0 Web 2.0 & Apple - How do they fit?
Apple’s nebulous .Mac services were introduced in What the Heck is .Mac? Here, I’ll present why Apple is uniquely poised to jump into the Web 2.0 brouhaha and deliver services worth the price of admission.
There are various clever ideas floating around the Web as it turns 2.0:
- Sites like Digg and Slashdot present and filter interesting news and information and provide a discussion forum.
- Sites like Friendster, MySpace, LinkedIn and Tribe create networked community.
- Sites like Yelp, Amazon, and Epinions present reviews and user feedback on products and services.
- Sites like Craigslist provide community forums, listings and other user generated information.
- Sites like Del.icio.us, Plaxo, and Flickr provide ways to share contacts, bookmarks and photos.
- Sites like eBay, and PayPal let you buy, sell and earn reputation as an entrepreneur.
These examples often use or rely on variety of ideas associated with new developments on the web: rich Metadata tagging, social networking, earned reputations, identity security, privacy, and inventive business models.
The problem with all these sites is that to use any of them, you need to log in and create a unique profile. As you navigate the various social networks, discussion forms, and sharing systems, it becomes frustrating that you can’t take your reputation from one place to another, that you can’t update all those profiles centrally, and that you can’t really prove you are
SuperDan2006xyz across the various Internet properties, nor can you take much of what you create to use offline. Boo.Apple, like no other company on Earth, has a solution to those problems because of their unique positioning in a number of areas. Here’s part one of why: the first five reasons.
#1 Apple has a loyal network of users
Apple has more than 15 million Mac users and something like twice as many users who’ve bought an iPod. A huge chunk of those have signed up for an Apple ID. They’re logged into the same backend system that .Mac uses; the accounts are functionally identical.
Apple IDs are used to buy iTunes or leave recommendations on songs and TV shows in the iTMS. They’re also used in Apple’s support forums and in the company’s developer and certified technician networks. They’re used by iChat to give presence information over the AOL IM network. So why hasn’t Apple leveraged their tremendous network of interrelated Apple IDs? They certainly need to start, but they’re in a unique position in the industry of having an active network already. Putting that network to use is the easy part, as I’ll point out later.
Google, Microsoft and Yahoo! are all desperately trying to build such a loyal network of users, but their willingness to shove ads in their users’ faces at every possibility, their shameless disregard for users’ privacy, and their culpability in shipping off political minorities to torture or death sentences in order to court the favor of the Chinese government all make corralling and retaining those unsuspecting pawns that much harder.
#2 Apple owns platforms: an operating system, desktop applications, the iPod, and a web browser
Nobody else has a desktop operating system apart from Apple and Microsoft. Google and Yahoo! can either shake hands with an evil empire who would prefer they just die, or face trying to turn Linux into a desktop mere mortals can navigate.
Owning a platform gives Apple a key head start in developing integrated services. Apple is the only company that doesn’t have to rely on Microsoft for distribution on the OS layer.
Beyond the OS, Apple has also managed to build a successful suite of applications for consumers with iLife and iWork; a large suite of Pro Apps, including Final Cut, Logic, Aperture, Shake and Motion; built a lush ecosystem around the iPod; and maintains a significant foothold in the installed base for web browsers with Safari.
Apple has already leveraged some integration between Mac OS X, iLife and .Mac, but there’s so much more they can do. And I’m getting to that, if you haven’t guessed yet.
#3 Apple makes money on hardware
People don’t like to pay for intellectual property like software or other intangible ideas; they like to buy stuff they can see. Apple sells hardware that people want. Microsoft primarily sells software licensing. It’s hard to like someone who is selling you an artificially crippled bit of software that unlocks to reveal its true potential only if you pay more money for it.
It’s not that software is a bad business model, but simply that human nature favors getting something real in exchange for your money. People who wouldn’t steal a book or CD will pirate music or sneak into a theater, because stealing is associated with tangible loss; IP theft is a hard idea to communicate, or apparently, to care about.
The corollary is that the harder big companies try to stem their IP “losses,” the more evil and greedy they look. After benefiting from piracy to build their monopoly, Microsoft’s Windows Genuine Advantage program and onerous product activation schemes are hard to stomach. Schemes to lock down software and media using DRM are seen as invasions of privacy and fair use, and hardware restrictions like the broadcast flag and DVD region encoding are similarly unpopular and hard for consumers to understand.
On the other hand, Apple can sell spiffy Macs and iPods, and bundle them with “free” software that is highly integrated and works great. Microsoft can only ever inject itself in as a middleman with software licensing to sell for someone else’s hardware. Other software companies similarly have to find an acceptable model of some sort for funding the software that consumers are so loath to pay for; Google and Yahoo! shove ads at their users to maintain “free” services. Who would buy Gmail if it cost money? It’s simply hard to get users to pay for ideas.
Combined with #2, Apple has not only a distribution platform and better integration than anyone else can provide, but those innovations are also paid for by hardware sales.
#4 Apple has a software store that works as a web service within a real application
Apple does sell software of course. In fact, Apple has been the only company to figure out how to sell digital media successfully. The iTMS is a software store, selling songs, TV and books in a end to end solution that involves hardware in a way that makes it palatable for consumers.
People who formerly bought CDs have demonstrated no interest in paying for MP3s, or WMAs that are tied to a PC and vanish if the subscription dues aren’t paid. Those same consumers are happy to buy iTMS tracks. Why?
Because music ends up in iTunes or on their iPod and plays the same as CDs would. They can even burn to a mix CD to play anywhere. Linux users think consumers are concerned about flawless fidelity and unfettered political ideas about freedom, but people really just want their stuff to work acceptably. Apple sells the gear, and software just makes it work.
That’s why nobody else can operate a music store: everyone else is competing with the other players in the game, trying to sell software licenses, subscription fees, shove ads, and ship hardware in spite of each other, instead of as a team. In the end, the components simply don’t work together very well.
Microsoft is trying to sell its WMA software platform to the competing stores and hardware makers, but have ended up herding cats. Microsoft is both powerless and unmotivated to control quality or enforce interoperability the way Apple can. Of course, it doesn’t help that Microsoft’s WMA software is greed based crap, or that hardware makers frequently fail on their end to deliver the reference designs Microsoft intended. It is simply impossible to create a tightly integrated system when the individual players are working at cross purposes.
The second part of the problem is that every other music store operates as a web site, not an embedded web service within a real application. Real applications are always preferred to web interfaces, which go offline, lose state, bungle navigation, and are generally clumsy. Ask an office worker if they’ll trade in their Outlook for webmail. Yeah right!
#5 Apple has a retail store presence
Gateway and Sony both fell on their face trying to build a retail store presence. Microsoft’s short lived store in the San Francisco Metreon was more oppressively boring than Steve Balmer; there weren’t even any flying chairs or sweaty monkeys dancing, just rows of software licenses for sale. Yawn! At one point, they tried to turn it into a museum by sponsoring art displays fashioned from Microsoft Mice. Wow. A couple blocks away from the Sony-Microsoft Metreon mega-failure, you’ll find the San Francisco Apple Store, which is always full and lined with buyers.
Just as consumers prefer buying hardware over the idea of software licenses, they prefer to be face to face with trained company reps rather than on the phone to India. That makes a huge difference in how Apple is experienced by its customers. Not only are Apple’s retail stores advertising Apple in the best possible light, but they’re making Apple money, so they can afford to lavish attention on their customers with the Studio, Genius Bar and theaters. Along the way, they’re creating a high priest class of Apple fanboys and handing out perks like free Internet access and free training sessions. Who else can match anything close?
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