is not to say that I agreed with the MS antitrust case (I think Barksdale is a bigger dildo than Gates ever thought about being) or that I think Apple should split up. But I do believe that MS shouldn’t dictate to vendors what to include in their installations and that Apple should license its DRM to other stores and other portable players.
Beeblebrox & Oskar:
Remember this. The legal issue about MS is not their OS dominance, it’s the fact that they used that OS dominance to stifle competition in other software markets.
No court, no government is forcing MS to preload” competing OS’s in any Windows distribution. No court, no government is granting Linux or any other OS a guaranteed install in all the Windows boxes out there. What the courts are doing is making it easier for other apps to interoperate with Windows.
As for the small market share invalidating my Honda argument. Here you go again using market share by itself as sufficient grounds for imposing anti-monopoly remedies. Even if Apple had 100% of the market, if it does not engage in the sort of practices that MS engaged in (strong arming the PC manufacturers, etc.) then the analogy with Honda engines holds.
I couldn’t care less if Apple licensed Fairplay or not. In fact they might be better off licensing it and collecting all those royalties. The point is there is a distinction in the behaviours engaged in by Apple and MS with respect to their particular dominant products. (Technically none are monopolies.) And only one of them has been nefarious.
Wll I certainly have a completely different outlook than you guys. I’m not saying DRM is great - but if you buy songs from iTunes, like I have, you’re choosing to bare those restrictions. To start chanting for the government to change the terms of your agreement with Apple after the fact is the most grotesque violation of contract law I’ve ever seen.
Don’t pout now that you can’t play your songs anywhere you want, and so S. Jobs is taking your “liberty” away. If you want to weasel out of a contract, you shouldn’t have signed/clicked it in the first place.
Remember this. The legal issue about MS is not their OS dominance, it’s the fact that they used that OS dominance to stifle competition in other software markets. -tundraboy
As I said in the “Why Apple Doesn’t Like the French” story, every company on the planet uses their current position to their advantage, whether dominant or not. In fact, business would be near impossible if you had to start over after every success, making sure you don’t appear to be “using” your domainance to (God forbid) harm your competitors.
Sorry, let me qualify so it’s clearer:
The legal issue about MS is not their OS dominance, it’s the fact that they used that OS dominance to stifle competition in other software markets THROUGH THE USE OF ILLEGAL METHODS.
That’s it for me on this thread.
tundraboy - Understood, but I maintain that the law is as vague as you are - and is so by design, since the DOJ prefers having the arbitrary authority to pursue anyone it wants to.
As for the small market share invalidating my Honda argument. Here you go again using market share by itself as sufficient grounds for imposing anti-monopoly remedies.
And here you go again ignoring what I’m actually saying so that you can maintain a preposterous double-standard defending Apple for doing exactly what Microsoft did.
The problem here (for the millionth flippin’ time) is BOTH that Apple has a dominant market share AND they are abusing that position with anti-competitive practices. The key is that they are doing BOTH. BOTH. BOTH.
As I said (for the millionth flippin’ time) if Apple did not dominate the market, then it doesn’t matter what agreements they have with consumers or vendors. Likewise, even with a dominant marketshare, that doesn’t necessarily mean they are abusing that they are abusing that dominance.
But in this case, Apple is both.
One issue that hasn’t really been addressed here is marketing, which has a huge impact. What would happen if Apple were to license FairPlay? Other download-to-own stores still suffer the problem of little publicity, and those with competing prices could lose customers if all players supported FairPlay files. How is it again that this measure would prevent a monopoly?
Technically, though, CD sales (even online, as from amazon.com) are still much more prevalent. I recall seeing that iTMS is the only music download venue in the top ten music retailers.
So why is it that Sony can offer some albums made by its recording label, yet only make them available through its online store or in DRMed “CDs” (which, of course, are not really CDs, as they don’t meet the industry standard CD specs), and face no legal ramifications?
Finally, isn’t the fact that Apple refused to even compete in CD rights management a strong argument that it put legality before profitability?
Other download-to-own stores still suffer the problem of little publicity, and those with competing prices could lose customers if all players supported FairPlay files. How is it again that this measure would prevent a monopoly?
Good lord, it’s like talking to a much of zombies with a flippin’ Apple logo tatooed on their heads.
The problem is that Apple has both a dominant market share AND that they have anti-competitive policies.
If Apple were to license Fairplay, you could then argue that Apple is legitimately maintaining its marketshare through consumer choice. If consumers still pick iTMS even though all other music stores sell iPod compatible songs, then that’s fair competition. And if they still buy iPods even though all other music players will play songs from the iTMS, then that’s fair competition.
The goal isn’t to divest Apple of market share. It’s to give consumers a choice of portable music players and online music stores that interoperate with the dominant music store and dominant music player.