The Apple-Adobe Altercation Continues

The open-than-thou battle between Apple and Adobe continues in full swing. Steve Jobs has now come out with an essay on how Adobe's Flash is technically inferior for usage on the mobile platform and how Flash is yet to evolve beyond the PC-centric web that it was originally designed for.

No doubt, some of Jobs' complaints on Flash might indeed be on the dot, in terms of battery usage and/or bugs. The logic carries weight when Jobs says there's a sizable body of content through YouTube that can still be viewed through Apple's devices. However, the argument breaks down when Jobs tries to drive home the point that Adobe is as closed a platform as any other. The problem is, as Jobs himself acknowledges in a fleeting manner, Apple has taken onto itself the responsibility (as it sees) or control (as Adobe sees) of determining what is best for its consumer. And a huge factor going in its favor currently is that consumers don't appear to be giving a thought. For now, Apple's innovations in user interfaces and form factors are greater drivers for consumers. Is that likely to sustain?

Apple is no stranger to criticism and Steve Jobs no stranger to writing open letters. A few years back Jobs wrote an open letter on criticisms that it faced on DRM'd music content. A common theme across both these letters is the emphasis on how industry players are expected to work around to address the needs of Apple's consumers! In the case of music, Jobs exhorted labels to go DRM-free and in the case of flash, the focus is on telling Adobe to deliver a tight product.

Jobs' reference to Adobe's strategy of working as a cross-development platform and how that hinders rapid deployment of new features is a clear acknowledgement of how Adobe's multi-platform multi-screen strategy gets in the way of Apple's single-platform multi-screen strategy (which I had alluded to in my previous post on control issues on the iPhone). And that issue is clearly one revolving around business model and potential monetization than a real pressing technical challenge.

Computing platforms have historically evolved and will continue to evolve. Flash may indeed have been designed for a PC-centric world, but it is as much Apple's responsibility to its consumers as it is Adobe's that they develop a working version of Flash rather than create their own versions of walled gardens. The issue at hand is very little around whether consumers can view flash videos on Apple's growing stable of devices, but one that is fundamental to how the web evolves. A seamless experience for the end-user or a series of islands that constantly spar on how to and if they should build bridges !

Why platforms like iPhone and Twitter are becoming control freaks

This post first appeared in VentureBeat.

Small app developer shops have had a great couple of years. Facebook, Apple, Twitter, and a host of other platforms opened up and let these third-party developers build games and other apps to entertain their users, and in the process allowed developers to build multiple monetization channels as well.

It was a great move for the platforms — all those cool apps brought in more users and kept those users coming back. And it was great for the developers who would otherwise have found it hard to drum up an audience for their apps. But it looks like that trend is probably in danger.

In recent weeks we’ve seen both Twitter and Apple clamp down on developers, adding new restrictions to their developer agreements. It looks like the platforms are eager to take over what appear to be lucrative business opportunities those developers helped to build. Now the question on everyone’s mind is, exactly how much control are the platforms going to be exerting here? It may be that wresting back control from the stakeholders is imperative if a platform is to grow, but if so, how do the stakeholders that helped popularize a platform benefit?

Whether we’re talking about Twitter launching an ad network that could challenge other Twitter-based ad players, or Apple’s recent decision to ban Flash-to-iPhone conversion tools, or the fact that Apple’s new iPad device lacks external ports, it’s clear there’s a trend towards control here. Apple has never been considered an open system, but the actions of the past week indicate that it’s going even further down the road to a closed ecosystem. And then there’s Google’s Android platform. Android’s raison d’être was to enable openness and allow the partners in its ecosystem to decide how closed they want to go. Yet, Google, as the curator of the platform, decided to introduce a new distribution channel and differentiate between phones based on its own criteria. Meanwhile, social networking giant Facebook has been busy, too. The social network has long said that its users should be in charge of their own privacy settings. But a few months ago, it changed tack and took on the role itself.

Why is this happening? Well, there are many reasons, but they tend to fall into three broad categories:

Erect Entry Barriers: Facebook, Google, and Twitter have all grown and scaled on the back of the open web (where access to services has been unfettered by any gatekeeper and consumers were free to switch services with minimal switching costs). They have been able to attract users rapidly because the web has been an open playground, with users gravitating to services that best served their needs. This is very unlike the physical world, where competition is highly uneven in different geographies and location inherently serves as an entry barrier. Increasingly, these companies are recognizing that while the open nature of the web has been a great contributor to their growth, they need to erect entry barriers one way or the other to limit competition if they want to sustain growth at the same rate. By taking steps to control access, features, development tools, or buying out competition, successful companies are looking to raise their control over the markets that they operate in. Apple’s lack of USB ports (primarily aimed at discouraging sideloading) and Google’s “Superphone” requirements for its distribution channel are both indicators of such entry barriers. These barriers will usually not be obvious to the end-user, but they certainly limit the ability of third-party players to operate and interact at will.

Build Platforms that Can Scale: As companies grow larger and more successful, a key decision they face is how much to invest in new products versus how much to continue investing in their existing assets. While there are pros and cons to both approaches, when companies decide to continue investing in existing assets by, for example, building new products/services on top of existing ones, they’re more inclined to protect that investment by exerting more control over their base products. Apple’s approach with its various product lines clearly exemplifies this approach. Starting off with the iPod ecosystem, Apple built the iPhone. On top of the iPhone OS, it has now built the iPad. Note that the iTunes way to interface with the product remains a constant, while the underlying core remains the same for apps (iPod Touch, iPhone and iPad). Having built a platform that Apple has now scaled to multiple products, the company has to ensure that it retains significant control. And that explains its latest move to keep companies such as Adobe at bay — companies that have a professed multi-platform multi-screen strategy that obviously gets in the path of Apple’s single-platform, multi-screen strategy. Similarly, consider Google’s new online-only distribution channel for Nexus One. A movement towards distribution is a first for Google, since the company had thus far allowed device vendors to forge their own distribution tie-ups. While these are still early days to gauge the success or failure of this channel, the intent is pretty clear. As Google continues seeing increased uptake of Android, it wants to involve itself not just in enhancing Android features and providing web services on Android phones but in expanding this presence to newer areas.

Grab the Early and Late Majority Crowd: A key feature of most web and PC-based services remains that most users tend not to tinker around with default settings. The implicit understanding is that if they are comfortable installing/using a service, then they are fine with the settings suggested by the provider. And this user behavior is exploited by service providers to further their goals. For instance, Facebook’s recent privacy settings changes are aimed at making as much profile info public for as many users as is possible. In a similar vein, Twitter’s move to acquire Tweetie or that of releasing a semi-official Blackberry app can be seen as an attempt by Twitter not only to control its platform but also to encourage users to access it through their own application. The underlying assumption here is that, while the innovators and early adopters ( read up here on the theory around diffusion of innovation) might care too hoots about using an “official app”, it is the next wave of people that are the low-hanging fruit. And to this large mainstream crowd, Twitter does not really want to project the impression that the service is significantly separate from the platform. While there are no obvious advantages to using one app over the other currently, that will likely change, as future versions of “official apps” are likely to be more tightly integrated with Twitter’s monetization model and will potentially offer more incentives for users to stick to them.

Given these advantages, it’s clear why platforms would feel the pull to take more control over their offerings. But does enhanced control really deliver in the long run? An answer to that question might come from a different set of players, the mobile operators.

Having started off with highly controlled and closed ecosystems, mobile operators have flourished offering their services in a lock-down fashion. However, of late, they have begun to realize that while closed systems are great for milking consumers, they are not sustainable in the long-run, since the more closed a system gets, the easier it becomes for a disruptive entrant to create havoc. You only need to take a look at the rapid collapse of operator walled gardens (where users were not allowed to browse any mobile site beyond the operator portal and a few select partner sites) and spread of flat-rate mobile data plans (that enable unfettered access to the mobile web) to gauge the pace of this change. Consequently, they are now attempting a painful transition to open ecosystems.

It is ironic that a key reason these mobile operators are beginning to change their business models is because they’re trying to emulate the very same Internet players who are now closing up their offerings. And as the two worlds — mobile telecom and the Internet — converge, expect players from both categories to switch business and operational models more often.

In the meantime, what does this mean for stakeholders in the Internet platform ecosystems — the app developers? Are they going to be left high and dry? I would reckon not. Going by past evidence, closed ecosystems, while being tremendously helpful to the platform owners, still allow for opportunities to be made at the edge of the ecosystem in areas the platform owner deems too small to bother with. The difference in this situation is that there are now a lot of edges — wide edges — where innovative developers can create products that can stand on their own whilst leveraging the larger platform. At the same time, services that offer limited value-addition will fall by the way as the platform owners decided to expand.

So it is really up to stakeholders to decide if they want to be offering me-too services or building out truly innovative offerings. But keep in mind that while platforms are going to continue to exert control over their ecosystems going forward, that strategy will only last until the next disruptive company springs.

Content Vs Platform : Walled Gardens 2.0?

The buzz around the e-book pricing wars refuses to subside. After the very public Amazon-Macmillan disagreement, and a renewed hope on Apple's iPad as a savior for the publishing industry, the news isn’t getting better for publishers. The New York Times is reporting that Apple is likely to have included with publishers aboard the iPad platform, a clause that lowers the prices for bestsellers, to a level matching Amazon's $9.99. These machinations, coupled with internal turf wars over pricing, throw the spotlight on what is likely to become a recurring theme over the coming months - one that of constant strife between platform promoters (in this case, device vendors such as Amazon and Apple) and content providers (Publishers, music labels). And this is not something that is likely to be witnessed only in the e-reader market. Apple's issues with developers over its app approval process, and with music labels over pricing of tracks are more examples of this strife.

While it might seem atavistic to say so, however, the current scenario indeed appears a throwback to the era of walled gardens , where mobile carriers decided what content you could browse on your mobile phones and which content provider gets the best positioning in their on-portal content decks. Those days are, arguably, gone. But guess what, players in the device and content industries have now begun to see the merit that telcos had seen all these years in being gatekeepers to the consumer's user experience. Content and device players are now in a face-off over who can lay claim to the 'last mile'.

What is it that is driving both these categories of players at one another's throat. In the case of the e-reader, the reasons appear to come out of a recent survey done by consulting firm L.E.K. In the study on changing media consumption habits, the survey found that over 44% of e-readers increased their consumption of other media content. This is a very telling statistic indeed. While it has been a generally acknowledged fact that the early wave of e-book adopters have been the most compulsive of book readers, however, such results point to a future where the e-reader has the potential to be a gateway for a new era of content consumption. And this is where Apple's trying to get its foot in the door with its iPad.

However, more than specific devices and the corresponding business models, one key underlying driver for all these changes is the massive impact that the Internet is having on traditional content consumption. And that is what is encouraging multiple players to try and set up vertically integrated ecosystems where they drive the user experience, and more importantly, own the billing relation with the customer. And this movement towards closed systems is happening everywhere. Take for instance, the case of Microsoft's Windows Mobile. One of the key issues for Microsoft over the years has been the inability to create a uniform user experience across devices that ran Microsoft's earlier versions. Platform splintering between multiple device vendors became rampant, and the end result, Microsoft started loosing market and mind share after the advent of the iPhone. And Microsoft's response, the stunningly beautiful, Windows Phone 7 Series , with its long list of hardware and software restrictions. Yes, Microsoft has realized the value of Apple's approach in offering as minimal a portfolio of devices as possible. However, since Microsoft already has a history of working with several mobile carriers and hardware vendors, it did not directly replicate Apple. Rather Microsoft put in place several restrictions that are going to determine how the Windows Phone 7 Series platform evolves.

Platforms begin with restrictive definitions of who can offer services, what kind of services can be offered, what are the pricing points, what are the hardware features, what is the role of the gatekeeper. And every major content and device company out there is now trying to build its own platform where they can define each of these parameters. We can debate ad nauseam whether such closed platforms offer more value to the end consumer or they are just a walled garden with invisible-to-the-consumer walls. However, the fact of the matter is, they are here to stay. And it is in this context that the current e-book pricing wars and aggressive tactics appear as nothing beyond a red herring. The real battle is for the control of the platform.

Is Apple falling behind itself in the innovation game?

A  version of this post, including early reactions from Asia, appeared first in VentureBeat

I agree, having a title like that on a day Steve Jobs introduced what is arguably “Apple’s greatest” device is debatable. But nevertheless, today’s unveiling of the iPad begs that question. While the iPad undoubtedly has top-of-the-line hardware, and a ready content/application ecosystem to feed on, however, does that mean Apple has genuinely innovated in creating a device category that can potentially rescue the legions of traditional media players? Or does it mean that Apple has created a device that can move an entire content stream from other devices/screens on to the iPad? I don’t believe so.

Innovation begins where conventional thinking ends. With the iphone, Apple had done just that. They questioned the fundamental thinking of handset vendors on why keypads should be there, on why compelling third-party applications can’t be built easily, and many more. However, with the iPad, Apple appears to have fallen for the trap of sticking to conventions and building products that do more of the same. True, the iPad indeed boasts a variety of features, targeted at e-book readers, regular content-viewing consumers, and ‘business’ consumers (although I am highly skeptical if we are going to see too many people suited up and using iWork on the iPad).  Apple has also thrown in a 3G radio and sewn-up a flat-rate data plan with its long-time partner, AT&T. But somewhere, all of these bells and whistles fall short.

Apple's iPad adopts a position that is confusing, both to the industry observer and the consumer. While the Kindle and the iPod tried to push consumers to adopt different screens/devices for different needs, the iPad, by attempting to do bits of everything, runs the risk of falling into a no-man's land! For instance, consider its suggested role as a netbook replacement. You cannot run regular Mac OS X apps! And lack of multitasking means users cannot perform basic netbook-style activities such as having a twitter client open whilst streaming music from an online radio. The lack of a camera is also likely to flummox consumers who would expect a $600+ mobile browsing device to allow video-conferencing. And finally, despite the high-end 1 GHz processor that the iPad boasts of, Flash is still off-limits for iPad users, stunting the overall browsing experience. Similarly, take its comparison to a portable high-res media player. The device lacks widescreen display, and you can't connect it to your large-screen TV. 

For more, consider its role as an evolved music player. You're stuck with the amount of memory you opt for, no expandable memory slots for you. Its positioning as a gaming device is probably the only thing that makes sense. Social gaming apps are likely to get a shot in the arm with this category. However, serious gaming remains a big if. Such hazy positioning makes for a potent combo when one takes the pricing of the device into consideration. Although it might start at $499, once you add 3G capability, a 3G data plan (the $15 plan for 250MB from AT&T is a joke for this kind of a device) and the keyboard, and suddenly even the entry-level iPad looks much pricier. Beyond the consumer, Apple also runs the risk of cannibalizing sales of its profitable Mac lines. 

Apple has historically shown that it has been ahead of the innovation curve, atleast in the decade gone by. Starting with the iPod, the iPhone, and the Macs, and the ever-neglected Apple TV, Apple products have always been known for going the extra mile in building innovative solutions for consumer challenges and in the process, profitable business lines for themselves. However, with the iPad, all I see is a product that does a little of many things, a product that tries to build on past glory (not necessarily a bad thing) and most importantly, a product that is representative of other technology companies and not Apple.

Make no mistake, the iPad will likely sell in strong numbers. It might strike it rich in some of the Western Europe markets as well, but as for as I am concerned, this is a step back for the innovative company that I have admired for long.