Apple iTunes and the Palm Pre with WebOS

Posted By on August 5, 2009

Palm AppleIn the business world, dominating a market has long been the practice of corporations. Some of it is justifiable since research, development and marketing cost companies a significant amount of money, but eventually most large corporations flirt with anti-trust laws. In the early 20th century and with hindsight it is easy to spot (ie. Standard Oil in 1911), but as the century drew to a close  the challenges of pinpointing what  behaviors are monopolistic and which are just smart business practices has blurred.

Microsoft in the 1990s … undisputed king of the personal computer operating system with MSDOS followed by Windows. To protect their turf, they spun their code in order to integrate Internet tools and services thwarting smaller browser companies bringing the eyes of anti-trust legislators upon them — too slow and too late for many struggling competitors. Other software companies like Adobe dominate by purchasing smaller rivals that threaten their products or preventing access to proprietary, but dominate file formats. In In keeping with the computer theme, Intel dominates when it comes to providing chipsets for PCs and devices … although monopolistic behavior is less noticed by the average consumer (direct competitors might suggest otherwise?). Then their is retail giant Walmart with rigid and frugal business practices that have work very well for this company: buying power, low prices and match or beat local competition has become difficult to beat when it comes to consumer value. Unfortunately for smaller retailers, it is nearly impossible to match the buying power of Walmart, difficult to sell at tiny margins and frustrating when a Grand Opening ‘ultra’ low price strategy can last long enough in small towns to put most ‘mom and pops’ out of business. Eventually competition in small town disappears, Walmart prices inch up, although remain respectably low enough to thwart competition upstarts. Unfortunately for residents of small towns, after a couple years of  Walmart matching or beating competitors, consumers are left with fewer retailers … especially smaller ones. Is this monopolistic behavior or just a shrewd business practice?

Currently, Palm and Palm Pre owners are facing Apple’s dominance in the recorded media and smartphone arena.  Apple claims to be defending their product when they block access to their  iTunes software (both Mac and PC computers) based on USB Vendor ID number (see PDF complaint letter). Some see this as controlling customer purchased music, audio and video and using methods counter to the openness being promoted by the USB-IF governing body. There is little doubt that Apple desires to prevent all external devices except theirs to access data that is controlled by iTunes. Is this monopolistic … maybe … but as a consumer it does slow progress and reduce competition.

Back to my initial comment about companies investing in research, development and marketing, I believe that needs to be protected long enough to be significantly profitable (ie. patents). We need this so that companies and individuals continue to risk capital on innovation. But when their is a move to protect and monopolize beyond the product, either by shear size and dominance , anti-trust oversight needs to prevail. In the case of using USB-IF interoperability ID numbers to block access to a computers organized data, its smells of Apple trying to control and dominate recorded media on  computers and the devices using this media.

An article in the NYTimes quotes Tim Wu, a professor at Columbia:

“There’s something very unseemly about what Apple is doing. It’s very counter to the ideals of openness, which is a concept Apple pioneered in computing.” In 2007, Steven P. Jobs, Apple’s chief executive, issued a call to the music industry for openness, titled “Thoughts on Music.”

As for Palm, Mr. Wu said, “It sounds like an uphill battle, in terms of trying to stop Apple from doing this.”

But Palm may have a shot. “The history suggests that openness wins,” said Mr. Wu.



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