All I know is that I was planning on buying an iPad 2. If my Netflix and Kindle costs go up, or their apps disappear, then the iPad becomes less compelling and I won't buy it. Simple as that.
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Apple's App Store Subscription Policies Raise Antitrust Issues as Content Providers F
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WTF?
The "channel" is your internet connection to the developer/publisher's servers (which they pay for the upkeep on, not Apple), through which the subscribed material is passed down.
The "App Store" is a channel for purchasing items in the App Store, for which Apple pays the upkeep. Apple's cut is fair and just for that. In case that's not clear: Their cut for serving and providing the original Application and subsequent updates is fair and just.
I've used the electricity & gas supply analogy elsewhere. Here it is in another form: If your Gas company offers you Electricity, do you expect them to charge extra for it, because it's coming through their "Channel"?
The answer is No. You expect them to be competitive.
Can't believe I'm replying to this. So many people are willfully open to the idea that it's good to be charged more just because they're told "it's our way or the highway".
How will Amazon reconcile what books I have purchased via the in-app purchasing if that information (i.e. my Amazon Account) isn't tied to my iTunes account?
Can you source your claim of the "fact that the App Store has since gone on to generate decent profits"? How much are they making in profits from the App Store? What is "decent"? How do you know what they will need in the future to keep the App Store going?
That's about back-end programming. In any case, you would log in your Amazon account and make the purchase. That doesn't mean Amazon has your iTunes Connect information.
Ouch, perhaps I deserved that. Not half as much as anyone defending Apple's side on this deserves though.
Educate me then. What's this great marketing/sales channel that I'm missing?
But you can't do that with an in-app purchase. Right now I log into the Kindle.app with my Amazon Account. from there all my books are available. If I have to use my iTunes account to buy books in-app how will Amazon know I brought those books? How would I be able to read the same book on my Kindle, Android device or PC?
If Amazon wants to stay on iOS, it has two options. One is to increase prices for all Kindle books by as much as 43%, and the other is to sell two versions of each book, one readable only on iOS devices and the other readable only on non-iOS devices, and increase the prices of the iOS Kindle books by as much as 43% while keeping the non-iOS Kindle books at the old prices.
Considering the App Store wasn't put there to mamk *any* profit (if you believe Steve Jobs), *any* profit is decent.
I'm not googling all night to dig up quarterly reports, but result 2 is from June23/2010:
"Munster figures the App Store has contributed only $189 million to Apple's total gross profit since it launched."
http://news.cnet.com/8301-13579_3-20008540-37.html#ixzz1E9mfbgNV
And the article of course closes with the familiar words:
"So while App Store sales are through the roof, Apple's certainly not making a killing from them. But that's never been the point, anyway. Like iTunes itself, the App Store's purpose is to drive hardware sales. It's a secondary business."
edit:
posted without answering the future bit... Obviously nobody knows what the costs going forward will be - they've always got things in the works, but the problem with the 30% cut on subscriptions is that it's ultimately going to cut into the user's wallet. If the App Store needs a justification, it's in it's ability to sell iPhones and iPads. It can run at a loss before Apple has to take steps to make the costs balance....Apple aren't exactly losing money. As long as the App Store is flourishing with trade, their iOS hardware business is doing good, and I'm pretty sure that profit from hardware is more than enough to counterbalance any App Store costing overrun.
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I feel exactly as you do on all points.
I'm very passionate about Apple, as a _very loyal_ user of their Desktops & Laptops, iPods, & every iPhone released.
That said, I'm also very outspoken & give my honest opinions about their business practices & ethics.
I would truly like to see Jobs & Company, roll off the throttle a bit. Be reasonable & fair, ease up on the questionable & overly aggressive ego driven profit taking, and bring the quality up to it's previous standards.
Stop over hyping good products that don't need to be hyped, and enjoy even greater success.
Be a good corporate citizen and watch the shift, as those who feel there's too much focus on power & control now, view Apple in a whole new positive light.
Apple was a professional, intelligent, creative company until the last few years. While the innovation may still be there, why act in an unseemly fashion.
Sorry, won't teach marketing 101 here. But your electricity and internet connection is not a channel, period.
There is no such thing as "defending Apple" on this issue. Apple has the right to set their price. Publishers/developers have the right to walk away. You can argue that publishers SHOULD walk way, but there is no point to attack or defend Apple's business decisions.
If you want, you can also short AAPL if you think this will damage Apple's business (and stocks).
For me, I am just saying that if I were the publisher, I would consider it a good deal, comparing to the cost to distribute my content with other means. That's looking at it from publisher point of view.
From consumer point of view, we will have to wait and see if the publishers stick around or walk away.
But the app store is only becoming the channel because Apple is dictating that it be the channel. Right now, the content providers are their own channels. Amazon.com is the Kindle channel, bn.com is the Nook channel, netflix.com is the netflix channel, etc. Apple now wants to require that the app store be the sole channel reachable from the app, and that it wants 30% of the sale for the privilege of co-opting the channel. On top of that, Apple is dictating a price floor in the content providers' own channels, in order to protect Apple's vig.
Or a 3rd option, remove the ability to purchase books in the Kindle app. The kindle app would simply become a reader for previously purchased content.
When you make the payment, you would have to log in Amazon account within the app, so the purchase is linked to your amazon account.
That does not link your amazon account to itunes connect account. The app simply calls an API to proceed the purchase and receive "success" or "failure".
I hope the companies do take a stand and remove their applications from the iOS devices.
Sales would take a hit if such basic smartphone applications were missing like Pandora.
That is because all these companies chose to exploit the app system and offer free apps for things that were not free.
I am not sure why people think Apple ever intended that.
The line has actually been "a bit over break even."
189 million in two years. Subtract total operating expenses, taxes, and interest from gross profits, and it sounds like Apple is being pretty honest about operating "a bit over break even."
Agreed that this is absolutely a business decision, that either will work or won't work, as determined by the market and possibly the FTC. I think the other point is that for periodical publishers, you may be right that this may not be a bad deal. However, for e-books, music streaming video streaming, etc., this is a worse deal, because most of them have invested in much greater electronic marketing and delivery infrastructure than the periodical publishers, and the price-fixing requirement much further reaching in its impact, and I think these are more likely to walk from iOS, particularly that for e-book providers walking form iOS may actually increase sales of their own devices, and in any event Honeycomb is about to hit the market, and could make some serious inroads into the iPad's market share, particularly if the manufacturers come out with devices with similar specs and a lower price, rather than the Honeycomb tablets with higher specs and same or higher prices that look to be hitting the market soon.
illegal to new guidelines to offer two separate prices
"All we require is that, if a publisher is making a subscription offer outside of the app, the same (or better) offer be made inside the app, so that customers can easily subscribe with one-click right in the app"
I see. So when Amazon takes 30% because they sold something, they're evil. When Apple takes 30% because someone else sold something, they're offering the best deal around.
Got it.
never mind the fact that often time those 30% cut apple demands out of gross revene is less than they are getting threw what they sell. So selling threw the app would be a loss.
For example Amazon who has to pay for the servers houses all the books ect would be getting 0% for anything sold threw the kindle app since 30% is their cut of the price.
Why would Amazon have ANY and I mean ANY motivation to do that. I could more see some big players like Amazon, netflex and so on saying screw you to Apple and playing hard ball. Follow by a lovely law suit for anti trust against apple.
Remember you do not have to be a monopoly to get busted for anti trust. Just be large enough player to abuse you power. Apple huge size can and will be used against it here.