Bad Apple: Five Classic Apple Marketing Tactics That Lock You In

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Locked in to Apple
Once you enter the Big Tent of Apple, it's exceedingly hard to find the exit.

Over its 33-year history, Apple has consistently elected to limit consumer choice, creating a situation known as "lock in." As soon as you start buying stuff from Apple, you'll find it difficult to move to products made by someone else without losing everything you've already paid for.

Of course, many people don't want to leave Apple's tent. After all, it's filled with iPhones and MacBooks and other cool stuff. And Apple is hardly the only business that tries to lock in customers--wireless carriers (including Apple partner AT&T) are probably the worst offenders. Nor is Apple the only vendor to use one product as leverage to push others onto consumers (let's declare Microsoft the champion there).

But no other technology company exercises the same amount of control over what its customers can and can't do with the things they bought. Part of this approach is due to Apple's deep belief that a closed digital ecosystem with limited options benefits both Apple and its customers. Part of it is due to an all-consuming desire for control on the part of the ringmaster, otherwise known as Steve Jobs.

The bottom line: Apple makes great products, but its marketing practices limit your choices and cost you more money. Here are five classic examples of how the company has done it.

1. iPod and iTunes

When the iPod arrived in fall 2001, followed by the iTunes Music Store in spring 2003, few early adopters realized the commitment they were making by buying their media player and their media from the same source.

Due to Apple's digital rights management setup, until April 2007 any music you bought from iTunes could play in only three places: on an iPod, within registered iTunes software on a limited number of computers, or on certain Motorola phones (that nobody bought).

If you wanted to move the songs you bought at a buck apiece to a cheaper player from a competing manufacturer, you had two options: an onerous process in which you burned your songs to a CD and then reripped them as MP3s, or quasilegal software that essentially did the same thing using your hard drive instead of a disc.

The last vestiges of DRM-protected music vanished from iTunes two years later. Apple offered to remove the DRM from the music that iPod owners had already bought, as well as to bump up the sound quality, for an additional 30 cents a track. (Gee, thanks, Apple.) Of course, movies and TV shows sold on iTunes are still copy-protected and cannot be legally converted to a DRM-free format.

Locking content to hardware cost consumers money--especially when first-, second-, and third-generation iPod batteries began failing. Consumers could either shell out the cash for a new iPod or pay Apple as much as $100 (plus shipping) to put a new battery in their existing device. In June 2005 Apple settled a class-action suit filed by iPod battery victims, offering a $50 voucher toward future Apple purchases (excluding downloads) and another year of warranty support.

Over the last three years, consumers have filed multiple antitrust suits against Apple alleging that the tight connection between the iPod and iTunes constitutes a monopoly; these have been consolidated in a federal class-action suit currently under way in Northern California [PDF].

Daring Fireball blogger John Gruber acknowledges Apple's lock-in advantage with iTunes, but echoes what many Apple supporters often claim: The company's hands are tied by content providers.

"When you buy a movie through your Apple TV, and the movie is in a DRM-protected format that will not work on home theater systems from other companies, it makes you less likely to switch," he says. "But what choice does Apple have? They can sell DRM-protected movies, or they can sell no movies at all."

Actually, Apple has at least two other choices. It could license its Fairplay DRM technology to other hardware manufacturers and allow multiple devices to play media purchased on iTunes, as Amazon does with its video-on-demand service. Or it could use its market power to push for one of the industry-wide DRM schemes proposed by Disney, Sony, and other parties. (Given the close ties between Steve Jobs and Disney, though, Apple might eventually endorse the digital rights scheme that the Mouse House favors.)

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