Apple No Longer 'Thinks Different'

Remember when Apple thought different? They wanted us to see them as being like us, their customers. They wanted us to believe we had similar values, goals and aspirations. They wanted to convince us that, with their help, computers would be different, life would be different, and we would be different. We would be happier, more productive, more fulfilled.

Curiously, it's true that one time Apple definitely embodied the hacker ethic. They were techies, they really grokked design, they did real engineering, not that knife and fork code mangling $#!~ that Microsoft did (does).

ANOTHER TAKE: It's Apple's world, we just click in it

Apple courted and supported developers and they loved their users.

Apple was on the side of the angels of tech and their PR machine played that image for all it was worth. They pitched the company's humble roots, their cleverness, their innovations, and that aura of nonconformity.

Now, I loved Apple and I still want to like Apple, I really do. I love my Mac, I love my iPad and I love my iPods. But Apple keeps doing things that I find to be so amazingly arrogant and manipulative that I no longer feel good about the company. In fact, I now see them as -- well, it has to be said -- I see them as untrustworthy and grasping.

But what a transformation! And it's all driven by money.

In the 14 years since Steve Jobs returned to the company and Apple challenged us to think (and buy) different, the company's share price has gone from just under $40 to over $360 while the company's valuation has rocketed from about $7 billion to just over $312 billion!

Sure, Apple's been very successful, but their ethical downfall has been pretty transparent and I blame iTunes.

Prior to 2003, the year Apple launched iTunes, the company was ... well, hardly humble ... but they were rather more modest. They believed in themselves, sure, maybe with what you might call "a passion," but their arrogance was centered on the idea that they made better products and served their customers better than the competition.

Contrast that profile with today's Apple: Totally immodest, buoyed by a legion of overwhelmingly supportive fanboys, flushed with more success than they ever dreamed of back in those pre-iTunes days, and apparently forgetting they once thought that we, their customers, were to be respected. Today's Apple treats us, their customers, like cash cows while developers and publishers are treated as pawns in their marketing games.

What has dismayed me so much is Apple's recent decision regarding e-book reader apps: In September last year Apple changed the developer terms and conditions such that, without major economic and functional changes in third party apps from the likes of Amazon and Barnes and Noble, the only book reader app left after June 30th this year will be Apple's own iBook.

Now Apple has always been rather eccentric in what software they allowed in the App Store. Some of the apps they denied seem inexplicable (for example, Apple does not allow apps that involve prizes or competitions) while others are curiously restrictive (no beta software), or overly prudish (anything that's even slightly risqué won't make it into the App Store).

On the other hand, Apple's high mindedness goes out the window when they allow apps such as "STD-Virus Scanner Gag" which "scans" a finger placed on an iOS device (of course, it doesn't really do so) and produces one of a number of spoken fake diagnoses that include herpes, extraterrestrial virus, gonorrhea and chlamydia (this pathetic attempt at humor can be yours for only $0.99 ... which is $0.9999999 too much).

Anyway, the e-reader issue has a bigger potential impact than any of the other controlled categories of software because of its impact on both publishers and users.

The impact on publishers is enormous because, while Apple has always required that apps that provide in-app purchasing for any product use the iTunes purchasing system (which takes a cut of the proceeds), Apple is now requiring that apps that send users to an external Web site for purchasing must instead offer the option of in-app purchasing via the iTunes purchasing system.

This won't go down well with publishers because Apple demands a whopping 30% of the end user price as a commission! Given that book publishing margins are tight anyway, this means that publishers will have to make iOS-derived pricing noncompetitive because their own e-books will be more expensive than either Apple's (if the title is available) or than their own pricing outside of the Appleverse, or they'll have to choose not to play at all on the iPhone, iPad or iPod.

There's a good reason why publishers may well choose not to play, as summarized by a friend of mine:

"iTunes takes a 30% cut of e-book sales. Under the Agency Model that went into effect last April when the iPad was released, the publisher gets 70% of the selling price of the e-book. It doesn't take a math genius to figure out that if Apple is taking 30% and the publisher is getting 70%, there's not much left for Amazon, Barnes & Noble, Borders, Books-A-Million, Kobo, Google, Sony, etc.

"The situation with non-Agency publishers is fuzzier but probably worse. The e-book stores typically pay about 50% of list price for those, then sell them at a significant discount off list (sometimes below cost). Giving Apple 30% of the selling price is going to be a big problem, regardless of whether prices have to be jacked up or the e-book store has to take substantial losses on each e-book sold.

"Apple is now [saying] that they will be retroactively applying this requirement to the existing e-reader apps If so, it's possible that, for a while at least, the only e-reader app available will be iBooks. The question for Amazon, B&N, Google, etc., is: Do they want to go to the effort to modify their e-reader apps even if they can't make a cent off of many (most?) of the e-books that they sell for those apps? It's possible that some of those e-reader apps will never come back.

"A conspiracy theorist might think that's Apple's plan. Their iBookstore hasn't been well-received; most iPad/iPhone/iPod owners buy their e-books elsewhere, and nobody else can buy from iBookstore."

So, the bottom line is that Apple is either going to get to financially squeeze the publishers and the booksellers and, as a consequence, squeeze the users of iOS devices, or they get to "pwn" the user base by making their bookstore the only game in the Appleverse.

Either way, today there's little about Apple that "thinks different." It's the same old corporate greed that every company that dominates a market winds up embracing.

Gibbs loves hating Apple in Ventura, Calif. Your emotional conflict to backspin@gibbs.com.

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