Friday, May 14, 2010

Apple vs. Adobe and More!

Adobe has responded to Steve Jobs' letter about why the iPad does not run Flash. In newspaper ads Adobe has proclaimed its love for Apple. The Mercury News said.

Adobe Systems declared its love for Apple, but continued the companies' very public squabble Thursday over the Cupertino computer maker's decision to ban the Flash video platform from the iPhone and iPad. [Read More]

Jobs is right about the resource intensive nature of Flash, the closed nature of Flash and the open nature of the emerging HTML5 standard. However, there also is the very real issue of the proprietary nature of Apple's H.264 video codec. There are several sides of this argument. This whole thing needs to be played out.

Meanwhile with the iPad, in my opinion: Apple has created a new device. Apple has defined a new market and Apple is running with it. Apple is establishing market dominance and Apple is, with the iTunes Store, taking ownership of the content distribution channel; big time.

In the future, watch for Apple to almost give the iPad away to maintain ownership of that content distribution channel. That's where the action is. The iPad is the Barbie Doll, content is the doll clothes.

That's what this battle is really about. It's about the doll clothes.


Anonymous said...

uh, actually no. Apple makes $275-$300 up front on average on every iPhone device. They'll take that over ancillary revenues every time.

The App Store is worth peanuts. Call it a $1B business on 80m devices, maybe $12/device * 30% (apple's percentage) - costs to run the store. If you think about it, every $1 purchase is worth 30 cents in margin. Folks aren't buying 1000s of songs.

The purpose of the store is to have cheap software so they can sell the expensive hardware. They could make more money on the store by raising the minimum price, but that would reduce the amount of device sales where they really make the $$.

Steve Sloan said...

It will be interesting to see how this plays out. Apple has market share because of innovation, at least that is what a lot of buyers seem to be saying. Reportedly in the last 3 months Amazon sold $5B worth of eBooks. That's virtually pure profit. I have about a dozen books on my iPad and it's a great reading experience. Video content, including podcasts, are sweet on the device. Apple doesn't have to build a store; it has a one stop shop. Most consumers will find that really compelling. If Apple starts making money, real money from selling content they might be motivated to lower device costs, perhaps reduce margins, to maintain market share.