Apple, Amazon, and Common Enemies(stratechery.com)
stratechery.com
Apple, Amazon, and Common Enemies
https://stratechery.com/2020/apple-amazon-and-common-enemies/
46 comments
This might be an unpopular opinion on HN, but I don't only pay Apple for the smartphone's hardware. I'm also paying Apple to curate my experience.
As a developer, I understand wanting to get access to a large user base. I understand wanting to keep costs down, especially as an indie dev. And I definitely understand wanting to keep my margins high, to fund better development but also retire early!
As a customer, I'd prefer even stricter controls on the app store and even more curation to keep pushing the application quality higher. If Apple needs to charge developers to ensure the quality of applications is constantly improving, then I'm happy they do. I'm also happy to wait for a killer app[1], deploy it to Android first and then bring it over to iOS when the demand is enough to negotiate with Apple.
[1] e.g. When I switched over to iOS I had to give up Swiping to type on my keyboard, for a few years till iOS was able to catch up. I understood Apple's rationale and waited. Now with iOS and a Swipe keyboard I am an even happier customer.
As a developer, I understand wanting to get access to a large user base. I understand wanting to keep costs down, especially as an indie dev. And I definitely understand wanting to keep my margins high, to fund better development but also retire early!
As a customer, I'd prefer even stricter controls on the app store and even more curation to keep pushing the application quality higher. If Apple needs to charge developers to ensure the quality of applications is constantly improving, then I'm happy they do. I'm also happy to wait for a killer app[1], deploy it to Android first and then bring it over to iOS when the demand is enough to negotiate with Apple.
[1] e.g. When I switched over to iOS I had to give up Swiping to type on my keyboard, for a few years till iOS was able to catch up. I understood Apple's rationale and waited. Now with iOS and a Swipe keyboard I am an even happier customer.
> I'm also paying Apple to curate my experience
100% agree. I pay the premium because of the walled garden. I prefer it. I want Apple to have a tight grip over suppliers. I want Apple to have a tight grip over the experience on their platforms. I want Apple to have a tight grip over their 3rd party developers.
In fact, I say this as an engineer myself; I even develop for Apple's platform so I'm impacted by their dev-facing decisions!
In my nearly 2 decade history with Apple as a customer, I often align with their principles and I want them to make decisions for me. I do not value an open platform. I only value a good user experience and I value my problems being solved in consistent and elegant ways with a focus on design.
People act as if customers are somehow duped into the walled garden. NO! That's missing the entire thesis of Apple and the driving force behind their success.
This is my opinion and you don't have to agree with it. I almost never express this opinion in discussions like this because why bother. But I figured it's helpful for others to see this opinion represented.
100% agree. I pay the premium because of the walled garden. I prefer it. I want Apple to have a tight grip over suppliers. I want Apple to have a tight grip over the experience on their platforms. I want Apple to have a tight grip over their 3rd party developers.
In fact, I say this as an engineer myself; I even develop for Apple's platform so I'm impacted by their dev-facing decisions!
In my nearly 2 decade history with Apple as a customer, I often align with their principles and I want them to make decisions for me. I do not value an open platform. I only value a good user experience and I value my problems being solved in consistent and elegant ways with a focus on design.
People act as if customers are somehow duped into the walled garden. NO! That's missing the entire thesis of Apple and the driving force behind their success.
This is my opinion and you don't have to agree with it. I almost never express this opinion in discussions like this because why bother. But I figured it's helpful for others to see this opinion represented.
> I pay the premium because of the walled garden. I prefer it.
As a Debian user, I can mostly relate to this.
The problem is when Apple's incentives are not aligned with the consumer.
That they do not allow a real Firefox on the iPhone to keep their browser engine relevant might be a small price to pay for some people, but certainly not for everyone.
As a Debian user, I can mostly relate to this.
The problem is when Apple's incentives are not aligned with the consumer.
That they do not allow a real Firefox on the iPhone to keep their browser engine relevant might be a small price to pay for some people, but certainly not for everyone.
Thank you for expressing your opinion here. I think it's often under-rated just how well Apple understands it's customer base and it's because these types of opinions are over-shadowed by developer gripes, especially on forums like this. One of the most impressive things I see Apple do is introduce products and features that they _know_ will land will with their existing customer base.
Are those mutually exclusive though?
Apple can control the user experience on the device you bought without forcing a 30% surcharge against the competition.
Apple can control the user experience on the device you bought without forcing a 30% surcharge against the competition.
> Apple can control the user experience on the device you bought without forcing a 30% surcharge against the competition.
I don't disagree with you.
My response was meant to be general, not a direct response to the article. I didn't mean to imply that Apple gets everything right. I just wanted to express how all the things that HN thinks Apple gets wrong, are exactly the things that I (and many others) value deeply and pay a premium for.
I don't disagree with you.
My response was meant to be general, not a direct response to the article. I didn't mean to imply that Apple gets everything right. I just wanted to express how all the things that HN thinks Apple gets wrong, are exactly the things that I (and many others) value deeply and pay a premium for.
> I do not value an open platform. I only value a good user experience and I value my problems being solved in consistent and elegant ways with a focus on design.
Fully agree. While I still criticise Apple on keyboard, hardware defects, sometimes unfair competitive advantage, I still prefer user experience over whatever ideology such as Open or Close, proprietary or Free. And I vote that with my money.
The only problem is when User Experience is not up to standards, such as the early days ( and arguably even today ) Apple Music, Apple TV+, Apple Arcade. But then of coz I still have choices such as Spotify and Netflix.
Again, none of that is to say I agree with charging 30/15% for its direct competitors. Given nearly 80% of the App Store platform are Gaming revenue. I wish Apple could use this opportunities to lower its fees for Non-Gaming Apps to 20% and Subscription to 10% charge. I think that is a much more fair price.
Fully agree. While I still criticise Apple on keyboard, hardware defects, sometimes unfair competitive advantage, I still prefer user experience over whatever ideology such as Open or Close, proprietary or Free. And I vote that with my money.
The only problem is when User Experience is not up to standards, such as the early days ( and arguably even today ) Apple Music, Apple TV+, Apple Arcade. But then of coz I still have choices such as Spotify and Netflix.
Again, none of that is to say I agree with charging 30/15% for its direct competitors. Given nearly 80% of the App Store platform are Gaming revenue. I wish Apple could use this opportunities to lower its fees for Non-Gaming Apps to 20% and Subscription to 10% charge. I think that is a much more fair price.
To the extent that the walled garden keeps quality up, I'm all for it as a user, and in agreement with you. I'm all for Apple clamping down on apps that crash, violate privacy, drain the battery, deceptively advertise prices, and so on.
But I don't see how I benefit from some of Apple's moves, such as stealing 30% of developers' revenues [1] when their own apps don't have to suffer this tax, or Apple Music spamming me via push notification ads while others are forbidden from doing so. Or taking down apps that mention that they also support Android. All of these are in Apple's benefit, and against mine.
In 2008, I gave the benefit of doubt to walled gardens. In 2020, it's clear that they need government regulation to stop abusing both users and developers, which a monopolist otherwise tends to do. Walled gardens are still a good idea for people like you and me, but need to be controlled.
[1] When I've already paid through my nose for Apple's overpriced devices.
But I don't see how I benefit from some of Apple's moves, such as stealing 30% of developers' revenues [1] when their own apps don't have to suffer this tax, or Apple Music spamming me via push notification ads while others are forbidden from doing so. Or taking down apps that mention that they also support Android. All of these are in Apple's benefit, and against mine.
In 2008, I gave the benefit of doubt to walled gardens. In 2020, it's clear that they need government regulation to stop abusing both users and developers, which a monopolist otherwise tends to do. Walled gardens are still a good idea for people like you and me, but need to be controlled.
[1] When I've already paid through my nose for Apple's overpriced devices.
Why do those 2 things need to be bundled?
If you want a Blockbuster Video store with no porn for your VHS player you can go to Blockbuster Video and I can go down the street to my local Video store. We can both have a VHS machine by Sony.
There's no reason your phone has to be locked by Apple for you to continue to only get apps from Apple's porn free app store.
Why does your desire to have Apple curate your apps mean that I have to put with it as well? Can't you just choose to only get apps curated by Apple and I can choose to get my apps curated by someone else on the same device?
If you want a Blockbuster Video store with no porn for your VHS player you can go to Blockbuster Video and I can go down the street to my local Video store. We can both have a VHS machine by Sony.
There's no reason your phone has to be locked by Apple for you to continue to only get apps from Apple's porn free app store.
Why does your desire to have Apple curate your apps mean that I have to put with it as well? Can't you just choose to only get apps curated by Apple and I can choose to get my apps curated by someone else on the same device?
Easy: Because Apple clearly sees it as a more profitable move and, whether you agree with them or not, contributes to an overall better user experience. Better experience = happier customers = more business.
Yes, I also think that $99 annual developer account fee is keeping the app garden neat.
Would your opinion change if the EARN IT bill passes? You’d now have the App Store forced to ban apps that won’t share encryption keys with US Govt. if I understand it correctly. That complete lack of choice to side load apps with strong encryption is grating to me. I don’t know if I can trust Android either (proprietary code that calls home to Google or Samsung) so I have no idea how to choose at this point.
> I'm also paying Apple to curate my experience.
Which is totally fine.
But why not allow customers to make that decision? If the Apple App store truly delivers an experience that warrants a 30% uplift, consumers will pay for it.
Which is totally fine.
But why not allow customers to make that decision? If the Apple App store truly delivers an experience that warrants a 30% uplift, consumers will pay for it.
Users have demonstrated repeatedly they’re unwilling to pay for anything when there’s a free alternative (broad strokes, obviously).
So some significant chunk of Apple’s users would use a 3rd party app store and experience would be down, security would be a nightmare, people would have all sorts of complaints and Apple’s reputation would take a hit.
So some significant chunk of Apple’s users would use a 3rd party app store and experience would be down, security would be a nightmare, people would have all sorts of complaints and Apple’s reputation would take a hit.
The curated model stops working the moment that there's any way to get around it, because enough developers will do what they think is in their best interest rather than the customer's. Anyway, the option for customers to "make that decision" exists and comes in the form of Android.
If Apple would allow customers bypass "the wall" by side loading apps, developers and companies will tell users to disable some security settings to install app from their website, creating a security issue for their users.
I do make that decision. I install very few apps. I use a browser for the majority of my non-messaging phone time.
I explicitly don’t want the non-walled-garden stuff to be installable on my phone (by me or my friends or my kids). I don’t want 3rd-party stuff to have the same experience/performance as a native app, which I grant more trust. I like the visual cues, permissions management and temporality while using the browser for low trust or low value add content.
I explicitly don’t want the non-walled-garden stuff to be installable on my phone (by me or my friends or my kids). I don’t want 3rd-party stuff to have the same experience/performance as a native app, which I grant more trust. I like the visual cues, permissions management and temporality while using the browser for low trust or low value add content.
But shit like not allowing seeking from the lock screen for Spotify but allowing it for Apple Music is not “curation,” it’s anticompetitive behavior which should be illegal.
It's not hard to find precedents: Nintendo owns the platform and games.
The real analogy is video game consoles.
>Content has extremely high fixed costs, and zero marginal costs; it follows, then, that the fiscally responsible content producers sell that content to as many outlets as possible
I wonder if this means Netflix may try to maximize some of it's best content more by taking out of streaming inventory and charging to purchase/rent individual series and movies? all within the Netflix app?
I wonder if this means Netflix may try to maximize some of it's best content more by taking out of streaming inventory and charging to purchase/rent individual series and movies? all within the Netflix app?
Netflix doesn’t need or want to segment the market. Most consumers will stick with one streaming service that is good enough. Apple needs transactions. Netflix needs subscriptions. Amazon takes both but really only wants prime members. Amazon is actually useful though because you can consolidate HBO, showtime etc.. under a single login. It can work under Apple but it’s a lot harder to switch between devices.
TLDR: Both are afraid of Netflix making channel subscriptions superfluous.
It's an interesting read with lots of explanations.
It's an interesting read with lots of explanations.
Yeah, I don't agree with their analysis of Disney+ either. It's as you say, these big corps are trying to claw back revenue that Netflix has been enjoying.
I doubt the reason Disney really went into Disney+ was to enhance the Disney magic experience or whatever. Maybe if Walt were still alive. It seems more likely that Disney did the cost/benefit analysis and decided that Netflix subscriptions were not zero sum and that parents would definitely pay for another subscription for Frozen and other shows.
I doubt the reason Disney really went into Disney+ was to enhance the Disney magic experience or whatever. Maybe if Walt were still alive. It seems more likely that Disney did the cost/benefit analysis and decided that Netflix subscriptions were not zero sum and that parents would definitely pay for another subscription for Frozen and other shows.
Disney+ is more than just a revenue stream. It is a sales channel for their brand. If you have Disney+ you are going to watch more Disney content... and if you watch more content you are going to buy more merchandise (0). Modern Disney is a brand company making money from selling merchandise (1).
Even more importantly Disney+ is a platform. Most little girls in western countries (3) already dream of being a princess. So if you provide a channel which parents can subscribe to put their kids in front of the TV... that is a tremendous value proposition for both sides. Parents because kids are out of their hair while watching family friendly shows and disney because see my previous point.
0. In my humble opinion. I have not done any research, but having disney+ -> watching more disney -> becoming a fan and buying their stuff makes sense to me.
1. $54.7bn from merchandise in 2019 with next highest revenue source bringing in $24.8bn - https://www.statista.com/topics/1824/disney/
3. Like every single 5 yo girl I've met... which is actually not a big number, so maybe not most little girls, but still a pretty sizeable portion.
Even more importantly Disney+ is a platform. Most little girls in western countries (3) already dream of being a princess. So if you provide a channel which parents can subscribe to put their kids in front of the TV... that is a tremendous value proposition for both sides. Parents because kids are out of their hair while watching family friendly shows and disney because see my previous point.
0. In my humble opinion. I have not done any research, but having disney+ -> watching more disney -> becoming a fan and buying their stuff makes sense to me.
1. $54.7bn from merchandise in 2019 with next highest revenue source bringing in $24.8bn - https://www.statista.com/topics/1824/disney/
3. Like every single 5 yo girl I've met... which is actually not a big number, so maybe not most little girls, but still a pretty sizeable portion.
Until you can purchase merchandise inside Disney+ it's as much a sales channel as HBO Go is for Game of Thrones.
I think this whole way of thinking about Netflix is dumb though, e.g. “ Netflix dominating means that shows are sold directly to Netflix.”
Netflix is not good at creating content. As time goes forward, Netflix is even less good as they need to cater to mass markets, thereby losing niche markets, and without having a brand or catalog like a Disney, or live sports, or trusted news, etc.
Netflix is not a business entity I would long. It is absolutely a fad, and will lose negotiating power to distributors and content creators.
Netflix is not good at creating content. As time goes forward, Netflix is even less good as they need to cater to mass markets, thereby losing niche markets, and without having a brand or catalog like a Disney, or live sports, or trusted news, etc.
Netflix is not a business entity I would long. It is absolutely a fad, and will lose negotiating power to distributors and content creators.
> Netflix is not good at creating content.
Why would you say that? These days, many of the most talked about and watched shows are Netflix content. Like for instance, Tiger King is the most talked about show in America right now, Netflix owned and produced.
> Netflix is not a business entity I would long. It is absolutely a fad, and will lose negotiating power to distributors and content creators.
This seems to be a five plus year ago view on the company. They've pivoted mostly to making original content at this point, which in my mind is the hardest reason to be long them. They've had to accumulate enormous debt to produce all of this content and have exclusive ownership rights, which makes their balance sheet look terrible.
Why would you say that? These days, many of the most talked about and watched shows are Netflix content. Like for instance, Tiger King is the most talked about show in America right now, Netflix owned and produced.
> Netflix is not a business entity I would long. It is absolutely a fad, and will lose negotiating power to distributors and content creators.
This seems to be a five plus year ago view on the company. They've pivoted mostly to making original content at this point, which in my mind is the hardest reason to be long them. They've had to accumulate enormous debt to produce all of this content and have exclusive ownership rights, which makes their balance sheet look terrible.
I think a perhaps more accurate way of stating the position is that "Netflix is not good enough at creating enough good content [to make up for 1) existing back catalogs and 2) parallel activity from strong competition]. I don't think anyone could definitively state that Netflix content is subpar when it's at its best, but I also don't think anyone would suggest they'd be willing to give up the big studios and rely exclusively on Netflix original content.
As things start to fracture more and more, the big studios kind of find themselves in the same position. Disney+ probably has one of the strongest single-publisher back catalogs, and there's still a lot of talk about there being nothing to watch after you finish the few originals and whatever old thing you were interested in.
Content ages. People want new topical content. Even someone who owned the entire criterion collection would still have problems.
Too true, I hardly hear about trending media, I try to avoid it, but my housemate told me about tiger king yesterday.
> Netflix is not good at creating content.
Neither is anybody else. It's a random crapshoot. To be fair, though, Netflix seems to be doing a bit better than random.
Disney+ has a huge advantage in that they have a significant back catalog that people actually want.
Everybody else can basically be ignored.
Amazon will blink first to Disney+ and Netflix terms, and Apple will be forced to follow or be irrelevant in video.
Neither is anybody else. It's a random crapshoot. To be fair, though, Netflix seems to be doing a bit better than random.
Disney+ has a huge advantage in that they have a significant back catalog that people actually want.
Everybody else can basically be ignored.
Amazon will blink first to Disney+ and Netflix terms, and Apple will be forced to follow or be irrelevant in video.
> Netflix is not good at creating content.
The difference is that the others don't have to be good at creating content. Amazon, Google, and Apple have a bunch of other businesses to prop up their streaming services. And Disney doesn't have to be good at creating new content because they've got so much enviable OLD content.
But if NetFlix can't keep people coming back, then the company goes under. NetFlix can't just run their streaming service at a loss until everybody else dies like Amazon, they can't rely in pure brand recognition like Disney, they can't rely on sheer volume like YouTube Premium, and they can't just charge more because they're not Apple.
The difference is that the others don't have to be good at creating content. Amazon, Google, and Apple have a bunch of other businesses to prop up their streaming services. And Disney doesn't have to be good at creating new content because they've got so much enviable OLD content.
But if NetFlix can't keep people coming back, then the company goes under. NetFlix can't just run their streaming service at a loss until everybody else dies like Amazon, they can't rely in pure brand recognition like Disney, they can't rely on sheer volume like YouTube Premium, and they can't just charge more because they're not Apple.
I think that may have been true at some point but they aren't really a distribution company, for almost a decade they've been a content publisher with their own distribution.
"Apple’s dominant position in portable devices, particularly the high end."
Is this person unfamiliar with technology specs because their products are average devices but cost excessive for what you get?
It seriously sounds like they fell for the marketing.
Is this person unfamiliar with technology specs because their products are average devices but cost excessive for what you get?
It seriously sounds like they fell for the marketing.
Not sure what you mean, but iPads and iPhones are high end portable devices in a market in which Apple holds a dominant position.
Brand new account, named “modsRapple”, with only this comment. Safe to ignore.
Ahh because rational argument doesn't count because of a name?
Be careful Thanatos, don't rely on tradition and authority figures. That's pre scientific method ways of thinking.
Be careful Thanatos, don't rely on tradition and authority figures. That's pre scientific method ways of thinking.
Nothing about your argument was rational. All you made clear was that you do not understand what Apple's customers value.
Hint: It's not a technology spec sheet. And even if it was, their specs blow the competition out of the water. I think your focus on embedded systems is coloring your view of consumer technology.
Hint: It's not a technology spec sheet. And even if it was, their specs blow the competition out of the water. I think your focus on embedded systems is coloring your view of consumer technology.
They own basically all consumers making six figure salaries. That is the high end customer base Ben is talking about.
I've seen the opposite, but I'm in embedded engineering. I imagine lawyers and physicians are less tech savvy and more susceptible to Marketing.
I have no dog in the fight but HN users who are generally reputed as being authorities on security seem to recommend iOS as being more secure than Android.
I get why some make the analogy with Grocery Stores and stocking their in-house brands (e.g. Safeway with Signature, Apple with iTunes), but with Apple, it's like the customer has already bought the grocery store and Apple is still charging rent on their shelves.
At least it looks like they're loosening the controls a bit with deals, but that's only for big overlapping partners like Amazon.