Apple Claim Chowder: Business Models

With an Apple Event fast approaching, I’m reviewing critiques of past Apple Events to see how accurate they were. Turns out, not very. Critique is needed and welcome. Repeated errors? Not so much.

Business Models

No one gets more bad advice than does Apple. Apple went from near-bankruptcy to nearly the largest company on earth, all the while being told each step of the way that they were doing it wrong. And now that Apple has done the equivalent of winning ten Super Bowls in a row, have the critics relented? Of course not. Their advice to Apple, as always, is that the only way for them to remain successful is to do the exact opposite of what made them successful.

It’s hard to say who gets criticized the most, the successful person, or the failure but it’s mighty close. ~ Joe Moore

This final section of my Claim Chowder Series focuses on business models. Apple has done all right while employing their own, unique, business model. However, no matter how much success Apple has, the critics insist that Apple is doing it all wrong.

3d joker - puppet, holding in a hand four aces


Apple has done all right while employing a vertical (closed) business model. The critics insist that Apple is doing it all wrong.

There’s something problematic in the idea that platforms with 1.5 billion users and 100 billion+ 3rd party apps installed are ‘closed’. ~ Benedict Evans (@BenedictEvans) April, 2014

…Apple’s ability to sustain an innovative edge over Android will be reduced to months – if that. The collective development opportunities made possible by the fact that Android is Open Source will see to that. ~ Brian Prentice, Gartner, 21 September 2009

Apple will have to make a strategic decision on whether to open up the platform. Ultimately a closed system just can’t go that far. ~ Patrick Lo, CEO, Netgear, 31 January 2011

It’s quite likely that Apple is going to commit the classic Apple mistake of trying to be too controlling and therefore the market gets away from them and people start to move towards Android. ~ Jimmy Wales, Co-founder, Wikipedia, 8 March 2011

Microsoft will ultimately muscle-out Apple as the leader in smartphones and tablets. Apple’s insistence on controlling every aspect of both its software and hardware puts it at a disadvantage to a more flexible Microsoft. ~ Charles Sizemore, Sizemore Capital, 29 Nov 2012

Average Sales Price

Apple has done all right when it comes to maintaining a high average sales price. The critics insist that Apple is doing it all wrong.


Phones and tablets are inevitably following computers into commoditization. Apple may still charge a premium for its products, but it will ultimately have to settle for a relatively small market share as a result, just as it has in computers. There is also a limit to that premium – with the likes of Google and Amazon setting the pace, the respective days of $700 smartphones and $500 tablets are numbered. ~ Peter Nowak,, 28 January 2013

You only find out who is swimming naked when the tide goes out. ~ Warren Buffett

The strong inference from Qualcomm’s earnings report is that smartphone prices are falling so fast that the new low end Apple iPhone is not likely to be competitive. ~ Nigam Arora, Contributor, Forbes, 25 April 2013


Apple has done all right when it comes to maintaining high margins. The critics insist that Apple is doing it all wrong.


The whole sector is priced as if the average player would sustain 25 per cent margin in eternity. It’s bordering on absurdity. This will end in tears. ~ Per Lindberg, MF Global Ltd, Feb 2009

Competition is compressing Apple’s margins. ~ Glen Bradford, Seeking Alpha, 10 July 2011

Apple is focused on defending the high end of the market, and that is becoming harder to do each year. Competitors, such as the Galaxy from Samsung, are starting to catch up. I think it is inevitable that the margin pressure increases. ~ Mark Newman, Director of Mobile Research, Informa Telecoms and Media, 26 Feb 2012

It shows (data chart from Nomura Holdings) that there is no historical precedence for Apple’s gross margins. Check this out. It shows gross margins for Nokia, RIM and Apple over the past ten years and it comes to us from Nomura because it believes the iPhone’s margins are likely 10% above the sustainable levels. ~ Sara Eisen Bloomberg, 15 Oct 2012

Margins are shrinking. ~ Howard Gold, MarketWatch, 1 February 2013

In closing, the price cuts for the iPhone 5c and the shuffling of the iPad lineup do little to address the company’s core problems of its dwindling market share, slower growth, and contracting margins. ~ Leo Sun, Motley Fool, 19 March 2014


Overheard in 2001: “Who would pay $399 for an Apple music player?!?” ~ kirkburgess (@kirkburgess)

Apple has done all right when it comes to charging a premium price for their products. The critics insist that Apple is doing it all wrong.

In Q2, Apple made 68% of mobile device OEMs’ profits (65% in q1, 53% in Q2 13). Samsung – 40% (41% q1, 49% q2 13) Source: Canaccord Genuity ~ Daisuke Wakabayashi (@daiwaka) 8/5/14


The market is already saturated with popular [phones] that are virtually free to consumers. The perceived zero cost of a cellphone like the Motorola RAZR is a serious impediment. ~ Ashok Kumar, Capital Group, 30 July 2007

Free things cost too much. ~ Talleyrand

Bleier believes Apple will have to dramatically lower iPhone prices or risk losing market share to Android-based phones and/or RIM’s Bold, which he believes will be a big hit this holiday season. ~ Scott Bleier,, 24 Oct 2008

Pricing to gain market share simply for the sake of market share is a chump’s game. ~ Bill Shamblin

Who’s going to buy an Apple iPad? Well, not you or me, anyway – not this version, not at $600-800. ~ Bruce Beris, bruceb consulting, 4 February 2010

It’s far better to buy a wonderful product at a fair price than a fair product at a wonderful price. ~ paraphrasing Warren Buffett

Americans now are buying more Android phones than iPhones. If that trend continues, analysts say that in little more than a year, Android will have erased the iPhone’s once enormous lead in the high end of the smartphone market. ~ Miguel Helft, New York Times, 17 October 2010

iPhone owns the US market. ~ Benedict Evans (@BenedictEvans) 7/22/14


From July 2012 to July 2014, iPhone share in the U.S. went from 32.4% to 42.4%.

Problematically, the Android competition is just as expensive as the iPad lineup, so Apple obviously feels free to continue gouging consumers on iPad pricing. ~ Paul Thurrott, Windows IT Pro, 3 March 2011

Everything is worth what its purchaser will pay for it. ~ Publilius Syrus

If an exchange between two parties is voluntary, it will not take place unless both believe they will benefit from it. ~ Milton And Rose Friedman

No one had a product that could generate that kind of excitement until HP sparked a frenzy when pulled the plug on its poor-selling TouchPad and slashed the price to $99. It’s an ugly way to go, but sacrificing profits might be the quickest way to rack up big revenues, and blunt Apple’s momentum. ~ Brian Caulfield, Forbes, 30 Aug 2011

There is hardly anything in the world that some man can’t make a little worse and sell a little cheaper, and the people who consider price only are this man’s lawful prey. ~ John Ruskin

Amazon’s willingness to sell hardware at a loss combined with the strength of its brand, content, cloud infrastructure, and commerce assets makes it the only credible iPad competitor in the market. ~ Sarah Rotman Epps, Forrester, 29 Aug 2011

Apple is expected to introduce an ‘iPad Mini; next week, which will compete directly with the Kindle and Nexus, but it seems unlikely that this device will sell well if it is priced at, say, $299. ~ Henry Blodget, Business Insider, 7 Sep 2012

Price – Expensive piece of kit [iPhone 5] ~ Oliver Wolf, Greenwich Consulting, 10 Oct 2012

What is a cynic? A man who knows the price of everything and the value of nothing. ~ Oscar Wilde

The iPhone, with its single annual update and super premium price, has been run down from behind by a pack of rivals with segmented product ranges, 6 month product cycles and aggressive price points. ~ Paul Sagawa, Sector & Sovereign Research, 19 Nov 2012

I think they should invest more of it in the margin, in the business. Get lower-priced products out there. Stop going after just the premium piece. Get into the real growth engine of the smartphone market, which right now is Android, its low-priced phones in China and India, same thing on the tablets. ~ Henry Blodget, CNBC, 3 January 2013

Author’s Note: Apple should get into lower-priced products? Why? Because that strategy has worked out so well for Samsung? See chart, below.


As the mobile phone market increasingly offers more quality phones at a range of price points, Apple now faces a difficult choice. Does it try to remain a premium product-premium price company, or does it dive into the commoditized lower priced arena? Neither choice is very appealing. ~ Bob Chandler, Motley Fool, 2 May 2013

Author’s Note: If being a premium business provider does not appear very appealing to you, you need to get out of the business of providing business advice.

Apple’s philosophy has always been to be consumer-centric. It wants to make easy-to-use, broadly-accessible products. But on some level, it’s failing consumers when only 18% of the global smartphone population has an iPhone. ~ Jay Yarow, Business Insider, 24 May 2013

Apple’s vision is to make the best, not the most. Apple is is the cutting edge that breaks the ice and allows others to follow. There are many fast followers (and even more slow followers). There are few pioneers. If you think that Apple is failing consumers, then you haven’t looked at the computers and notebooks and MP3 players and smartphones and tablets that consumers are using. They were all inspired by Apple.

Amazon’s pricing ambition is the clearest indication of its phone playbook: undercut rivals and grab meaningful market share. It is also shows that Apple’s worst nightmare may be coming true: prices could fall not just for cheap phones in developing markets but higher-end ones too. ~ Amir Efrati and Jessica E. Lessin,, 6 September 2013

(T)he pricing of the company’s iPad line as a whole is absurdly high, with Apple’s models often costing at least $100 more than their closest rivals. ~ Troy Wolverton, Mercury News, 24 October 2013

Apple’s new iPads and iPhones will aid the company’s revenue growth going into the busy holiday season. However, Apple’s pricing of iPhone 5c will have a difficult time competing in the lower end of the smartphone market. If Apple products remain expensive the company’s penetration rates will hit a brick wall sooner or later. ~ Ishfaque Faruk, Motley Fool , 26 October 2013


The iPhone 5c appears to be Apple’s red-headed stepchild. The tech giant is selling far fewer units of the 5c than it is of the (more expensive) 5s, according to recent reports. ~ Cadie Thompson, CNBC, 15 October 2013

Author’s Note: So Apple sells more of its premium product than its second-tier product and this is viewed as a bad thing. That reminds me of a joke:

Question: How did the fool try to kill the fish?

Answer: They tried to drown it.

Question: How did the critics try to kill Apple?
Answer: They tried to drown it in profits.

Apple in my view made a huge mistake by not launching a mid end smartphone. ~ Sneha Shah, Seeking Alpha, 2 January 2014

Wars are not won by fighting battles; wars are won by choosing battles. ~ George S. Patton

Note that the average Android price is heading toward $200 and the average iPhone price is heading toward $600. Apple is asking the question, do you want to pay three times as much for our phones? Thus far, 80% of the market has answered ‘no.’ ~ Jim Edwards, Business Insider, 31 May 2014

Twenty percent of the market has answered: “yes”.

For all that Android has improved, and we see the difference as a matter of taste, iPhone still outsells Android at the same price 3:1 ~ Benedict Evans (@BenedictEvans) ~ 3/30/14

As of June there were 886,580,000 iOS devices sold. 1 Billion sold will happen well before this year is out ~ Horace Dediu (@asymco)


Apple has the strongest computing platform in the world. The critics insist that it is an illusion that cannot last.

Over the last year, Google paid devs ~1/2 of Apple’s App Store ($5B vs $10B) on ~2x the devices @BenedictEvans

In other words, each Apple owner is worth 4 times as much to developers as is each Android owner.

Apple’s critics have always been wrong about the how Platforms work. They insist that cheaper hardware will always outsell more expensive hardware and that platform is a game of winner-take-all with the more ubiquitous hardware sales attracting the majority of the developers. You have to admire Apple’s critics for their consistency. Despite having no evidence to support their position and plenty of evidence to refute it, they’ve remained consistently wrong.

There are very roughly the same number of high-end Android and iOS users, yet total Android payout in last 12m was $5bn, where iOS was $10bn. ~ Benedict Evans (@BenedictEvans) 8/23/14

Apple will likely have a tough time convincing application vendors to build specialized clients for the iPhone until the volumes are there, and the volumes could be limited by the lack of third-party applications – a Catch 22. ~ Jack Gold, J. Gold Associates, 10 January 2007

Even if it is opened up to third parties, it is difficult to see how the installed base of iPhones can reach the level where it becomes a truly attractive service platform for operator and developer investment. ~ Tony Cripps, Ovum Service Manager for Mobile User Experience, 14 March 2007

Will [Android] be as elegantly executed as the iPhone? Probably not. But it won’t matter to the mobile application developer if there are eight or ten Android handsets shipped for every iPhone. Addressable market will again trump elegance. ~ Brian Prentice, Gartner, 21 September 2009

All the apps that count will be ported to every one of them (smartphone platforms). ~ Microsoft’s chief software architect, Ray Ozzie, at the Microsoft’s Professional Developers Conference, 17 November 2009

All the people (including me) who felt underwhelmed by the iPad initially might have missed its true potential. Put another way: the iPad is all about software. Forget the sleek form factor – that’s just a prerequisite. Ironically, it’s the software and services that Microsoft never ‘got’, that Apple totally does get. ~ Dan Wayne, apc mag, 12 February 2010

The iPhone vision of the mobile Internet’s future omits controversy, sex, and freedom, but includes strict limits on who can know what and who can say what. It’s a sterile Disney-fied walled garden surrounded by sharp-toothed lawyers. The people who create the apps serve at the landlord’s pleasure and fear his anger. I hate it. ~ Tim Bray, Developer Advocate, Google, Inc, 15 March 2010

(W)hile Apple’s attempt to control the ecosystem and maintain a closed platform may be good for Apple, developers want more options and customers want to fully access the overwhelming majority of web sites that use Flash. We think that customers are getting tired of being told what to think by Apple. ~ Jim Balsillie, Co-CEO, Research In Motion, 20 October 2010

Android will become the operating system (OS) of choice for developers rather than IOS within 12 months. ~ Adam Leach, Ovum, 23 Jan 2012

If Apple continues to pursue its current pricing and maximize-short-term profit strategy, it may continue to increase its profits for the next couple of years. (BlackBerry and Nokia grew earnings for a couple of years after some analysts began seeing the writing on the wall.)
But Apple will also continue to lose platform and ecosystem share in most of the world.
Apple fans can talk all they want about how Apple is “like BMW,” but in a couple of key competitive respects, it isn’t. And if the gadget platform market behaves the way other platform markets have (think Windows), Apple and its fans may come to regret this short-term thinking in the end. ~ Henry Blodget, Business Insider, 15 November 2013

Author’s Note: Hardware is the musical instrument. Software is the musical score. Platform is the stage. Ecosystem is the Orchestra that brings the instruments, the music and the players altogether on the grand stage. There is no company on the planet who out orchestrates or out ecosystems Apple.

Until such time as the critics understand that the Orchestral performance — the overall ecosystem — is worth far more than its component parts, they will never understand Apple.

Wall Street

October. This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February. ~ Mark Twain

Just before, during, and after the upcoming Apple Event, Apple stock is going to take a dramatic turn. And you know what that means about the future of Apple’s current products and about the future of Apple…

…absolutely nothing.

Believing that the direction of Apple stock determines the value of an Apple Event is like believing that a weathervane controls the direction of the wind. ~ John R. Kirk

The stock market is neither a gauge of current success nor a predictor of future success.

Markets reflect perception. In that sense they are always right. For the price to change, perception has to change. ~ Horace Dediu (@asymco)

In the short run, the market is a voting machine but in the long run, it is a weighing machine. ~ Benjamin Graham

We think that markets reflect and even anticipate facts. But markets reflect perception, not facts. And perception is not about reality, it’s about human foibles.

If a business does well, the stock eventually follows. ~ Warren Buffett

Claim Chowder

iPhone which doesn’t look, I mean to me… And I guess some of these stocks went down on the Apple announcement, thinking that Apple could do no wrong, but I think Apple can do wrong and I think this is it. ~ John C. Dvorak, 13 January 2007

The best revenge is massive success. ~ Frank Sinatra

Sell your Apple stock now, while the hype’s still hot. You heard it here first. ~ David S. Platt, Suckbusters!, 21 June 2007

I made a killing in the stock market. My broker lost all my money, so I killed him. ~ Jim Loy

(W)e think investors should also pay close attention to Apple. In addition to the Amazon tablet, Apple faces a growing number of risks. ~ Naked Value, 27 Sept 2011

Cook has been increasingly compared to Jobs and found wanting. ~ Rob Enderle, TechNewsWorld, 26 March 2012

I was talking recently to someone who knew Apple well, and I asked him if the people now running the company would be able to keep creating new things the way Apple had under Steve Jobs. His answer was simply ‘no.’ I already feared that would be the answer. I asked more to see how he’d qualify it. But he didn’t qualify it at all. No, there will be no more great new stuff beyond whatever’s currently in the pipeline. So if Apple’s not going to make the next iPad, who is? ~ Paul Graham, March 2012

Market share analysis presumes a zero sum game but greatest wealth comes from creation of new markets. ~ Horace Dediu (@asymco)

Here are seven events, all of which could hurt Apple’s stock price in a big way:

1. Wireless service providers (WSPs) collectively decrease iPhone subsidy
2. Window 8 is a huge success
3. No surprise in iPhone 5
4. Departure of major executives
5. Lukewarm replacement sales
6. Global smartphone growth slows down
7. Chinese demand of iPhone unsustainable during the last quarter
Gutone, Seeking Alpha, 29 May 2012

Here are four reasons why I don’t think Apple’s stock will see $700 again:
1. Growth in phones is slowing as competition increases
2. Margins are shrinking
3. Apple is losing its innovative edge
4. Apple may no longer be a growth story”
Howard Gold, MarketWatch, 1 February 2013

Author’s Note: Apple’s stock adjusted price passed $700 in August, 2014.

As a value investor, I strongly believe in BlackBerry’s future because the company has several advantages, such as the security, the Q10 and the corporate world. On the contrary, Apple’s potential increase appears very limited in the short run because the company won’t release new products, which can increase the interest of the company. ~ Gillian Mauyen, Seeking Alpha, 28 April 2013

Harvard University, the world’s wealthiest university, has liquidated its stake in Apple Inc. as the iPhone maker’s shares tumbled after reaching a record high of $702.10 in September. ~ Michael McDonald, Bloomberg, 10 May 2013

Author’s Note: One doesn’t have to go to Harvard to know that it’s “Buy low, sell high.” Instead, most investors — including large institutional investors — are inclined to buy stock on the way up and sell it on the way down.

Apple has become a value trap, This is a company with no growth, and profit margins that are way too high vis a vis the competition. ~ Doug Kass, Seabreeze Partners Management, 17 Sept 2013

I will look at taking my profits on Apple stock as I do not think that the company has much upside left at the current valuation and price. ~ Sneha Shah, Seeking Alpha, 25 October 2013

They only have 60 days left to either come up with something or they will disappear,” said Trip Chowdhry, managing director at Global Equities Research. (March, 2014)

Wasn’t Apple supposed to have disappeared by now without the iWatch? ~ Brad Reed (@bwreedbgr) 8/20/14


We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful. ~ Warren Buffett

Lessons Learned And Unlearned

When I find the road narrow, and can see no other way of teaching a well-established truth except by pleasing one intelligent man and displeasing ten thousand fools — I prefer to address myself to the one man. ~ Maimonides

This has been a very long article and this has been a very long series of articles. Have we learned anything from it? I fear we haven’t learned much. As this week progressed, I watched pundit after pundit make the same ridiculous errors that they’ve always made and, I guess, that they always will make. But just because they will never learn does not mean that we cannot profit from their mistakes.

Wise men profit more from fools than fools from wise men; for the wise men shun the mistakes of fools, but fools do not imitate the successes of the wise. ~ Cato the Elder

Here then are seven last lessons learned and unlearned.


Don’t take a butcher’s advice on how to cook meat. If he knew, he’d be a chef. ~ Andy Rooney

Apple is one of the greatest Chef’s of our age. Most critics are butchers. Enough said.


Never offer to teach a fish to swim. ~ Proverbs

Apple seems to be doing swimmingly without our advice. Perhaps we should stop spending our time telling them what they’re doing wrong and start learning what they’re doing right.

There are a lot of people innovating, and that’s not the main distinction of my career. The reason Apple resonates with people is that there’s a deep current of humanity in our innovation. ~ Steve Jobs


The person who says it cannot be done should not interrupt the person who is doing it. ~ Chinese Proverb

Don’t listen to people who say it can’t be done. ~ Steve Jobs

If something is being done, we should stop saying that it cannot be done and start figuring out how they’re doing it.

Things are only impossible until they’re not. ~ Jean-Luc Picard


“Apple is screwed” – 1997, 1998, 1999, 2000, 2001, 2002, 2003, 2004, 2005, 2006, 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014. ~ Sammy the Walrus IV (@SammyWalrusIV)

It is a test of true theories not only to account for but to predict phenomena. ~ William Whewell

To arrive at a contradiction is to confess an error in one’s thinking; to maintain a contradiction is to abdicate one’s mind and to evict oneself from the realm of reality. ~ Ayn Rand

The prophets of doom have predicted Apple’s demise year in and year out and always they have been wrong. We need to pay less attention to prophets and more attention to profits.


Worldly wisdom teaches that it is better for reputation to fail conventionally than to succeed unconventionally. ~ John Maynard Keynes

It is a paradoxical truism that success comes from unconventional strategies which are, by definition unpopular.


It’s not about doing what you can, it’s about doing what others can’t. ((Excerpt From: C. Michel. “Life Quotes.” C. Michel, 2012. iBooks.

Apple’s critics always want Apple to adopt the strategies employed by their competitors. This, of course, makes no sense at all. The goal is to be different from, and more successful than, one’s competitors.

Apple has no competition who sell what their customers are buying. ~ Horace Dediu (@asymco) (3/18/14)

Apple has a monopoly on being Apple. They want to maintain that for just as long as they can.

Long Run

It may not be that the race is not always to the swift, nor the battle to the strong – but that is the way to bet. ~ Damon Runyon

Apple is in it for the long run. We too should viewing Apple from a long-term perspective.

Apple is run ‘for the investors who are going to stay, not the ones who are going to leave.’ ~ Warren Buffett

When you get up in the morning and the press is selling Apple short, go out and buy some shares. That’s what I would do. That’s what I have done. ~ Steve Jobs

If you’re in Apple for only a week… or two months, I would encourage you not to invest in Apple. We are here for the long term. ~ Tim Cook


CAPTION: Tim Cook and Apple crying all the way to the bank.

Apple Claim Chowder Series:

Evolutionary Or Revolutionary
Business Models

Published by

John Kirk

John R. Kirk is a recovering attorney. He has also worked as a financial advisor and a business coach. His love affair with computing started with his purchase of the original Mac in 1985. His primary interest is the field of personal computing (which includes phones, tablets, notebooks and desktops) and his primary focus is on long-term business strategies: What makes a company unique; How do those unique qualities aid or inhibit the success of the company; and why don’t (or can’t) other companies adopt the successful attributes of their competitors?

257 thoughts on “Apple Claim Chowder: Business Models”

  1. What, to me, is most damning is not that people once thought these things. What is most damning is that people still think these things against all the _overwhelming_ evidence otherwise.

    It’s kind of like watching a TV show or movie where the lead character is constantly dismissed by his peers or bosses even though he is constantly right. I guess that’s it. There is no entertainment if everyone accepts the efficacy of one’s actions and right off the bat agrees with their conclusions.


  2. No one – and I mean no one – puts more boundless research into his articles than John Kirk. He must have discovered a 25-hour day.

    1. High praise indeed, humbly received. I’ll respond with a quote from Mark Twain:

      I can live for two months on one good compliment. ~ Mark Twain

  3. “Apple seems to be doing swimmingly without our advice. Perhaps we should stop spending our time telling them what they’re doing wrong and start learning what they’re doing right.”
    if they, the critics, did learn about what apple is doing right, what kind of article would they, could they sell? And what would they, could they do with that information? Start a gnu apple? Critics can never see the goal, only the defense of the score. Apple Long!
    Great set of articles, Thanks

    1. Thank you for your compliment krabbie. It was hard work, but your appreciation of that effort makes it all worth the while.

  4. John, kudos to you for such an entertaining, informative and evocative set of articles. Always love the use of quotes to anchor your thoughts and points to another/broader perspective.


    1. Thank you, Mark. Since you like my quotations, I’ll throw one more at you:

      “An apt quotation is like a lamp which flings its light over the whole sentence.” ~ L. E. Landon

    1. Thank you so much.

      “The pen is mightier than the sword, and considerably easier to write with.” ~ Marty Feldman

  5. Apple’s business model is so revolutionary, ingenious and subtle that it has been totally overlooked by all these naysayers and their analyst’s yammer of open v close, market share dynamics, and other such fancy biz school catchwords: Apple just builds products that people really like then sell it at a price that they are willing to pay.

    For all the fancy-shmancy analysis that insists that Apple has been on a 10-year-long Wile E. Coyote moment, none of them have ever seemed to grasp that no one else builds devices that people like as much as they like Apple’s devices. Not even close. But you can’t really measure consumer desire, you can’t really measure product quality, so if you restrict your analysis only to measurables like market share, prices, profit margins, and hard product specs then you are missing the biggest thing that explains Apple’s apparent ability to walk on air. But they aren’t, they just build the far-and-away best damn product out there and people are willing to pay for it.

  6. John,

    Whatever they are paying you to write your articles is simply not enough.

    And you should ask to be paid in Apple shares.

    1. “Give a man an article and he will starve for a day — but teach a man to write and he will starve for a lifetime.” – Anonymous

      Thank you for your kind words, isitjustme. My pay is enormously supplemented by your compliments.

  7. “Apple’s vision is to make the best, not the most.” No. That’s Apple’s PR. Apple’s vision has been spelled out in the internal memo revealed in one of their suits. It’s: lock-in. Not one word about “best” in it.

    1. In early August I began to collect material on an article. It started out as a discussion on how culture affects companies and then it evolved and separated into three chapters:

      1) APPLE: University: Codifying and Creating Culture On Purpose
      2) APPLE: Keeping The Company Focused On Its Mission And Not On Itself
      3) APPLE: Keeping The Company Young And Flexible

      I was unable to finish the article before my vacation and with the Apple Event fast approaching I switched my focus to writing about it instead. Your completely wrong-headed suggestion that Apple is all about lock-in has reignited my interest in completing my article. It may be delayed because coverage of the Apple event will take precedence, but I look forward to explaining to you and those who think like you that you are not only wrong, but you are profoundly wrong about what motivates Apple…

      …and that motivates Apple; what drives Apple, has made all the difference.

    2. Well, you can choose to take an internal document out of context OR you can choose to accept observable reality where hundreds of millions of Apple customers really are happy with Apple’s products and services because those products and services are quite good and deliver a lot of value.

      Maybe the underlying issue here is you truly don’t understand why Apple is succeeding, so you’ve decided to make up a reason, ‘Apple customers are foolish’. There. Nice and tidy. There’s no innovation happening, the products aren’t very good or capable, in fact they are two or three times the price and have waaaaay less features. Apple certainly isn’t trying to make anything good, they’re just out to screw customers and milk them for more money. It’s mostly marketing anyway, people are just being fooled by slick ads, plus Apple is trendy and fashionable and that certainly won’t last. Any day now Apple will come crashing down and the whole world will see that Apple’s success wasn’t real at all. That about sum it up obart?

      1. That’s what beautiful about that memo: there’s no context to it. That’s what Apple spontaneously discuss amongst themselves, when there’s no events, no mics nor cameras around. i-nalysts are studiously refusing to acknowledge that private memo because it mightily contradicts the public narrative.
        To me, the “observable reality” is that, though I know there are some cases where Apple products are better (music creation, localized edutainment), none of the Apple customers around me use any of that, and technically, they’d be just as well served by a much cheaper smartphone.
        As for the mechanisms that make people buy luxury items and then stockholm up technical reasons for doing so, indeed, that’s way over my head. Then again, I used to have a friend adamant that Prada shoes were more comfortable, and Vuitton bags more practical. Recent hires at Apple do emphasize they want to keep the luxury thing going, whiwh is fine, but let’s acknowledge it’s a subsidies-related success, I’d probably get a BMW too if my gas station was paying for my car. Actually no, I wouldn’t either, but I understand why others would.

        1. This is exactly why it’s so fascinating to engage you from time to time. You truly believe Apple has succeeded by tricking foolish customers into buying expensive gewgaws. The reality of Apple’s success upsets you so much that you’ve created an alternate narrative to deal with it. You’ve gone as far as invoking Stockholm syndrome as part of your explanation of Apple’s success. You are indeed a living, breathing case study.

          1. While there’s somewhat better quality in some of the apps/os , a lot of the appeal in the iphone for some is as a status symbol and apple uses it .

          2. Apple customers buy because they’re getting a lot of value within the user experience Apple provides, and that goes far beyond “somewhat better quality in some of the apps/os”. The failure to acknowledge this differentiation is a key factor in poor analysis of Apple.

            Of course Apple is known for quality, and there is always an aspect of the aspirational brand. Stratechery had a good recent article about Apple and Veblen goods. But we must be careful not to fall into the trap that Obarthelmy has, to argue that Apple has succeeded by tricking foolish customers into buying expensive gewgaws. He (or she) actually seems to believe this. From this foundation all analysis of Apple will fail miserably (as we see with much of the nonsense obart spews).

          3. > to argue that Apple has succeeded by tricking foolish customers into buying expensive gewgaws.

            In a sense, the differing market shares in places where there’s carrier subsidy and where there’s no such subsidy , tells us that this is largely a story of tricking customers.

          4. Interesting to follow up on this now that we’ve had a year of subsidies decreasing or going away, and the reality has been an increase in both iPhone sales and share, and that happened globally. The industry seems to be moving to monthly payments (I predicted this BTW), the same way humans buy lots of other things we can’t afford in one lump sum, such as leasing a BMW, buying a house, using credit cards, and so on.

          5. Ah yes, and you think status, especially status that endures, can be manufactured out of thin air? People aren’t as stupid as you need them to be for your assertion to be true. A company might be able to sell a few widgets by projecting its brand as a prestigious status symbol, but they better deliver the quality and performance befitting their claim of status or they’ll soon find themselves devoid of customers and the object of public ridicule and contempt.

            To be able to sell a product solely on a claim of its lofty prestige, you need some pretty nifty marketing. Apple has pretty nifty marketing, in fact a lot of its detractors say that’s the only thing they’re really good at. But marketing, at best, only gets you a first sale to a customer. For that customer to not return that first sale and then come back to buy from you again, that’s not due to marketing anymore, that’s from delivering the quality and value that you promised.

            I’m so tired of hearing people say Apple’s only appeal is snob appeal and its success is based solely on marketing. As if there is some kind of marketing that is so mesmerizing that it convinces unsatisfied customers to keep buying the disappointing product.

          6. “As if there is some kind of marketing that is so mesmerizing that it convinces unsatisfied customers to keep buying the disappointing product.”

            Oh but haven’t you heard? That’s due to “lock-in”!

          7. > Ah yes, and you think status, especially status that endures, can be manufactured out of thin air?

            I look at beats an i’m inclined to answer yes. Such marketing is pretty common today.

            On the other hand , altought there are some differences between apple and android today , they aren’t that big(for some evidence – there are plenty of people who shifted from iphone to android usage). Also , since most people only use few apps, the quality is good enough for those( and i don’t buy the claims that “good enough” don’t applies to user experience – heck they even apply to healthcare sometimes).

            To test this , let’s start with a place who doesn’t offer carrier subsidy(another way of tricking customers). Let’s take something like the moto-G(good $179 android) with a special app store(that is somehow equivalent to the iphone app store.Why apps – because you mostly spend 95% of you screen time there) and try to sell it , only with basic marketing comparing app quality for $450/$650 . How large a marketshare do you think such phone will get?

            I think you won’t get many customers for this because :

            1. We know that most customers only download and use a few apps.And the major apps are probably quiet polished for both platforms.

            2. We know that even on the iphone ,users don’t value apps for that much and are’nt willing to pay for them.

            My guess is that this phone won’t be very popular.Do you think otherwise ? The rest of the difference between iphone/android is mostly marketing and lock-up-effects(for example due to data) , and not true differentiation.

          8. “The rest of the difference between iphone/android is mostly marketing and lock-up-effects(for example due to data) , and not true differentiation.”

            This was exactly my earlier point, let me quote myself “The failure to acknowledge this differentiation is a key factor in poor analysis of Apple.”

            The common thread among those who do not understand Apple’s success does seem to be this failure to acknowledge the differentiation *and value* within Apple’s user experience. If you refuse to admit it exists, then your arguments do seem rational.

          9. I did acknowledge apple’s true differentiation. It’s mostly really good apps, by the best ecosystem. No doubt. I even offered to go to the effort of recreating it because of it’s possible importance.

            But do you think that if we did my little experiment , many people would have paid +$300 more just for a better app store ?

          10. “do you think that if we did my little experiment , many people would have paid +$300 more just for a better app store ?”

            I doubt it.

            “I did acknowledge apple’s true differentiation. It’s mostly really good apps, by the best ecosystem. No doubt.”

            No you did not. You’ve misunderstood what it is, as shown by your thought experiment. Apple’s differentiation comes from the value created within the user experience, and this is so much more than apps, it is the entire stack, from apps to content to ease of use to build quality to industrial design to support, and more. It took Apple decades to create this. You are making the common mistake of boiling it down to ‘better apps’. Other pundits might boil it down to something else, but usually it’s a single thing that they view as easily copied. So of course as soon as Company X starts doing Easily Copied Thing Y, Apple is doomed.

            What you still fail to understand is Apple’s differentiation may be impossible to copy. In fact, no other company even seems interested in attempting to follow Apple’s path. Most of the tech industry views Apple as ‘doing it wrong’. I suppose that’s easier than admitting how difficult it is to do what Apple is doing. “Yeah, I could totally do that, but it’s stupid so I’m not going to.” That seems to be the attitude of a big chunk of the tech industry.

          11. >> “so much more than apps, it is the entire stack, from apps to content to
            ease of use to build quality to industrial design to support, and more.”

            a. ease of use – depending on one’s needs , one could customize android to be much easier to use than ios, for example , this launcher[1] , which is specifically designed for old people , offering for example bigger text and icons and other stuff for people with poor eye sight. There are other launchers for other needs of course, and i think there were also some phones by manufacturers targeted at that. In a sense , with that customizability , for some people android could be considered even easier to use than the iphone.

            I grant that the first config does take some time/complexity , but usually people who find that difficult have help from family and friends.

            b. build quality – there are many different android phone with varying levels of build quality , surely some of them could be considered “good enough” . same goes for industrial design .

            c. support – again varying phones with varying levels of support , but for example buyers of the “moto x” describe it’s customer support as great.

            d. content – i’m from outside the u.s – so i’m not sure about that.

            Those are the reason why i believe apps are most of the differentiation.


          12. You are so far away from understanding the true value and differentiation of Apple’s offerings. In fact you’re doing exactly what I warned against, ticking off individual things you think can be easily copied, “Oh, Android already does X, and it can do Y, and this other phone does Z” and so on.

            You’re missing the cumulative value that comes from vertical integration and the *whole* user experience. Indeed, many folks in the tech industry deny that this value even exists. I suppose they have to deny its existence, since only Apple is doing it.

          13. The customer gets to decide whether there is a difference between iOS and Android, not you, Restfullbull. Most people who don’t understand Apple’s success don’t understand the value of their ecosystem. Some customers appreciate it and are willing to pay for it and other do not and will not. This is as it should be and presuming that you know better than those who spend their money is the first step towards poor analysis.

          14. It occurs to me that Android and iOS need each other, in a way. Apple cannot scale its model to serve the entire market, and most of the market doesn’t value Apple’s differentiation anyway. Android is good enough for most of the market, but the horizontal nature of it means there can be no vertically integrated user experience like Apple’s. Hmm, I wonder, what does the market look like without an Apple delivering a vertical experience? Are there other industries with examples? I haven’t thought this through at all, obviously.

          1. (full source)

            “- tie all of our products together, so we further lock customers into our ecosystem”
            “- make Apple ecosystem even more sticky”
            “- Google and Microsoft are further along on the technology, ”
            “- Strategy: catch up to Google cloud services”
            “- Strategy: catch up to Android where we are behind (notifications, tethering, speech, …)”
            Also, intriguing how competitors’ ads, but not products, are studied (see text). to me it’s revealing of where Apple’s focus is.
            Even Apple acknowledge that kind of things, yet a lot of i-nalysts and commentators don’t.

          2. Okay, never mind that the document you’re pointing to doesn’t prove what you think it does, not even close. There’s a single line about ‘lock in’ and most of the document is about improving Apple’s offerings. That seems to be the opposite of the narrative you are attempting to create.

            Looks to me like you intentionally clipped some quotes to better support your story. Here’s some of your quotes, in full, instead of your edited versions:

            “Google and Microsoft are further along on the technology, but haven’t quite figured it out yet”

            “Strategy: catch up to Google cloud services and leapfrog them (Photo Stream, cloud storage)”

            “Strategy: catch up to Android where we are behind (notifications, tethering, speech, …) and leapfrog them”

            Subtle but important differences. Truth matters obart.

          3. That’s twice about lock-in, and yep, “catch up and leap frog” instead of “catch up” changes everyting.

          4. The word ‘lock’ appears once. As I said, truth matters. And the truth is most of that document is positive, talks about the state of the industry and improving Apple’s offerings. You’ve latched onto a single line as if that somehow proves Apple is just as bad and evil as you wish it was.

            Funny that you didn’t quote any lines like this one: “Strategy: stay in the living room game and make a great “must have” accessory for iOS devices”

            Well, you could interpret ‘must have’ to also somehow mean lock in I’m sure. That’s *three* times now Apple talked about lock in!

            But wait, what about this quote: “Free MobileMe for iPhone 4, iPad and new iPod touch” Surely that means lock in as well! Four times! There must be more examples, I just have to open my mind!

          5. Nope, they are not the same. The differences may be subtle, but are important. Although I could argue the way Apple means lock in isn’t what you think it is. Of course you have to argue now that sticky and lock in mean the same thing, and you also have to argue that your edited quotes don’t matter. You have no choice, you painted yourself into a corner.

            You’re still ignoring the truth that most of that document you’re clinging to doesn’t prove what you want it to. If your narrative re: Apple is correct you should have no need to edit quotes and conflate terms, and you should have *far* more documentation/evidence. Obart, you simply have to do better.

        2. There is hardly anything in the world that some man can’t make a little worse and sell a little cheaper, and the people who consider price only are this man’s lawful prey. ~ John Ruskin

          1. I’d argue in that case, it’s “make a good bit worse, and a lot more expensive”.

            Also, among which:
            “He wrapped himself in quotations – as a beggar would enfold himself in the purple of Emperors.” ― Rudyard Kipling, Many Inventions
            “[A] quotation is a handy thing to have about, saving one the trouble of thinking for oneself, always a laborious business.” ― A.A. Milne, If I May

          2. I quote others only in order the better to express myself. ~ Michel de Montaigne

            I love quotations because it is a joy to find thoughts one might have, beautifully expressed with much authority by someone recognized wiser than oneself. ~ Marlene Dietrich

          3. So to quote is to “slavishly copy” a thought!
            And that’s not a bad thing, as long as it’s cited, which you do.

  8. Much has been written about market share of Apple products, or the relative lack thereof.

    You’ve written much about the “vertically integrated” business model. Vertically integrated has always meant something more along the lines of “specific purpose” to me. Though I find the terminology highly misleading, I see it al lot around here, so let’s go with it.

    Apple has successfully integrated hardware, software, and retail within it’s ecosystem. It totally controls the whole thing. If I may add, it does so in an anti-competitive fashion. Fine, you may say it’s not a monopoly after all. Great! It’s vertically integrated.

    Microsoft tried to do the same thing, to a far lesser degree in the ’90’s, and was justly slammed. The difference, of course, was dominant PC market share.

    a) Should Apple’s market share rise to monopolistic levels, is their vertically integrated model still legally viable?
    b) Wouldn’t that have been applicable to MS as well?
    c) Is lack of monopoly position sufficient justification for “exclusively” vertically integrated systems? (Admittedly a very loaded question).

    1. Vertically integrated means a firm performs all the production steps from the raw material stage to distribution of the finished product. There are really no fully vertically integrated firms -the modern economy is too complex for that, but back in the 1950’s Ford came closest when they owned their own iron and steel mills to produce the sheet metal and cast iron used for making their cars. I don’t see how “specific purpose” has anything to do with vertical integration. Except maybe that a product with a very a narrow use and market (i.e. specific purpose?) is easier to vertically integrate.

      As the computer industry goes then, Apple, though far from being fully integrated, is one of the most vertically integrated companies given that they make both hardware and the software that goes into it, they design a lot of their own key components, and they even do retail. Samsung is also relatively vertically integrated but since they outsource the OS, perhaps the most critical component of any computing device (at least from the customer’s point of view), then I would say Samsung is less vertically integrated than Apple

      Be that as it may, trying to address your questions in turn:

      a) There is no law against being vertically integrated, regardless of whether you have monopoly power or not. So your question a) is moot. In fact I haven’t heard of any antitrust law against any particular market structure, all the laws are about behavior. It’s not what you are, it’s what you do.

      b) Following from a) above, your question b) is moot as well. In fact I don’t think I understand what your question means because Microsoft, especially before they acquired Nokia’s hardware business, is not even close to Apple’s level of vertical integration.

      C) Thus your question c) is moot as well. In truth, I don’t understand what you mean by “exclusively vertically integrated system.

      Maybe we are talking past each other because we mean different things when we say ‘vertical integration’. Oh well, tried my best.

      1. Then wasn’t it an attempt at vertical integration, in software at least, when MS provided the OS, and leveraged that to win in Office Suites, and made attempts at controlling programming languages and internet access? The methods they used were contemptible, but they did not directly, by fiat, forbid competition. There were no rules over “what runs”. They DID control by coercion. Fiat is a higher form of coercion.

        So if they claimed they were a “vertically integrated software company”, this all becomes okay? Or was it market share combined with these things that made them a monopoly?

        1. You should really do some research on the terms used. “Vertical integration” does not equal “monopoly”. And “monopoly” does not equal “anti-trust violation”.


          1. That’s not what I said. I associated extreme market share, in conjunction with anti-competitive behavior, as monopoly. A hypothetical situation.

          2. You are trying to layout some sort of correlation to the MS business model practices that resulted in the anti-trust trial (which had nothing to do with vertical integration, no matter your reductionist key word) and the Apple model in order to justify (at least personally) anti-competitive charges against Apple when vertical integration has nothing to do with market share/monopoly or anti-trust.

            You’ve already admitted a misunderstanding of a vertically integrated business model definition. Before you go much further down your rabbit hole do some more research on “vertical integration”. There are several good business model oriented websites out there to find out more what it means. You won’t even need to resort to Wikipedia. You might even be better able to put together a more coherent argument based on something other than specious analogies.


          3. Some facts:
            MS was accused and convicted in using their monopolistic position to enforce “bundling” of IE with Windows as a mandatory situation. Bundling is integrating.
            Everything Apple includes is “bundled”.
            Apple has as a stated policy the need for their approval of all software to run on iOS. This is not my opinion of anti-competitiveness, it is fact. In fact, many programs that “duplicated functionality”, or substituted functionality were forbidden. Contrast this with MS’s “bundling” of IE. You could still install Netscape, or Opera at the time.
            I submit to you that the term “vertical integration”, as applied here, is nothing more than “bundling”.
            If market share grows to monopolistic levels, thus squeezing out the competition (which is the premise I made originally), aided by anti-competitive policies, is iOS legally viable in that scenario?

          4. You’ve either misrepresented or just plain gotten so much wrong in your list of “facts” I really don’t see the need to continue. You’ve made up your mind, regardless of the facts, such as the meaning of “vertical integration”. If you would at least make the effort to understand what vertical integration really is and what it isn’t, this might be a worthwhile conversation. Otherwise, I’m out.


        2. “Then wasn’t it an attempt at vertical integration, in software at least, when MS provided the OS, and leveraged that to win in Office Suites, and made attempts at controlling programming languages and internet access?”

          The simple answer is no. You actually answered your own question with your comment about coercion. Microsoft did not vertically integrate, I suppose you could say they horizontally coerced. But as jfrutal says, you really need to back up and learn more about the terms and concepts here, you’re mixing up a lot of ideas.

          1. It can’t be integration when Apple does it and not when other’s do. Granted MS wanted to control the PC ecosystem through “vertically integrated software”, and basically stayed out of hardware. Do you mean to say that if MS had their own PC in the 90’s (thus fully matching what Apple is doing today) it would have been all right?

          2. “It can’t be integration when Apple does it and not when other’s do.”

            Perhaps you’ve missed that companies can act horizontally (Microsoft) or vertically (Apple). They are not the same. Apple’s vertical model was (and still is) mocked in the tech industry, it isn’t supposed to work. We’re only recently seeing companies like Microsoft and Google begin to copy it to some degree (in light of Apple’s massive success). Microsoft was not vertical in the time period you speak of. If they had been it would have been impossible for Microsoft to do what they did. The only way to do what Microsoft did was by going horizontal.

            You can relax, Apple isn’t going to take over your world. In fact they have little interest in your world.

          3. My world is far more inclusive than yours, so YOU can relax and stop taking things so personally. If Apple takes over THE world is the premise of the conversation.

            Answer me this…Is the App Store vertically or horizontally integrated? Apple didn’t write those billion Apps, and they do sell developer licenses to write Apps for iOS. Under the most stringent and anti-competitive terms no less. To write to the unlicensed operating system, you need a license. Sound familiar?

          4. “My world is far more inclusive than yours”

            I doubt that very much.

            “Is the App Store vertically or horizontally integrated?”

            The App Store is part of Apple’s vertical stack. Did you have a point to make?

            Look, jfrutal has already said this, you’ve made up your mind that Apple is bad, and you’ve really gone off the rails here, your arguments make no sense at all, you’ve officially arrived at the point where you’re just making things up to suit your opinion. Vertical integration is bundling? What the heck…

          5. The question was, is the App Store, as an entity, vertically or horizontally integrated? It has thousand of dependent developers who purchased a license to code for iOS. In that regard, it’s a licensing model. Rather than license the OS they license (for a fee) the right to program for it. These developers are partners. Is that a horizontal or vertical scenario?

            MS licensed Windows and applications run on it. There are no license restrictions for coding on the OS. The license fee was for the OS, not the right to code. Yet that’s considered a horizontal scenario. If that is, why isn’t the iOS Developer’s License.

            The concept of Vertical Integration, as discussed here, is not only “bundling”, it’s an extreme form of bundling. How can it not be?

          6. “The question was, is the App Store, as an entity, vertically or horizontally integrated?”

            Your question has no merit. The App Store is part of the vertical stack. I could also argue the horizontal nature of individual aspects of many parts of any system, but it doesn’t make any sense to do so.

            Any kind of integration could be viewed bundling I suppose. Obviously you want to do that because it helps your ‘mad-at-Apple’ point of view.

      2. “I don’t see how “specific purpose” has anything to do with vertical integration.”

        I agree, it has nothing to do with vertical integration (save your point that a narrow use case does make integration easier). I’m fairly sure klahanas means it as an insult, as in Apple products are less capable, the typical closed vs open nonsense.

        1. In no way did I mean it as an insult, oh wise simian from space. In other contexts vertical applications are often industry or application optimized, and specific.

    2. You have a real lack of understanding of “monopoly”. Marketshare does not equal “monopolistic level”. You can have 100% marketshare if you have the best product and people happen to prefer it. Unlikely, but true.

      “Monopoly” usually refers to excluding others from a market in which you have become the sole supplier.

      MS supplied the OS to all hardware makers except Apple and the ones it drove out of the hardware business (MS even drove IBM out of the PC hardware business due to the deception around OS/2).

      Apple supplies no-one (it is not horizontal!). Apple does not have a monopoly over mobile OS’s, for instance — that would be Google.

      So, let’s revisit your questions, a, b, c, and substitute Google for Apple. Maybe the penny will finally drop?

      1. So Kizedek, according to your understanding, Apple could theoretically achieve >90% market share in mobile and not be a monopoly?

        1. Were there particular problems in the MP3 Player market as far as you are concerned? Should there have been some anti-trust suits against Apple?

          1. It could be argued that there was anti-competitive behavior with the iPod. Apple prevented other companies and user’s from using any software, other than iTunes to control their property. Still, it was not yet close to being a “computer” until the iPod Touch, and it was then that things started getting weirder.

            The popularity argument is weak. Some things can’t be abdicated. User tolerance for the anti-competitive behavior under the hypothetical high market share we are discussing does not negate anti-trust law.

          2. Totally agree. Which is why I didn’t suggest that. There is no “popularity” argument. Certainly not one that negates anti-trust law.

            “Popularity” is generally equated with marketshare, and if anyone uses “popularity” as an excuse for their actions, it is MS, Amazon and Google (or Google fans). That certainly wouldn’t make it a legitimate excuse for Apple, were Apple ever to be “popular” (which it is not), and were Apple to do something nefarious to either become popular or remain popular.

            Rather, I was suggesting that, in the absence of “popularity”, Apple relies on satisfying its end customers. That is what makes it tick. All evidence suggests it will continue to try and satisfy its customers, as it becomes increasingly popular, or less popular, and even if it attains “monopolistic levels”.

            Quite right, popularity is not a defense… but “what makes Apple tick” is an evidence that Apple goes about what it does very differently than other companies.

            Of course disgruntled parties are going to try to initiate action against Apple. Amazon was one such “aggrieved” party (ha!). Despite appeal, and regardless of the facts, Apple may well have to pay a fine brought about by that “anti-trust” action. (If so, I would suggest that Apple will actually pay real money and not, as did MS, pay off penalties in software licenses!).

            It is even true that by “aligning their interests with the consumer”, Apple may well step on the toes of developers from time to time. Apple may need to tread a fine line in order to keep their developer’s as happy as their customers. I believe they do.

            But your contention that the definition of “computer” is pertinent has little to do with it. Either you exert horizontal power across the whole industry/market (of like things, such as “smartphones”), or you don’t. Usually you do this by leveraging other products (say, Intel restricts access to its large processors if you don’t also buy its integrated chipsets, thereby harming, say, AMD — oh wait!).

            Therefore, having a vertical model certainly does mitigate a lot of this danger and a lot of the issues. You can howl all you want that “vertical control over your own platform” is the same as monopolistic abuse across a whole industry or market. But, it simply is not. The iPhone, or the iPad, is not a “market”. It just isn’t.

          3. Then that would have applied to MS as well. Can’t have it both ways.
            They strived to be “vertically integrated” in everything as well, except for maybe hardware at that time.

          4. No, Microsoft did not strive to be vertically integrated. In fact Apple’s vertical model was mocked during the time period you reference. Even today it is mostly mocked and viewed largely as the wrong approach. How can you still not understand this?

          5. MS leveraged the OS to extend to Office Suites, programming languages, internet integration, data compression, and just about anything having to do with software. They wanted to play in all aspects of software and control it. How is that not vertical integration?

          6. Well, more than one person has explained these concepts to you, and I think every one here has been more than generous with their time doing so. If you choose to misunderstand what is being explained to you simply because it doesn’t fit your preconceived notions, I can’t help you. As jfrutal already said, I’m out.

          7. Because I can’t pop the DVD into a slot in my head and enjoy all that “integration” — I require a …PC?

        2. After reviewing the thread growing out of this post, it’s pretty evident that what you refer to as ‘vertical integration’ is not vertical integration.

  9. I suspect you have infected a good number people who have become addicted, or come to appreciate the maxim, saying or succinct quote. My fav on health is Hippocrates on food and medicine, “Let your food be your medicine and your medicine be your food” and it has benefitted our children’s health. It underscores a lesson we want them to carry though this latest incarnation.

    The perfect maxim is like the picture and the thousand words. Sadly, in the field of tech and Apple, the foot that rests in the mouth of some analyst’s, as in the case of J.C. Dvorak, highlights a grave weakness in a chosen profession; but on the brighter side, to the grave and beyond some may live to be a delight to good humour somewhere on this literate planet.

    Upon my desktop I now have a folder, whose icon is my children’s Hippocratic maxim, to collect the little jewels that help give meaning or bring a smile to my daily adventures.
    Namaste and care,

  10. Apple’s premium, elitist iOS strategy together with Google’s populist, everyman Android strategy co-exist so well that they have all the profits in the world-wide mobile device & software market. There is no hope for any other platform.

  11. Until such time as the critics understand that the Orchestral performance — the overall ecosystem — is worth far more than its component parts, they will never understand Apple.

    They cannot because they are tone deaf.

  12. Believing that the direction of Apple stock determines the value of an Apple Event is like believing that a weathervane controls the direction of the wind. ~ John R. Kirk

    Tech writers hold their finger up to the wind once each year after the Apple main event and convince themselves that it will keep that direction for 365 days.

  13. “True wit is nature to advantage dressed/ What oft was thought but ne’er so well expressed.”
    —Alexander Pope

    Kudos to you, Falkirk. This series can stand on form, alone, no matter what may be thought of the content.

  14. John: I have been following your comment for a long time. Your analysis and insight is always spot on.
    This collection is simply monumental. I really don’t know how the likes of Paul Thurott, Rob Enderle, Henry Blodget (to say nothing about the entire editoral board of The Register, Business Insider or even New York Times) can wake up everyday now and have no shame in owning up all the FUD they have spread about Apple. The darning thing is that they keep doing that. Thank you for calling all of them out.

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