Dan Lyons takes off the mask and throws down the gauntlet with Apple
I have no doubt in my mind that Steve truly is the cunning monopolist Dan Lyons says he is, but his debut article as Steven Levy’s successor at Newsweek turned out to be a drive-by foot-shooting of dubious arguments and logic.
First, Dan sets up Vudu as an example of the little company trampled underfoot by Apple. “Vudu was winning rave reviews… now Apple is selling or renting more than 50,000 movies a day, and Vudu is laying off staff.”
Rave reviews? Hardly. I thought the content selection on the Vudu was disappointing, the walled-garden approach (i.e. you can’t do much with it once you’ve bought the content) was off-putting, and it suffered from most of the same plagues that put pretty much EVERY other startup set-top box manufacturer — from Akimbo to Moviebeam — out of business. Oh, and not Laptop, CNET, nor MacWorld gave the Vudu anything higher than a 3.5 out of 5.
“[Apple] operates the only store that can sell music, movies and software programs for [the iPod and iPhone].”
Movies perhaps; music, definitely not. There’s plenty of free video and paid video content online, but no certainly no shortage of DRM-free MP3 music stores (like competitors Amazon, Rhapsody, Napster, and even Microsoft’s Zune Marketplace) that sell content that works on the iPod and iPhone.
“Apple sets prices and takes 30 percent of the money.”
On applications. If they’re not distributed for free (which Apple does for no cost). And on music and movies, Apple’s margin is far, far less. It’s been said that Apple gets less than 10% of music, for example — that kind of content is generally a break-even or, at best, mildly profitable effort to sell iPods. In fact, that’s the record labels’ biggest contention with iTunes: Steve won’t let them turn up the price because he wants music to be affordable so iPods seem like a better ecosystem value.
“One iPod accessory maker… gripes that Apple takes up to 75 percent of the sales price, leaving him with zero profit on some of his products when he sells them in Apple stores.”
I used to do technology retail. In fact, my first job was as upgrade / accessories manager at a CompUSA. If Apple gets 75% of the sale price of an accessory at retail markup, the anonymous company in question is probably getting a pretty good deal. Most accessories are marked up more than just 400% — multiply that by four or five, and you’ll enter a reasonable ballpark. Even for stuff like speakers, whose margins are far lower than cases or cables, those numbers don’t sound completely off to me.
“The problem is that if Apple squeezes too hard, some partners may go out of business, harming the ecosystem.”
My editor instincts tell me: this is a great place to give an example. But he doesn’t. Probably because he can’t. I’m racking my brain and even did a little googling to give Dan the benefit of the doubt, but I’ve got nothin’.
“… a woman has filed a class-action lawsuit because her new 3G iPhone won’t always attach to a 3G network, which provides faster wireless Web downloads.”
What Dan doesn’t mention is that Apple gets two, sometimes three class-action lawsuits filed against it every week. I wish I was kidding. Unfortunately for Apple (and the woman who stands to lose a lot of money on lawyers’ fees), for the most part, the issue in question has a lot more to do with AT&T’s early, raw 3G rollout, which tends to lack network capacity. Remember, a class-action lawsuit is no different than any other kind of lawsuit: it’s just one person (or group of people) who think they have a case and decide to sue.
Maybe it’s just me, but I think Dan did a much better job at cutting to the heart of what makes Cupertino tick when he was doing so with subversive parody. Trust me, there are many, MANY things to groan about Apple over — its obsessive control in all aspects of business, its reluctance to try genuinely new markets and products, the way it handles media — but these complaints are not those things.
Update: Dan (kind of?) responded to some feedback, but didn’t really back up anything I mentioned. Although I will grant him, it does get a lot harder when you have to say real things about the companies you cover.