Exclusivity killed the apple

By Jack Peat, Editor of The London Economic

Apple vs Android

Practising exclusivity whilst preaching connectivity is an expensive mistake to make, particularly as competitors start to offer the same level of functionality without mandatory membership to ‘the club’.

Throughout its lucrative history, Apple has relentlessly raised the technological bar by consumerising software and hardware that has fundamentally changed the fabric of society. Forest Gump and many others have made their fortune from investing in “some fruit company”, but as they continue to revel in their ingenuity they may find their market of millions stranded alone on a desert island as competitors herald inclusiveness over exclusivity.

That competition comes primarily in the shape of the Android operating system. Not only do their smartphones and tablets have more choice in how you operate them and more capabilities in regards to NFC (near filed communication) and the like, but they also herald inclusion as a key facet of their anatomy. A ‘universal sharing menu’ connects you to the world from your device and everything from appliances to software is standardised, which means you don’t have to fork out for extra kit emblazoned in branding every time you want to connect.

According to a research note by Morgan Stanley’s Katy Huberty, the appeal of inclusiveness over exclusivity is showing in the market. For the first time during the third quarter of 2013 (3Q2013), Android devices accounted for a greater share of the market in revenue terms than iOS. Not only has Apple’s share of the smartphone market been eroded, but the iPad share declined to 29.7 per cent from 40.2 per cent during the quarter, which is quite a remarkable loss.

Apple must ease its ‘one brand’ rule

Comparisons between Steve Jobs’ management of the Apple brand and Karl Marx stem from the early days of Mac PC’s in what become known as ‘Tech Communism’. From the manufacturing belt to the retailers and consumers, the global brand has always retained a tight grip over processes. When they shout jump, the world shouts back “how high?”

But its eroding monopoly coincided with China’s relaxation of state controlled policies a little too conveniently to overlook the comparison. The 22,000-word document released three days after the Third Plenum meeting of the Communist leadership in Beijing eased the ‘one baby’ rule and boosted the role of the private sector in the economy.

Apple, founded three years prior to China’s population-control policy in 1976, may also find the time to change their age-old ways is now. Dropping their ‘one brand’ rule and allowing the forces of the free market to reign is the most prudent way forward, rather than waiting for their next technological leap to renew draconian policies.

A slow proprietary death

The Apple Mac began life as a device running proprietary software on proprietary hardware, but soon it began to adopt PC standards like USB, until there wasn’t too much to differentiate between a Mac and a PC. If Apple is to remain dominant in the smartphone/tablet market, they will have to adapt to industry norms and incorporate software from multiple sources and make their hardware less ‘state controlled’.

Their defence of a closed system – that it can ensure best possible user experience, the best possible service, with the fewest number of hiccups and the least hassle to its consumers – is communist at its very core, and lessons must be learned from the world’s biggest communist country in terms of relaxing rules if it is to win consumers back.

If it is to avoid a slow proprietary death, exclusivity must not be allowed to kill the apple.

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