Apple: When is Enough Enough?

I’m a big admirer of Apple.  They design incredible products.  They innovate and, beyond innovation, they create new categories and approaches.  They have been richly rewarded for that and are now the second highest valued company in the world, behind ExxonMobil.  You know there’s a “but” coming.  And it’s a big one.  Is it good for anyone (other than Apple) — even you — when they put their hand so deep in everyone’s pocket and when they tell you and me how to do business?  (Full disclaimer:  I don’t own any Apple products.  I have a Sansa MP3 player, because I like the Rhapsody subscription music model.  I actually like the Microsoft Zune subscription model even better, because then I get to rent and own music, but that’s maybe my next device consideration.  I have an Android-based Motorola Droid, largely because I’m on Verizon and won’t buy any electronic device without a replaceable battery, so no, I’m not getting on line for a Verizon iPhone.  I do, however, own some really old Macs and an original, and still working Newton.  And my introduction to the technology industry in 1979 was on an Apple II+.  But I digress…)

The latest flap is over Sony’s e-reader application where Sony wants to enable users to buy books without paying Apple its 30% “tax.”  Apple, however, is insisting that all purchases must be made “in-app”…and as such, Apple wants to take its share of the transaction.

So, let’s get this straight.  Apple owns complete control over whether your application makes it into the app store and if they say no, there’s basically no “legitimate” way for you to get an application on to your phone.  With Android, while the default is to only allow apps to come in through the Android market, a simple uncheck in settings allows you to install applications from any source.  Apple will tell you that’s to protect the user experience.  That’s the same argument the telcos used to exclude devices from their network until, paradoxically, the iPhone came along and led to a new OS-centric model of wireless carriers here in the States and opened up the market to innovation that had been stalled for a decade.  In other words, bullsh**, Apple.

But that’s not enough for Apple.  Once the app has been approved, they want their full share of any revenue generated and won’t allow solutions that circumvent their taxing mechanism, regardless of how consumer-friendly and/or app provider-friendly those solutions are.  If you want to make money on the iPhone, pay us our 30%.  (This one will get really interesting the first time Oracle and SAP get serious about mobile apps.  Clash of the Titans anyone?  But it probably won’t get to that.  Read on.)

If this were any vendor other than Apple, the hue and cry would be so incredibly loud that it would drown out conversation about American Idol.  But Apple, our little darling, gets away scot-free.  Imagine if Microsoft said “any transaction that occurs on a Windows machine will henceforth and forever more involve a payment to Microsoft.”  The antitrust lawyers would move so fast that time would actually go backwards.  But Apple?

Actually, I think this time Apple made a mistake.  A big mistake.  This one is so outrageously wrong that it’s sure to draw scrutiny from all corners.  This could be the proverbial straw that broke the camel’s back.  Apple probably thought “well, it’s only Sony.  Who cares about them any more.”  The real target, of course, is Amazon whose Kindle software is available on all platforms (imagine that, not just iPhone and iPad) and whose sales enrich Amazon’s coffers.  Amazon is a threat to Apple’s control of the ecosystem.  If Kindle is the standard for some forms of digital content, how can Apple own the whole process they way they do with music and, increasingly, video?  If someone is able to stand up to Apple and not pay their ransom, what does that mean for all the others who feel they are being held captive?

So Apple started with Sony.  A trial balloon if you will.  This, however, could instead become Apple’s trial by fire.  What Apple’s trying to do here makes Google’s and Facebook’s privacy intrusions seem like a walk in the park.  Quite simply, Apple is trying to put a meter on the flow of digital content over the Internet.  I’m loathe to draw comparisons to what’s going on in Egypt this week.  Clearly, that’s a real-life saga that dwarves anything we’re talking about here.  However, it’s hard to ignore the parallels.  Enough is enough.  Whether it’s a military dictatorship or a technological one, at some point the citizenry/customers say this has gone on too long and we need to push back.

While I’m not of course predicting such a dire outcome, this could some day be remembered as Apple’s Waterloo.  They’re inviting legislative scrutiny in the United States and around the world.  They’re forcing their “partners” to stand up and revolt.  And most dangerous of all, they’re risking the love and support of their fan base.  If there’s a coordinated effort on the part of content creators across all media types (books, music, video and, with today’s announcement of The Daily, news and information) — heck, even without a coordinated effort — the risk to Apple’s reputation, position (and market cap) is considerable.

Apple is restricting choice, controlling innovation and enriching its coffers.  And it’s not benefiting you.  Enough is finally enough.

I do believe that this week may well have been the Zenith of Apple’s power.  And that’s pretty remarkable to contemplate.  Pride goeth before the fall.

Social Ennui: Presaging the Real Revolution

A friend this morning did it.  He set me off.  His offense:  calling social media “old wine in new bottles.”  (And why is this a pejorative anyhow?  Isn’t old wine better??  At least for my readership.)  I couldn’t disagree more violently.

Before, however, I get into the heart of my rant, let me observe that it’s going to be harder to prove that in 2011 than even in 2010.  Why?  Because I think a state of “social ennui” is setting in.  For those of you who are unilingual, ennui is French for “boredom.”  Gartner would call this phenomenon the “trough of disillusionment.”  Everyone’s on the social media bandwagon now.  You’ve got 1,000 Facebook friends, you’re a social media consultant.  Social media will solve disease, global warming, make us all happier, richer and more content.  Better looking, too.  People are way overpromising and underdelivering.  But, as I’ve observed earlier in this blog, that’s the nature of technological change.  We overstate the impact and benefits in the short-term.  God, is that going on here!  But interestingly, we understate the impact and change in the medium-term.  And I again fully expect that to be the case with “social media.”

Social media is in the still very early stages of something that’s going to end up flipping relationships and changing others.  No, we’re not going to throw out everything we know.  The new rarely ever does that.  Yes, we still ride horses.  But the advent of the automobile changed what and how we use horses.  The most earnest horse supporter would point out “but the Amish still live without the car” or “well, I could use the horse if I wanted to.”  Meanwhile, the rest of us would just humor, or ignore, them.  More importantly, though, the car didn’t just change the way we use horses.  It changed the way we live and work.  Distances were expanded.  And gaps were closed.  The suburbs were created.  At first, people probably observed “now I can get from point A to point B faster.”  That’s the stage we’re in with social media.  Only later did people say “or for the same amount of time, I can now go a lot further which changes where I can live.”  And the really smart people said “this is going to change the nature of our society and I can build products and solutions that capitalize on this newfound mobility.”

So, what is “social” going to change?  PR is in the early stages of changing radically.  I have made the argument for over a decade now that while we called the discipline P-as-in-public-R, it had largely become M-as-in-media-R as the pathway to the public was through the media.  PR firms were evaluated based on their friendships with key reporters and their ability to secure covers on Forbes and Fortune.  The Internet was already in the process of changing public relations (if not the PR industry).  What is a press release, anyhow?  The idea was to tell your story to intrigue a reporter who would write about it and tell the public.  But Google indexes press releases.  The public is seeing that release.  Don’t write for the reporter, who’s overwhelmed by these outreaches anyhow.  Write for the public.  (No, most aren’t even doing that.)

But there’s more.  Social media changes “public relations” in profound fashion.  Not only do you have a direct path to the public, and your customers and competitors also have those same direct paths, your paths to the “influencers” have been augmented in significant ways, and new influencers have emerged who influence both traditional influencers and your buying public.  Yeah, that’s a lot of change.  I won’t get into the whole social media “you’ve got to be part of the conversation” discussion here.  First, that’s a whole other post.  Second, if I hear one more person say “you’ve got to be part of the conversation,” I’m going to slap them.  That’s exactly why we’re suffering from social ennui.  Lastly, the whole discussion is already over-discussed.  You don’t need yet another perspective, however nuanced, from me.

But we still haven’t scratched the surface of the change to come.  Longer term, I am fiercely interested in the emerging discipline known as VRM.  Vendor relationship management.  Its most powerful advocate is Doc Searls, he of the Cluetrain Manifesto (can you believe that was almost 12 years ago?!).  I actually arrived at the concept independently.  I was asked a few years ago to do a presentation on Social CRM.  I talked a little about how “social” provides new insights into the customer relationship equation, providing new insights previously unavailable.  I went on that putting “social” in front of everything reminded me of Internet 1.0 when we put an “e” in front of everything.  eBusiness.  eMarketing.  eThis.  eThat. Until we realize the distinction was no longer differentiating and in fact no longer valid.  (It’s interesting.  Even my spell-checker wants to flag eBusiness as a typo.)  It was business.  It was marketing.  And so ultimately SCRM is just the next iteration of CRM.  But, I hypothesized, the big change came when users flipped the relationship and started managing their vendor relationships the same way the vendors manage their relationships with us.  SCRM leads to VRM.  When after the presentation, someone told me about existing early thinking about VRM, I was both disappointed (I thought I was about to invent my first category) and thrilled (there’s momentum!!).  As an analyst, this is an important moment.  We can do all the theorizing we want but unless someone’s actually building this stuff, it’s not terribly interesting.

While VRM is far from mainstream now (for many, this will be the first time you’ve even heard of the notion), there’s an interesting community growing up around it and some large retailers are dabbling and monitoring.  The concept here is twofold.  One, the big vision for the field, is that tools will be developed that will enable customers to manage their relationships with vendors and that the relationship is ultimately owned by the customer, not the vendor.  CRM will never give a full view of the customer because the customer deals with multiple channels and providers.  VRM is the only way that picture can be developed…and customers will share that view with vendors who offer value in return.  At its most extreme, imagine an easy-to-create-and-manage iRFP (individual request-for-proposal) process.  Yes, it’s hard to imagine and even harder to do but if done, wildly powerful.  The more selfish view for retailers, as I heard another friend express to a major retailer, “what if you knew what a customer was looking for when they walked in your store.  What if you really knew?”  Today, at best you’re making a guess based on past purchase patterns, incentives you’ve provided, etc.  But if you know the totality of what they were looking for, you could sell solutions, not products.  You could upsell.  You could target.

You might argue this is hard and will never happen.  I won’t argue with the first part but I will argue with the second part.  On second thought, I will argue with the first part.  The pieces are all out there.  Assembling them isn’t very hard.  At its most basic level, Groupon and LivingSocial are VRM 1.0.  Assemble large numbers of customers and demand a deal.  That model has been proven reasonably successfully.

You might also argue that “this isn’t social media.”  I don’t want to get into the “this is or isn’t social media debate” but I would say that this is only possible with the existence of social media.  We’ve made it very easy for people to create, assemble and manage their buying preferences and signals.  Wish lists, tweets and Facebook statuses, GetGlue updates, FourSquare checkins and Quora questions can be combined to put together an interesting picture of what you’re doing/thinking.  When meta-tools evolve  to assemble these into coherent solutions, tying together product discovery, acquisition, utilization and support, we will be on to something exciting.

You might argue that consumers are lazy and that they don’t want to manage their relationships.  OK, you’ve got me there.  You’re right.  This is the real stumbling block.  The tools had better be REAL easy to use with REAL economic value in exchange for participation.  This will require serious software work that assembles what consumers are already doing with social media, parsing and assembling it and making reasonable suggestions and solutions out of our piecemeal, bottom’s-up approach to information sharing.

There are already real players in this space.  Look at Kynetx.  I pick them not because they’re totally on point with VRM, although they can and will get there.  I pick them not because they’re necessarily the best solution out there; I haven’t spent enough time looking at vendors to make a Magic Quadrant.  I pick them because my old friend and foil, Craig Burton (VP of Marketing for Novell, when Novell owned PC networking 23 years ago) told me about them a year ago and brought me in to meet them.  The problems they’re trying to solve are real and exciting, and great for us users.

VRM is the next big thing.  Even as social ennui sets in and we wonder what all the hype was about, there’s real change coming around the corner.  This isn’t old wine in new bottles, or at least it won’t be.  If I were a mainstream marketer, I might take the old wine position for now.  I wouldn’t want to try and sell my company on this from the inside right now.  They’d look at your strangely.  (Well, they probably already do that.)  But in my role, as outside provocateur, I’m going to yelling this one louder and louder.  A decade ago, we were yelling that the Internet was going to change everything.  Pets.com and Webvan died.  The naysayers snickered.  And then we went and changed everything.  We’re going to do it again.  Come along for the ride.

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