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BLOG: Apple: A force against innovation?

Andrew Milroy | June 25, 2012
We are likely to see much more innovation in the Android and possibly Microsoft ecosystem, than we will see in Apple’s closed environment.

Apple is considered by many, to be the dominant force in IT.  Indeed, it is often cited as a driving force for much of the innovation in the technology world. But, comparatively few people consider how it is stifling innovation, overcharging customers and has a business model that is unsustainable.

In its 21st century existence, Apple has consistently shown the ability to launch attractively designed products just as the introduction stage of the product lifecycle is about to enter the growth stage. Apple has shown the ability to launch products just as they are 'crossing the chasm' and drive demand in the early growth stage. Apple did not invent digital music players. MP3 players had been around for some time before the launch of the iPod. Similarly it did not invent smartphones or tablets. In hindsight, it timed its product launches superbly.

Apple has also created a proprietary ecosystem around its devices. Customers buy music and video content as well as apps from iTunes. All have been vetted by Apple.  This tethers the customer to Apple's ecosystem and, in many ways, stifles innovation. No application or media content can reside on an Apple device without Apple's approval. In such an environment, it is difficult for innovation to flourish beyond boundaries set by Apple. It decides what will be designed and produced for Apple devices.

Android not a 'walled garden'

Android, Google's operating system, is not a 'walled garden'. Anyone can develop any app for Android. This is now the leading smartphone operating system and it will continue to increase its market share. In the world's largest smartphone market, China, the Android model will dominate. Apps need to be customised rapidly for local contexts and in many markets, most notably China, paying for digital assets is not likely to become mainstream.

Apple does well in China today because its products are viewed as status symbols, much like BMWs, among the nouveau riche in the world's emerging markets. But, ominously, many Apple users in China jailbreak the devices and run Android on them, quite simply because there are more suitable Chinese-oriented apps available in alternative ecosystems. As smartphones become mainstream devices, ecosystems with limited local content and that charge money for digital assets will struggle.

Furthermore, ecosystems that offer devices at multiple price points will succeed. There are multiple Android devices available at multiple price points and produced by multiple handset manufacturers. This gives Android and its handset makers a further competitive differentiator. Apple charges a premium on one or two models and arguably does not offer good value for money to customers outside the world's highest income brackets, whereas in emerging markets, Android is set to rule.


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