Should Apple Fear HTML 5? Not a Chance

on September 12, 2011

Apple-Think DifferentIDG News Service’s Leok Essers has an article in which a couple of financial analysts predict dire consequences for Apple from the growing adoption of HTML 5, a technology that allows web pages to behave much more like native apps.

Toni Sacconaghi Jr. of Bernstein research thinks HTML 5 could reduce Apple’s operating profit growth through 2015 by 30%. Jeffrey Hammond of Forrester Research argues that adoption of HTML 5 will squeeze Apple by increasing the commoditization of both hardware and software.

This sort of analysis fundamentally misunderstands the nature of Apple’s success. The first question you have to ask yourself is why, if HTML 5 is such a threat to Apple, why is it embracing the technology so aggressively?  When the iPad was introduced in early 2009, Steve Jobs famously rejected Adobe Flash in favor of HTML 5 for providing media content and rich apps and a browser, a stance from which Apple has never wavered.

The fact is that no company is better at resisting commoditization than Apple. It does this through relentless focus on user experience. “It just works” may be a Jobsian cliche, but it is the essence of Apple. It provided a breakthrough user experience with the original iPhone, which relied on Web apps that are not nearly as good as what HTML 5 offers, it did it again with native apps on later iPhones and the iPad, and it will do it with HTML 5.

The one area where Apple may be hurt a bit will be the ability of HTML 5 web apps to go around the iTunes store and the 30% of sales that Apple takes off the top. But that’s not where Apple makes its money. In the June quarter, all iTunes Store revenues, including apps and content, accounted for only $1.6 billion of Apple’s $28.6 billion in revenues.

A bigger threat perhaps is that in a world of HTML 5 web apps, Apple will lose the curatorial control that the App Store has provided. While Apple’s “control-freakery” has been much criticized, this curation has maintained fairly highly minimum standards for iPhone and iPad apps and has avoided the chaos of the Android Market. HTML 5 will loosen control somewhat, but I suspect that Apple will find a way to keep that user experience coming.