How the Apple Tablet Could Save Computing

Popular Science bitches and moans about how the rumored Apple Tablet could ruin computing. [h/t Instapundit]

The Apple Tablet is rumored to be a cross between a laptop and an iPhone. The iPhone isn’t really a cell phone, rather, it is a handheld computer employing a touch interface with a cell phone built-in. It uses a slimmed down version of Apple’s MacOS X operating system that Apple uses on all its computers. This makes it easy to make an actual laptop-like device that uses the iPhone’s operating system complete with the special cell-phone associated attributes of the handheld.

In PopSci’s thinking, this is a problem because the iPhone’s default setup only allows people to use software written by independent developers but approved by Apple installed exclusively by being downloaded from Apple’s App Store. According to PopSci, this is bad because if this model spreads to all computers, people wouldn’t have the same level of flexibility to run any software they please on the new type of computer as they do on current ones.

PopSci needs to rethink that because without a new business model to pay for the creation and distribution of software, there won’t be any software for people to run. You can’t make money anymore writing and selling software using the current business models. PopSci isn’t saving freedom for end users, they’re killing it. Apple is saving the freedom of end users by making it possible for software developers who aren’t giant corporations to make a living at writing software.

The iPhone and its App store recently convinced me to return to writing software directly for end users and I am far from alone in doing so. The iPhone app store has ignited a renaissance in software development and PopSci shouldn’t be trying to abort that. We don’t need a software Bonfire of the Vanities.

(Just for clarification, when I say software in this context, I’m talking about programs that are installed and run on the end user’s hardware. Web based software, i.e., things you use from a web browser, is an entirely different business model. Things aren’t so hot there for small developers either.)

When we talk about who writes software and for whom we’re not talking about technology, we’re talking about business models. Technology is all great and good but business models provide the organization and the allocation of resources that lets end users route their money to the people who create that technology. It doesn’t matter what kind of whizbang idea you’ve got, no functioning business model means no technology in the hands of end users. It’s just that simple.

PopSci does not wish to face the ugly truth that the business model for software development is fundamentally broken. Only big companies can make a profit doing it anymore. If you don’t like what they make, you do without. It wasn’t always like that.

From roughly 1975-1995 a lot of individuals and small companies made a lot of money writing a lot of software. They could make money because they could reasonably expect to be paid for the vast majority of installs of their software. Software could only be easily moved between computers on a physical medium and bypassing serial number protections was relatively difficult. If an individual wrote a useful little program, they could sell it for reasonable price and expect that 80% of the people who used the software actually paid for it. A small program that took a month to write, sold for $9.95 and had 10,000 installs would bring in something like $80,000.  That left a tidy profit of around $8,000-$16,000 dollars. Those kinds of numbers made it possible for small developers to survive and create a blizzard of innovative software to fill almost every niche.

Post-1995, things changed. The arrival of large capacity physical storage, networks and the Internet made it easy to move software from computer to computer. Serial number protection is cracked within hours or days of a software title’s release. Today, a small software developer has to assume that 80% of the people who use their software won’t pay for it. A program that takes a month to write, sells for $9.95 and has 10,000 installs will only bring in $20,000. That leaves a profit of $2,000-$4,000 dollars. That’s okay if you’re a high school student but you can’t earn a living with those numbers. Small developers have moved into other areas. They don’t write programs for individual end users anymore.

Today, the computer software industry has split towards two extremes. We have the really big players like Microsoft, Apple, Adobe et al, who either attach their software to hardware or who have the money and legal muscle to force institutions to pay for their software. In the middle, you have a very tiny population of small companies that mostly make their living writing custom software for specific clients. At the other end, you have open-source freeware which is economically parasitic on some other activity (e.g., universities, tech support, turn-key installs, etc.). Such software only exists if the programmers have some means of earning a living other than  being paid for actually programming. Businesses based on free, open-source software make their money helping people to use the software, not by writing the software itself. Such businesses aren’t computer software developers, they only tweak software written by others as a sideline to their main business.

All of this means that an individual or small company cannot make a living writing software. Consumers are left with a choice much like the one we have with cars. Today, you can buy a car from a giant, multinational corporation or you can have Billy Bob cobble one together for you out of parts he found in the junk yard. You can’t buy a small car from a small manufacture like you could 70 years ago. Likewise, you can’t really buy a small, useful, inexpensive, polished and reliable program from a small developer because those developers cannot afford to write that kind of software. This is the “freedom” that PopSci wants to preserve.

Enter the iPhone and Apple’s App store. The App store makes it simple for small developers to write, distribute, sell and — drumroll please — get paid for, computer software. The App Store has created a boom time for small, creative software developers and provided iPhone users with a staggering degree of software choices. At the time of this writing, there are an estimated 65,000 iPhone apps.

The overwhelming majority of those apps are written by small developers. Thousands of small developers, the kind who historically have created new, ground-breaking software, are flocking to the iPhone. The business model for the iPhone and the App store has created an explosion of creativity and business diversity in computer software, not seen since the mid-’80s and not seen in computers in general since the dot-com days a decade ago.

End users win as well. Apple screens apps so they can’t be malicious or overtly defective. Since developers get paid for every install, they can charge far less for each app. Most apps sell for $0.99 and even the most sophisticated and specialized sell for under $10.00.

If Apple moves this model into the full-fledged computer world, we could see a similar renaissance in desktop software. Instead of plunking down several hundred dollars for Microsoft Word, end users could buy a dozen or so small applications for a few dollars each that would combine together to handle their word processing. For example, you could have a basic framework application and then buy several $0.99 cent plugin modules to make the program do just what you wanted it to. Small, niche markets could get software written for them. You could actually pay a couple of dollars for a small, special-purpose program and get it when you wanted it, instead of having to wait for a bored computer science major to bang out a crude version over the summer break.

However, what if, like PopSci, you hate the idea of not having complete freedom over your software choices? What if you want to pick and choose whether you pay programmers for their work or not? What if you don’t want vetted software. What if you want to run software written by the Russian mob? Well, you still can. You can do so on the iPhone today by jailbreaking it and turning it into a completely uncontrolled, unmonitored platform. Simply don’t use AT&T and Apple’s services and you can steal all the software and take all the risk you want. Oh, wait, what if like PopSci and Google, you want AT&T and Apple to provide all the benefits of the iPhone and App store today without any of the tradeoffs? Well, too bleeping bad, you can’t. Everything has tradeoffs. Grow up and stop whining.

Like the old saying goes, you get what you pay for and free is often worth every penny. There wouldn’t be 65,000 and counting apps for the iPhone if iPhone developers couldn’t get paid for writing them.. Instead, there would be about 1,000 apps and 800 of those would be rattletrap kludges whipped together for some programmer’s amusement (400 of which would be programs that only programmers would use), and the rest would be toss-offs funded by some big corporation to tie in to or advertise some other product of theirs that actually made money. End users couldn’t get the apps they actually wanted, because the business model wouldn’t exist that could funnel their money to the people who could write those apps.

The iPhone as a technology is ground breaking. The App Store as a business model represents (and I usually hate this phrase) a paradigm shift in software business models. To date, we’ve sold software like expensive books in a bookstore. We’ve sold programs like they were physical items, but software is ethereal and it has to be sold in different way with different tradeoffs. The App store does this. It sells software with boundaries of software, not software with boundaries of paper.

Like all good business models it has the potential to reward the creative and provide functionality to users. Like all strong systems of property rights, it will protect the interests of the small and powerless against the interests of the big and powerful. Like all free-market products, no one has to use it if they don’t like the tradeoffs inherent in doing so.

If PopSci had the awareness of technological history that a technology publication should have, they wouldn’t be cheering on the attempts by the giant, multinational corporation Google to hire the government to force AT&T and Apple to let Google parasitize the former two’s system. Instead, they should be rooting for the system that give the little guy a chance.

The modern computer industry started in garages. The future of computing could be born there as well if PopSci and others of like mind weren’t so damn nearsighted. I’m heading out there now.

40 thoughts on “How the Apple Tablet Could Save Computing”

  1. The problem with software (as with music and movies) is that corporations (note that I say corporations, not developers) that make it have been so greedy over so long, that now users are paying back with Internet, if you know what I mean.

    An intelligent solution is to offer goods at a fair price. In the case of software it is more difficult to determine price, since it depends on the development work involved and the sales numbers, but for music and movies, sell any CD, DVD or Blu-ray downloaded via Internet using P2P networks for 1 dollar and piracy is history overnight. That way the cost for them is near nothing and they are selling something that does not exits (not physical disk or book or box or whatever) and that can be duplicated to the infinite a virtually no cost. THAT IS THE NEW MODEL. Sales increase thousands of times WORLDWIDE and everybody wins. But they keep on being too greedy to see it. Poor dinosaurs…

  2. Great article. Especially with the popularity of netbook computers, people aren’t going to spend hundreds of dollars on MS Office bloatware.

  3. I don’t buy this at all. The iPhone App Store [was] fertile ground because there was a serious lack of content available for that platform.

    Are independent software developers for the PC driven away due to piracy? I find this an incredible claim, particularly since we’re limiting our topic to niche software, the kind that will not be interesting to a large number of people and thus isn’t exactly easy to find for casual pirates.

    More realistically, the decline of the independent software developer is just a natural result of a mostly matured platform. Word and Notepad are ubiquitous and good enough for most people’s needs. Media is handled by Windows Media Player and iTunes or the web browser of choice. Email is handled by Outlook or Mail. These programs are pretty much the core of almost everyone’s computing experience, and they’ve all been around for quite some time now. Heck, there’s software written 30 years ago that’s still in use today. So anyone trying to sell a product these days has to compete with software from the past 30 years of development, not to mention get their product visible to their clients on an internet full of advertising and also overcome the strong bias people may have against downloading possibly virus-infested software from the internet.

    Thing is, this phenomenon of independent software developers hasn’t ever really gone away. These days those guys that are sitting alone in dark rooms at all hours of the night are working on webpages. Instead of writing an executable you make a web-based app that offers a service and put ads up on it, maybe a donation link or premium membership.

  4. Hey Shannon, I use my iPhone all day long! Let us know about your software. I’m a 52 yr old plumber who is hooked on this gadget. I’ve purchased a lot of small programs AND music that have made my life bitchin’. Gotta say that I’ve carried PDA’s and PPC’s for 8 yrs or so, and this iPhone is a game changer. I’m scheming how to get my mitts on a MacBook pro.

    The basic fact is that you have to support your family. Popsci is slinging warm bull droppings, and anyone who can’t see that is probably over educated. Oh well….I enjoy Chicago Boyz, and appreciate the thought and hard work that is put into the blog.

  5. The App Store does have some odd ommisions that apparently come from Apple’s restrictions about competing with the “base functionality” of the iphone and ipod; for example, there are several apps for playing remote streams in ogg vorbis format, but none for playing ogg vorbis files, because playing music files would be the job of the music playing application Apple provides. And Apple has decided already that Ogg Vorbis isn’t a file format they want to play.

    Depending on how Apple decides to enforce those rules it could rule out a lot of software that there is a market for… specifically different web browsers or plugins for the default web browser (since they either duplicate functionality of core software or extend the behavior of core software).

    (Among the other things they don’t want to sell, btw, are interpreters for scripted languages, because of the apparent belief that these would represent some sort of security hole. WHile it’s not one of the things I’d use an iphone for, it would be one of the things I’d use an itablet for.)

  6. One of the problems that developed on the iPhone Apps store is that a small number of programmers make money, and a large number of programmers lose money.

    This leads me to assume that either (a) such apps will follow the general market trend, and be dominated by a few well-funded developers with lots of resources and/or companies with lots of resources or (b) the market will devolve into a hobbyists’ arena, much like open-source.

    It might resolve to a stable equilibrium with elements of both extremes present.

    I do note that one of the results of the iPhone has been an implosion of the market for stand-alone GPS devices. With the latest iPhone OS release, application writers can use the API for Apple’s Map utility. Some of the big companies that now sell GPS, and have seen their sales decrease due to iPhones, are discussing porting their turn-by-turn navigation software to the iPhone.

    That appears to be a case where an established name in the business of navigation software would dominate the navigation software market on iPhones. Would they be a small software company or a big one? Would any small, up-and-coming competitors have enough resources to replace these established names in the navigation-software niche?

  7. Chix,

    The problem with software (as with music and movies) is that corporations (note that I say corporations, not developers) that make it have been so greedy over so long…

    Blaming a economic phenomena on greed is like blaming a building collapse on gravity. “Greed” is a useless concept not only because it has no firm definition for any given case but also because like gravity the desire of individuals to get the maximum possible reward for their work is a universal phenomena.

    Don’t I have a right to set what I believe is a fair price for the results of my work? If I build a chair and set a price for it do you have the right to just steal the chair if you think that price is too high? If in your opinion, I take to much money in exchange for my work, I am greedy. If you use my work without paying my price, isn’t that also greedy behavior. After all, you’ve injured me for your own economic benefit. Isn’t that the core definition of greed?

    I don’t know what you do for a living but would like me to apply the same standard to your work? You do the work and then I, and only I, decide what is a fair price and if you don’t agree I will just steal it.

    The real problem here is that you’ve dehumanized business people to the extent you don’t feel morally obligated to treat them fairly. As long as I am an unsuccessful seller or software, you see me as a human being towards which you have reciprocal moral obligations. Once I succeed and make money, I suddenly become subhuman and you feel morally justified in taking whatever you wish from me.

    That type of thinking never ends well for a society in the long run. Short-term it discourages people from producing because

  8. A company with a proprietary platform can afford to invest significant money in the marketing and distribution of third-party-developed applications…a company with an open platform, generally speaking, cannot (because money spent on such marketing/distribution would help its competitors almost as much as itself.) Back in the olden days, proprietary minicomputer makers and also timesharing services did a significant amount of such marketing and distribution.

    Reading the post and the comments, it strikes me that Apple has been missing out by not having a much stronger software partners program for its main-line products. I bet there are a significant number of (mostly small) software developers who would agree to a 2-year exclusivity with the Apple platform in exchange for appropriate promotion and distribution.

  9. The PopSci article missed what seemed to me a crucial point: you get the Apple software & hardware by paying the premium to Apple. If the Apple tablet succeeds, I estimate it will take less than a month for the first decent clone to appear. Microsoft will push to make it happen, as will other wireless providers, and Linux will follow shortly. You will soon have the same set of advantages and disadvantages as you have in the PC & mobile markets.

  10. Caveat Emptor,

    More realistically, the decline of the independent software developer is just a natural result of a mostly matured platform.

    This is partially true but doesn’t explain the entire picture.

    First, there are a lot needs not being met by large commercial software. The flood of freeware apps for all platforms demonstrates this great unmet need. People who create these apps are heroic because they often spend a great deal of time creating and maintaining useful software for little or no economic reward. They can’t turn their useful ideas into income because no model currently exist to efficiently and cheaply link them to their consumers. The App store could fix that.

    Technologically, we don’t have to have giant bloated applications designed to give meet the needs of 99% of all users. It’s quite possible technologically to use a cluster of interoperating small programs to accomplish the same task. Unix and linux have long worked on this system and many people have put forward similar systems for other platforms. Open Doc was probably the most fully developed.The attempt to create software based on this idea failed because it had no economic support in the form of a functioning business model. The App store could fix that.

    These days those guys that are sitting alone in dark rooms at all hours of the night are working on webpages. Instead of writing an executable you make a web-based app that offers a service and put ads up on it, maybe a donation link or premium membership.

    Exactly my point. This isn’t a feature as you seem to think, it is a bug. Small developers write for the web because the web provides a business model in which they can be paid. Web apps are inferior in almost every regard to apps running on local hardware yet people right a lot of them because that is the only way they can make money writing software under the current business models. If the right business model existed, a lot of those web apps could be turned into local applications that would work better for end users.

  11. I think there are huge opportunities for new software businesses. In virtually every company, there are people doing important business processes using EXCEL (often combined in klutzy ways with manual processes and with various interfaces to legacy systems) because they have work that needs to get done and

    a)their internal I/T departments are unresponsive
    b)the approval and contractual overhead for outsourcing is too high
    c)there is no packaged application available that does what they need

  12. What if you want to run software written by the Russian mob?

    It is written by a Russian mob.
    That is, 70% of programmers (my personal anecdotal data) are Russian-speaking Jewish immigrants to US. (20% of the remainder are Indians).

  13. Phil Fraering,

    The App Store does have some odd ommisions that apparently come from Apple’s restrictions about competing with the “base functionality” of the iphone and ipod;

    This is one of the tradeoffs of the model. If the platform in its entirety cannot make money, then the small developers cannot either. This would be unacceptable if both developers and users didn’t have the option of not using the App store and other Apple and AT&T services but they do. What critics of the App store want is to have all the advantages of the closed App store system without any of the disadvantages. This is something akin to someone who demands the security that having a lock on a door but is outraged at the requirement to carry keys with them when they leave the house.

    Also, because of its cell phone functions, the iPhone itself has to be more secure and reliable than your average computer. If your computer crashes you can still call 9/11. If the iPhone crashes you can’t. Those restriction would not apply to software aimed at full fledged computers.

  14. Mitch,

    If the Apple tablet succeeds, I estimate it will take less than a month for the first decent clone to appear

    That’s what they said about the iPod, iTunes and iPhone itself. Truly successful clones haven’t yet appeared because people concentrate on cloning the technology without paying close attention to the business mode. Look at Microsoft Zune.

    It is the business model that makes the iPod, iTunes and the iPhone work, not the tech. Microsoft already has a tablet based operating system and tablet form laptops are already out there but they haven’t caught on. Ditto for Windows CE which is an operating system for small and handheld devices.

  15. Karrde,

    One of the problems that developed on the iPhone Apps store is that a small number of programmers make money, and a large number of programmers lose money.

    This has always been true in the software industry and indeed every industry. It follow Praeto’s rule: 20% of the people make 80% of the money.

    The key point here however is who has the opportunity to make the money. On the iPhone, a small clever developer can make more money that a big developer. When the software model favors small and modular software, small agile developers have the advantage. Bigger isn’t always better.

    Most iPhone developers won’t make their fortune. Heck, most won’t even make living developing exclusively for the iPhone. However, that possibility that a realistic possibility exist that they could do either draws developers to the platform in a way that doesn’t exist for any other platform.

  16. I don’t like Apple hardware or software, and that’s fine, because I can just buy something else that I prefer instead. The same works the other way around, too – you’re free to buy and use Apple stuff if you prefer it and I don’t mind at all.

    There’s one exception and that is the iPod. There used to be good portable hard drive based music players available. I know because I bought one a few years ago (an iRiver IHP-140). It has much superior sound quality to today’s iPods. The problem is that I went to buy one for my mother and guess what, they don’t make them any more. In fact virtually nobody seems to make hard drive based portable music players any more except for Apple. I guess they just couldn’t compete. But, I want something with better audio quality – the DAC they put in the iPod is terrible. It’s made by Cirrus Logic for god’s sake. Couldn’t Apple spend the extra 50c to one made by a more reputable analogue company like Burr Brown (Texas Instruments now) or Analog Devices? I’d be happy to pay for it. But they’ve decided not to offer me that choice. The original iPods used Wolfson DACs which are much better than the Cirrus/Crystal ones that replaced them.

    Anyway I guess my point is that when, for reasons I just can’t understand, most people seem to think that iPods are great and it eliminates most of the competition in that market, I’m not happy. A lack of competition and choice in any market is bad. I don’t think that’s going to happen with laptops or netbooks though. Alternatives will be around for a long time.

    Note that I don’t really blame Apple for this, the simple fact is that if people will pay just as much for an iPod with a cheaper, crappier DAC chip in it and Apple earns 50c more per unit in doing so it’s a perfectly rational decision on their part.

  17. Nicholas,

    Anyway I guess my point is that when, for reasons I just can’t understand, most people seem to think that iPods are great and it eliminates most of the competition in that market, I’m not happy.

    Your problem is that you value something different than most people. Nothing is eliminating competition from the market, its just that there are enough people who share your parameters for an mp3 player.

    Couldn’t Apple spend the extra 50c to one made by a more reputable analogue company like Burr Brown (Texas Instruments now) or Analog Devices?

    Component choices are non-trivial decisions. Even 50c spread over millions of units comes to a huge chunk of change. You also have the problem of supply. Just because a company can produce 100,000 clearly superior units for a trivial cost doesn’t mean they can produce millions. I can tell you from personal experience that Apple and other companies often choose components based on the ability of the supplier to scale quickly so that if the unit sells much better than forecast the company won’t get caught short.

    Your real problem however is that nobody has succeeded in reproducing Apple’s business model for the iPod. What you really need is for someone to create a generic iTunes like system to sell, load and manage music on mp3 players from many different manufactures. If they did that, then you would see viable niche markets in mp3 players open up.

    This rather reinforces my original point. It is the business model that makes the technology work in market place.

  18. Nicholas,

    Don’t want to start a fight but won’t your mother be satisfied with an ipod. Does she know sound fidelity as well as you? Is she going too put in 7 gazillion songs or a few thousand? It probably just for her walks. Just buy her an ipod nano in her favorite color. She’ll love you just the same.

  19. “Small software companies can’t make money anymore?” Nonsense. The Individual who make the best selling series of Bird Watching Apps has cashed checks from Apple in excess of $10,000,000. You can become a millionaire making software for the iPhone/iPod. There is an ‘App for That’.

  20. Dove,

    Small software companies can’t make money anymore? Somebody better tell these guys,…

    Do I need to explain why anecdotes are not evidence?

    Games are one area in which small companies can still prosper. This is because most gaming companies don’t do a lot of programming. Most games are based on another companies gaming engine and the company that creates the game merely provides the rules and graphics. A lot of game engine companies brag that you can make games with their products with little or no programming. Gaming companies add value largely by the graphics they produce. In these companies, artist outnumber programmers by a wide margin.

    Even so, a small company isn’t going to make it big in games anymore in large part due to piracy and the difficulties in distribution. An App store business model would help small game companies a lot.

  21. Nicholas,

    You remind me of camera guys who look at the hardware specks, like the number of Megapixels, and completely ignore the quality of the camera lens.

    The best thing you can do for an iPod owner is give them a decent set of headphones.

  22. Great article!


    To date, we’ve sold software like expensive books in a bookstore. We’ve sold programs like they were physical items, but software is ethereal and it has to be sold in different way with different tradeoffs. The App store does this. It sells software with boundaries of software, not software with boundaries of paper.

    The emphasis is mine. A well-designed tablet and associated software will allow those very same “expensive books” to sold (and consumed) electronically through the app store.

  23. Al,

    “Small software companies can’t make money anymore?” Nonsense. The Individual who make the best selling series of Bird Watching Apps has cashed checks from Apple in excess of $10,000,000. You can become a millionaire making software for the iPhone/iPod. There is an ‘App for That’.

    Were you replying to the parent because my entire point was that the App Store lets small developers make money whereas other models do not.

  24. Shannon, at this point in history I don’t think there’s any way the ipod would start losing money if Apple allowed ogg vorbis _files_ to be played on the machine; I also doubt that such would cause the phone network to crash.

    I’d also like to point out that I can get a wireless card for my laptop(which can run python) FROM AT&T that will let it go on the cellphone network; they don’t feel the need to do any special audits of user’s machines or provide specialized software in order to let them use their network.

  25. Phil Fraering,

    Nobody outside of Apple or AT&T actually understands what will and will not impact the network. We’re all just guessing. For example, laptops may simply not be numerous enough yet on the network to have an effect.

    The more important point form my perspective is that protecting the business model is just as important as protecting technology. Just as it is software that makes the hardware useful, it is the business model that really makes the software useful. The business model is a kind of meta-software that ties the whole thing together. Disallowing a use because its interferes with the business model is every bit as legitimate as disallowing one that damages the technology.

    As I noted above, if it was merely a matter of technology, there would be dozens of iPhone clones out there right now. Personally, I think Apple/AT&T can refuse apps or use based on any criteria they wish. They created the system so morally, they can use it as they wish. If they want to disallow apps because they don’t like purple or because it is Tuesday they can.

  26. “Like all strong systems of property rights, it will protect the interests of the small and powerless against the interests of the big and powerful.”

    I hope you don’t mind me saying this but that is hopelessly naive. Don’t forget that Apple is big and powerful and I decides to turn against you you have no where to go. One thing we’ve learnt from history is that strong property rights allow the big and powerful to bleed the small and powerless to death. You only have to look at some of the things that Microsoft (as an example) has done to see that.

  27. For those people who seem to be suggesting I’m too picky or don’t know what I’m talking about, can I point out that I’ve designed audio equipment before and am familiar with measurements like THD and SNR (which I have performed on my own equipment using Audio Precision gear). Better headphones won’t fix a DAC with very bad THD numbers like the one Apple are currently using. The headphone driver on the iPod is also extremely weak, causing THD to skyrocket with any kind of significant load such as good headphones which often have an impedence of 32 or even 16 ohms.

    All these you-should-settle-for-an-iPod-it’s-good-enough-for-me type comments suggest why people like me who are in the market for hifi gear (and I admit, we’re a small and shrinking minority) get stiffed when it comes to portable music players.

    Shannon may be right that it’s the business model which is driving the lack of choice but personally I don’t care about Apple’s business model, I don’t want an iTunes store, I just want to pay money in exchange for a physical device that does what I want. I guess because what I want doesn’t match what others want, that means I’m out of luck. But I thought one of the advantages of capitalism is that in a capitalist system, niche markets exist and can be profitable enough to attract players. That used to be the case with portable music players but it’s becoming less and less so. I wonder why…

  28. Here is the proof:

    Hollywood hates Redbox’s $1 DVD rentals

    Because P2P is not stealing; it is sharing. Because the digital world is not real (physical): you can duplicate it to the infinte at virtually no cost. Because they have been for decades selling just one or two good songs on a full album at rocket prices, and selling virtually the same software with almost only just a change on the version digit. Now is the turn of the consumer. Now is the turn of Internet. Unless, of course, they are intelligent enough, as Redbox. Time will tell.

  29. Nicolas,

    Perhaps in this capitalist society this is a niche that you need to fill personally. Exercise your entrepreneurial spirit – get out there and produce that mp3 player for audiophiles (good luck with that). You’re going to have to do it, because, unfortunately, that’s the only way you’re going to have the pleasure of owning one.

    I don’t think anyone’s suggesting that you are too picky (for your mother, perhaps) or that you don’t know of what you speak. It’s just that most audiophiles decided long ago to stick with their Bang and Olufsen home stereos and so it is not a large enough market for the portable player market to concern itself with.

  30. Good point, but now the sole thing I think is to restrictive, acceptable for the iPhone, but would not be acceptable for the iTablet is to be forced to buy the right to compile software on the computer.

    Ok for the AppStore

    Not Ok for the programming right fee…


  31. Me,

    I hope you don’t mind me saying this but that is hopelessly naive. Don’t forget that Apple is big and powerful and I decides to turn against you you have no where to go.

    Apple protects my digital property rights against those who would steal my work. That is what I meant. That thievery might come from individuals or it might come from corporations or governments. Regardless of the case, the Apple App store will ensure that I get paid for every install of my software.

    Suppose Apple does “turn” on me. Would I be any worse off than if they had never opened the App store at all? No, I wouldn’t. I would be right back where I was before Apple opened the App store.

    In a perfect world, the government would automatically protect my digital property the same way it protects my physical property but having the government involved poises many technical challenges and political risk. Having a private company like Apple do it is preferable. I have more control and influence over Apple computer than I do over any any level of government.

  32. Steven, actually I have designed & built my own Ogg Vorbis player, however it isn’t quite finished. I spent a lot of time working on it (probably about a month of solid work) and while it works, it needs some hardware & software improvements to be fully functional. Obviously the reason I designed and built it myself was that I could no longer find a commercial product to suit my needs. Not a new one, anyway – I could probably find some old used models that would do the trick but I prefer to buy a new item.

    The hardest thing about making the player is that I haven’t yet worked out how to have an enclosure made to put it in that will fit it snugly and have cutouts for the screen, buttons, etc. I know how to build the electronics and I know how to use a CAD program to design a shape but I’ve no idea where to actually get a suitable box manufactured in small quantities at a reasonable price. Maybe one day I will have enough spare time that I can figure that out.

    My greater point related to the original post is this: however much people love Apple I think you have to admit that, at least in the market for hard-drive based portable music players, they have caused a large contraction in the variety of options available for purchase. I don’t think that is a good sign, and I hope it doesn’t happen in any other fields. It’s obvious to me the difference between now and five years ago when I go to a store looking for one of these players. The choices available in the same store are much narrower now. I like having more choices, not less.

  33. Chix,

    Because P2P is not stealing; it is sharing.

    No, it’s flat out stealing. If you take the fruits of another persons work without paying what they believe is a fair price you have stolen from them. You have hurt them.

    You rationalize your theft by dehumanizing your victims. Your rationalize that your not stealing from human beings but rather from big, impersonal institutions who have cruel exploited you by charging you more than you wished to pay for entertainment. Why, they owe you! You’re like Robin Hood balancing the scales of economic justice! You’re nobly striking about against those who exploited you and everyone else for so many years. You’ll show those damn greedy jewish moneylenders whose boss…

    …whoops. See where a lack of respect for other people’s work leads? Destruction of rights always begins with some marginalized group that people feel justified in hating and then it spreads to larger and larger sub populations. You think your defense of digital theft only hurts giant corporations but the same ethical and legal standards you seek to normalize hurt individuals like myself even more. Giant corporations have the resources to defend themselves to some degree but I don’t. I rely on law and the morality of fellow citizens to enforce my property rights. If those break down, I am screwed.

    Here’s what is apparently a radical idea for you. You don’t get to decide how much I value my work. If I create something, anything, I get to decide what price another person will pay for it. If you don’t have want to pay my price, you go without. You don’t get to just take it.

    Because the digital world is not real (physical):

    If its not “real”, then why do you want it? Can something that is not “real” have any value to you? If software isn’t real and has no value, why are you using a computer in the first place?

    you can duplicate it to the infinte at virtually no cost.

    You can only duplicate it after I have spent tens of thousands of hours studying how to right software, gaining experience in how people use software, learning to judge what software people need, using all that knowledge to write, test and polish that software, paying for the hardware and software needed to write the software, then paying for the marketing and distribution of that software so that it gets up on the internet where you can steal it. Oh, and I also have to forgo all the income I could have made making something you would deign to actually pay for.

    I am so f*cking glad that people like you believe that software just rains from the sky like mana and that people like me just scoop it off the ground with no effort whatsoever and then turn around and unjustly charge you actual money for it.

    If you reply to the post, don’t mention the corporations you dehumanize. You talk about me and my software. You explain why you get to steal from me. You explain why you being pissed off at movie companies justifies you stealing my software and “sharing” it with 10,000 of closest friends. You come back with argument how pissed off you are at corporations and I will delete your whiny little thieving post.

  34. GI,

    Good point, but now the sole thing I think is to restrictive, acceptable for the iPhone, but would not be acceptable for the iTablet is to be forced to buy the right to compile software on the computer.

    Apple provides the iPhone programming tools for free. It even comes with an iPhone simulator. You only have to sign up as a developer to get the right to install the software on the iPhone. They do that because it is the only way to protect the integrity of the iPhone system. Because of its inherent interlinked nature being able to install software on one iPhone means being able to install it on all iPhones. Apple can’t protect its rights and the rights of developers any other way.

    Not Ok for the programming right fee…

    Why not? Do you have a natural/God-given right to produce software for the iPhone? Apple created the iPhone from scratch why don’t they have the right to control that creation no matter what other people think. If Apple doesn’t let you program for the iPhone you’re no worse off than if Apple had never made the iPhone in the first place. You lose nothing you didn’t start with.

    You only have a right to control the work of others if you contributed to the work. You and I didn’t expend any resources creating the iPhone and we don’t expend any resources maintaining the iPhone system. Why should we have a veto over how Apple uses it?

  35. You only have a right to control the work of others if you contributed to the work. You and I didn’t expend any resources creating the iPhone and we don’t expend any resources maintaining the iPhone system. Why should we have a veto over how Apple uses it?

    You know, that’s not a convincing argument when you’re trying to get someone to buy the system. I was kinda thinking that if I bought the piece of hardware that I’d have the veto rights.

    BTW, to whoever was building their own ogg player: some of Sansa’s players can handle Ogg, and cost less than fifty dollars.

  36. Phil Fraering,

    I was kinda thinking that if I bought the piece of hardware that I’d have the veto rights.

    You have complete control over the iPhone hardware you buy. You just don’t get veto over Apple’s services and you don’t get veto over my property rights. You don’t have buy any particular App and you don’t have to use the App store and you don’t have to use AT&T.

    You have to accept the tradeoffs with any benefit. If you want abundant, high quality software, you will have to accept some restrictions on how you obtain that software and how you move it from device to device. If you don’t care about the quality of your software, then your choices are wide open.

  37. Do I need to explain why anecdotes are not evidence?

    Ha! Well, your post consisted of bald assertions and appeals to personal experience, so I think I’ve still got you beat in the evidence department. And ycombinator is hardly to be dismissed as a mere anecdote. A company that invests in small software startups is a better indicator of the industry’s health than any individual developer’s experience might be–and they seem to still expect a high success rate. Moreover, its forum is the buzz site for smale scale software entepreneurship, at least on my radar. I’d say it’s the most relevant possible community to the discussion. Certainly more relevant than Chicagoboyz.

    The message of the anecdotes is this — I follow the small business side of the software industry. I mostly care about games, but ycombinator is pretty broad. And the story you’re telling doesn’t match the one I’m seeing. You say money can’t be made on the desktop, but I see a lot of folks doing it anyway. You say piracy is the major thing that’s changed in the last 10 years, but that’s not what the folks struggling to survive say they grapple with. They talk about a competitive market and technological churn and the need for innovation and mundane running-a-business challenges, not piracy.

    So consider Moonpod more of a counterexample than an anecdote, representative of a class of counterexamples. I consider them a typical, if strong, example of what a successful, small indy games company looks like. You presented that as an okay pursuit for high school students, by these are 18-year industry veterans; they shouldn’t exist. The company is three guys, quite vulnerable to piracy, targeting the desktop, literally betting their livelihood one one flagship product at the start. They’re doing everything wrong, and yet–while the market is tough–they apparently did okay since they’re still around. And there’s, and Introversion, and on and on. Heck, Braid was a one-man show. The market’s not what it was in 1992, but money still seems to follow innovation okay, and small companies can still succeed.

    Now, I know you wanted to discount games entirely from the discussion, but you gave the lamest possible excuse for doing so. Seriously, it amounted to, “You can’t count the games industry. Games are easy to produce and mostly about graphics, at least according to game engine advertisements.” Look, you can’t make a successful game with the cheap no-programming engines, no matter what the ads say–those are for novelty products and completely starved and captive platforms (like iPhone!). A mature market like the desktop is far too competitive for such a cookie-cutter approach. Big companies license serious engines for six or seven figures, and bring even more expensive technical resources to bear in customizing the game further. Small game companies can’t do that, and have to be brutally innovative to stand out; even if they do use an engine, there’s a lot of programming still involved. The norm is several months of work by two to four developers, not a hack job by a couple artists. And successful games look more like Darwinia and Auditorium than This Week’s Platformer Re-Skinned With Zombies.

    So in spite of your dismissal of games in general, I think indie games do stand as a counterexample. Money can still be made by small companies targeting end users on the desktop, piracy notwithstanding. But you have to be very innovative and very good.

    Now, no one contests that that market’s tougher than it used to be. The absolute flood of shareware products that was the way of the 1990s has slowed to a few superstar offerings per year. Why is that? You blame piracy, but the numbers don’t bear that out. In the United States, the software piracy rate is 20%, meaning 4 out of 5 copies are legitimate. Most of the developed world weighs in no higher than 30 or 40%. The worldwide numbers look bad, but seriously–was your target market Nigeria? Who was even selling to China in 1992? Not the bedroom programmers, that’s for sure. Moreover, software piracy, both worldwide and in the developed world is getting better, not getting worse when you look at rates instead of raw lost revenue and adjust for methodology. Even if the raw lost revenue numbers keep growing–and that on shaky assumptions–the market is growing faster. Yeah, piracy is a problem, but it’s less of a problem than it used to be, and the legitimate market is bigger than it was ten years ago. Way bigger.

    In particular, the tax of piracy isn’t really worse than the tax of Apple. When you develop for the desktop in the US or Europe, pirates take 20-30% of your installations. When you develop for iPhone, there may be few pirates, but Apple takes 30% of your revenue. That’s at best a wash. Practically, the open market’s a better deal; it’s a bigger market, the rate’s a little lower, and the losses aren’t equivalent. Apple’s guaranteed to take 30% of legitimate sales, but even perfect DRM wouldn’t convert all of the desktop’s thefts into sales. A lot of folks who steal weren’t looking to buy.

    Why is the desktop tougher than it was ten years ago? Two reasons, in my opinion.

    First, the platform is much more mature. Any industry goes through a phase of heavy innovation and investment by many parties–a gold rush–and then matures into a few key big and little players. When the desktop was brand new and no one knew what would work, bedroom programmers could hack together something competitive. With established processes and techologies, with the market mapped, with resources allocated and everyone aware of how lucrative things are, it’s a tougher field. That always happens. Two guys on a hill may have started aerospace, but they couldn’t compete with Boeing these days. There are little companies that can, but it takes extreme excellence and innovation. The automotive industry once looked like iPhone apps do now, but over time it got so small players had to be someone special to have a chance. Heck, it even happens in science–young fields are easier to make a splash in. Why shouldn’t it happen to software? What you’re seeing on the desktop is a very natural phase of growth: the transition to a tough, mature market. That’s not really something that can or should be fought.

    Second, the platform is not only mature, it’s actually dying. Or rather, shrinking down to its natural size. Applications are moving to the web. Not quickly, probably not completely, but . . . more and more. What AIM/ICQ was a generation ago, Facebook and its ilk are now. Moonpod five years ago looks like Auditorium this year. Quicken is a web app now–did the 90s see that coming? Google wants everything in the cloud; Microsoft has moved Office to the web. It’s a natural home for a lot of applications. And not mainly to avoid piracy, either–that’s really reason number three or four. The pull of the web is its broad reach: developing for the browser is so cross-platform it’s silly. There is no installation, no physical media, no troubles reinstalling on separate machines. The app is simply there, ready to be used at a moment’s notice. Free trials are easy. Micropricing is easy. Deployment is instant, development cycles are fast. The market is huge and easy to get to. Oh yeah, and software on the web is harder to steal. Sure, there’s a performance hit, but performance isn’t the big deal it used to be. Moore’s Law has been quietly dying of economic causes: computers simply got as fast as we needed them to be. A few niche markets will remain for the desktop: computation-intensive, security-intensive, infrastrutural things. Everything else is going to the web.

    This, too, is a completely natural process. You want to discard web apps as a completely different market, but this is an incorrect approach. That’s like ignoring the web while discussing the cause of death for the newspaper industry. Look, the web isn’t really killing the newspapers, and it’s not really killing desktop software. Rather, it’s what those things are evolving into. It’s not a different industry; it’s the same stuff being done in a different place.

    Now, I know that’s overstating it. The Web App vs. Native Software debate is still roaring, and nobody can say for sure how far the web will go. The position I’ve stated is strong, but far from uncommon. But you really can’t ignore web apps when talking about why developing for the desktop is hard these days. That’s just an inherently inaccurate approach.

    To come back to the Apple App Store and your original point, even if the main effect of the App Store were countering piracy, it’s overly heavyweight for that. There are a few ways to do DRM, and a third party application as a gatekeeper bundled with some serendipitous functionality is one of the more effective and palatable ones. Steam does it in the games industry on the desktop, and it works pretty well. But Apple’s approach goes way beyond that, walling off the market, charging a fee for entry, and asserting fiat control over who can compete. You associate the present gold rush with that control, but I submit it’s just the gold rush associated with any new and starved platform–like the home PC in the early 90s or the web in the late 90s. You would see that rush no matter what Apple did. Whether its policies help is hard to judge from here; it attracts you, but I wouldn’t touch it with a ten foot pole.

    I say the authoritarian approach actually retards the platform’s growth. Even if I wanted to get into native development on a niche platform (which I don’t–I consider it a blind alley!), I sure as heck wouldn’t do it under Apple’s rules. There’s a real risk that if I invented something good, Apple would shoot the app down and say, “Sorry, we were going to do that–no competition, please.” A cursory look at the blogs of the developer world reveals that I’m hardly isolated in that. And repelling developers cannot be good for innovation or the platform.

    As I see it, sure, there’s a gold rush on, and if you’re good and lucky–and quick!–you can ride the iPhone to make a quick buck. But it’s going to collapse in a big way, and anyway, the rush is caused more by artificial scarcity than genuine innovation. My programming projects remain client-side or server apps targeting the web, not because I’m unaware of iPhone and Facebook, but because I consider learning web technology a better investment.

    Mobile computing has a lot to offer in terms of innovation. I’m not really trying to downplay that. But the tax and rules of the App Store drive away a lot of developers who might otherwise be interested. I think that’s the major effect, and that it’s harmful, not helpful.

  38. You know, Shannon, there are a bunch of people posting on this web page who understand technology but nothing about markets.

    These people have no understanding about why the iPod and the iTunes Music store were such a success. What they never saw was that Apple created a music player which was good enough for the mass of people to use and an easy, secure, cheap and convenient means of delivering that music. Furthermore, Apple created a marketplace where there wasn’t one before.

    It’s Apple’s marketplace; they have a right to protect and defend it for the benefit of their customers, the producers of the music and themselves.

    The business model was so successful that Apple would be foolish not to extend it. It was said, as of two years ago, that Apple wasn’t making any profit from the store. I seriously doubt if that is true now.

    These above people were probably the same bunch who dismissed the possibility of success for the iPhone. They never saw that Apple built on the success of the iPod. It used the iPod’s economies of scale to keep down the iPhone’s cost. I seriously doubt that the above people expected the App store to do well. It has had a phenomenal growth in a short period. I seriously doubt that the trend is ending.

    Do I expect that Apple will create a tablet, eventually? Sure. My only doubt has been about the size.

    A 10 inch tablet seems unwieldy in a 5 by 8 inch format. I would rather have a 4 by 6 inch back pocket sized tablet having a higher resolution screen than the one used on the iPhone. 220 dots per inch would make it small enough to be a true hand held.

    I couldn’t guess which form factor Apple will choose, but I don’t expect to see anything before Snow Leopard 10.6 is released in September and the Christmas buying season starts in October.

    The point is that Apple is likely to continue to build upon its successes. Apple is building a new Data Center in North Carolina, so I expect a huge increase in downloads.

    The App store, like the iPhone, is very new. I would expect that eventually Apple’s competitors will get their act together and provide a viable alternative to it and the iPod.

    Capitalism doesn’t work very well without competition. It is hardly Apple’s fault that they out did their competitors so well that they drove them out of business. It’s what successful companies do.

    So long as Apple has no means to keep out competitors then they will arrive. The only way that a competitor can overtake Apple is to provide a better product thus forcing Apple to match or exceed them. Apple needs to be challenged, but it’s competition is likely to be someone new rather than Microsoft or even Google. Both have serious baggage.

    Who knows? An audiophile’s music player may be one means to compete against apple, so that Nicholas’ audiophile needs can be met. Free and open markets are not perfect, especially when they are as new as the app store. They are merely better than any alternative.

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