Tim Cook keeps it simple, plays the Walmart card.
Apple can't be regulated as a monopoly, Cook insisted in his CBS Morning News interview, because Apple has minority shares of the global smartphone and PC markets. He doesn't mention smartwatches or wireless ear buds.
But he does push back against Elizabeth Warren's theory that a platform—like, say, the App Store—can be viewed and regulated as a monopoly:
I think some people would argue, if you are selling a good, then you can’t have a product that competes with that good. But ... that’s an argument that takes you down the path that Walmart shouldn’t be stocking an alternative or house brand.
My take: Now that's an analogy to which most Americans can relate! Think of Apple-branded apps, Cook is saying, like Walmart-brand aspirin. Wait a minute... Does that mean Walmart can insist on a 30% cut from every bottle of Bayer's sold from its shelves?
Cue the video:
See also:
I don’t know the percentage, but Walmart isn’t putting that competitive aspirin on the shelves for nothing!
So does this all devolve down to haggling over the amount of Apple’s cut? Hardly Supreme Court material…
Question: Would you rather Apple was achieving “cash neutral” at an average of $200/share or $250/share? IMHO, that is precisely the result of the panic selloff of AAPL over China. Tim Cook is saying there has been no major damage over the trade war and doesn’t expect any, and I believe him. So the net impact on Apple is to massively lower the price of AAPL during a period when Apple is pursuing a serious buyback of it’s stock.
IMHO, that’s a very good thing indeed for long term holders of AAPL.
“…much better for Apple to compete on price and functionality, rather than dictat.”
The complaint I’ve heard is that Apple doesn’t have to tack a 30% fee on it’s apps. Fair enough. But how far do you take this? For many of it’s “apps”, Apple doesn’t charge a dime! Like iOS. I suppose you could force Apple to charge the same amount as any potential operating system would have to charge to make a decent profit. And then Apple could reduce the price of it’s hardware with that windfall profit.
I seriously doubt there are very many examples at all where App Store apps of equal or better quality have been seriously harmed by a similar Apple app. But I’d be willing to be educated about them if I’m wrong.
And lest we forget why we have Apple Maps, recall the hammering the iOS version was taking by Google’s purposeful refusal to upgrade it at anywhere close to the upgrades it was doing for it’s Android version. Apple does have a right to defend itself – and to defend the right of it’s customers to get the very best products possible.
Apple does compete on price/functionality, and it appears that Apple’s target consumers are finding value/functionality in Apple’s products (though priced higher than the competition) they don’t find in competing products.
Besides, price is not a differentiator except for non-differentiated products. My ex-wife (not the wealthiest person by any means) uses a Windows desktop and a BYOC MacBook Air at work and an iPhone/iPad at home. Retiring at the end of this month she is looking at new Macs to replace her MacBook Air (7 years old). She is gravitating toward the iPad Pro 11″.
“One problem comes when Apple removes other apps that conflict with its own default apps. ”
…except that Apple almost always has a very good reason (such as privacy) for doing so. And these two (com)plaintiffs, so far as I know, didn’t have that problem.
PED, I rejoined because it’s so important for you to understand how retail works.
Retailers are shelf space limited. They know exactly how much ($$$) each linear foot of shelf space should generate. One of the most important metrics in retail is revenue per square foot. Apple generates more revenue per square foot than any other retailer in the world. Ergo a position in an Apple Store, or Apple App Store, is very valuable, much more so than in any other retail outlet.
Wal-Mart and all of the other big box retailers (most small ones as well) take a very, very small cut from the retail price of the item sold. To insure retailer profitability the manufacturer/distributor guarantees the retailer X revenue per linear shelf space dedicated to that manufacturer’s products. Could the combination of the retailers nominal participation in the actual sale, plus the shelf space guarantee equal 30%? Depends on the volume (turnover) of the product, but, yes, it could. The deal is that a lot of manufacturers (most?) can’t afford to compete with the national brands for big box shelf space. Does that make Wal-Mart a monopoly? Absolutely not.
Apple’s 30% cut is justified by the demand by manufacturers and developers to get products into Apple Stores and Apps into Apple’s App Stores. That some complain about the cut is a reflection of how little CONSUMER demand there is for their respective products, not what Apple is charging.
That 30% gets the developer access to a unified/central distribution point to the wealthiest mobile consumer demographic that, before Apple’s iPhone App Store, did not exist, forcing developers to create their own online distribution capabilities. Those efforts were incredibly fragmented and difficult to find, with varying degrees of ease of use and version control.
Nokia was, at one time, the world’s #1 handset/smartphone manufacturer, yet apps for its products were scattered all over the internet, difficult to find and even if you found something you wanted it may not run on the version of Symbian (Nokia produced several for different models and/or markets) your handset utilized.
Apple eliminated all those barriers enabling developers to successfully market their respective creations. Additionally, the Apple online Stores are curated to insure purchases are safe to install (privacy/tracking/malware) on your Apple device, a consumer protection that was non-existent before Apple’s App Stores. Apple, as a single handset manufacturer, pays out orders of magnitude more to developers each year than the entire handset app development industry generated in its lifetime before the iPhone.
These suits, while legally (SCOTUS decision) allowed to proceed, are going to go nowhere.
If consumers and suppliers don’t like that, they are most welcome to stop their Walmart relationship and go somewhere else to buy/sell their products, just like consumers and developers are most welcome to leave the iPhone ecosystem and go somewhere else to buy/sell smartphone apps & services (eg any android phone).