Apple's Past Sideloading Plans, Ecosystem Lock-in Strategy, and More Revealed in Internal Documents

[I7guy]

[…].

This is not to discredit Apple's innovations and ingenuity, it's more to highlight how the iPhone's success cannot only be attributed to the device itself and if one wants to consider the investment a competitor or new-entrant would have required, the cost of the groundwork Apple had already in place would also need to be factored in.

Based on the above a windows phone should have been a smashing success and should have taken over the world, and yet here we are today. If anything the windows phone decline shows that prior groundwork may not be such a contributing factor. Of course brand identification plays a role.

The smartphone barrier in 2021 is not legal, its not money, it’s acceptance, imo.

 

[bsolar]

I still believe the concept of lock-in exists only in the ether. Wanting out of the apple ecosystem is a simple three step process.
1. Buy competition equipment
2. Move data
3. Sell

Yep it will cost $$$, but that is real life.

The concept also clearly exists in the business strategies discussed by Apple's managers as outlined in the article, which is what ultimately matters.

I understand you believe something different, but your business strategies are not involved in the Epic lawsuit whereas Apple's definitely are.

 

[Abazigal]

I still believe the concept of lock-in exists only in the ether. Wanting out of the apple ecosystem is a simple three step process.
1. Buy competition equipment
2. Move data
3. Sell

Yep it will cost $$$, but that is real life.

The term “lock in” to me sounds like a load of “sour grapes” by disgruntled competitors who realise that they are unable to compete with Apple.

The way I see it, the reason why Apple is doing better than ever (and why I believe this will continue to be the case) is because their long-term strategy of building a comprehensive ecosystem of devices and services is resonating with consumers. Apple products connect with consumers, and Apple is able to do so while pushing through iPhones that are priced higher than ever.

When a customer buys an iphone, they are not just getting an iphone. Instead, the iphone is a portal into an Apple world which offers benefits from entertainment solutions (TV+, Apple Music, arcade), the most powerful consumer computers in the world (M1 Macs) and incredibly personal computing (Apple Watch).

To put it another way, Apple is able to have such a comprehensive ecosystem because it is pretty much the only company willing to invest in building up said ecosystem in the first place.

This is the biggest challenge facing Apple competitors. It is no longer enough to simply come up with an iphone alternative. They need to come up with an even better experience than what the Apple ecosystem currently offers.

Can it be done? Looking at the state today, my answer is a resounding “No”.

And this is why I believe Apple will go on to be even more successful. Consider that half of apple users still use only one apple device - the iphone. This means that they are using a lot of non-Apple hardware, which in turn means that there is still an incredibly huge untapped market of iphone users for Apple to market their hardware and services to.

 

[bsolar]

Based on the above a windows phone should have been a smashing success and should have taken over the world, and yet here we are today. If anything the windows phone decline shows that prior groundwork may not be such a contributing factor. Of course brand identification plays a role.

The smartphone barrier in 2021 is not legal, its not money, it’s acceptance, imo.

There are heaps of articles about how Microsoft failed at the opportunity of being a key player in the mobile market. They definitely had the groundwork to be successful, but as stated, my post was not to discredit innovation and ingenuity, which you still definitely need no matter how much groundwork you already did.

 

[bsolar]

The term “lock in” to me sounds like a load of “sour grapes” by disgruntled competitors who realise that they are unable to compete with Apple.

The statements in the article are not from "disgruntled competitors", they are from Apple's managers discussing business strategies. Vendor lock-in is clearly among the strategies discussed.

Note that this doesn't mean these are automatic violations of antitrust regulations.

 

[I7guy]

The term “lock in” to me sounds like a load of “sour grapes” by disgruntled competitors who realise that they are unable to compete with Apple.

The way I see it, the reason why Apple is doing better than ever (and why I believe this will continue to be the case) is because their long-term strategy of building a comprehensive ecosystem of devices and services is resonating with consumers. Apple products connect with consumers, and Apple is able to do so while pushing through iPhones that are priced higher than ever.

When a customer buys an iphone, they are not just getting an iphone. Instead, the iphone is a portal into an Apple world which offers benefits from entertainment solutions (TV+, Apple Music, arcade), the most powerful consumer computers in the world (M1 Macs) and incredibly personal computing (Apple Watch).

To put it another way, Apple is able to have such a comprehensive ecosystem because it is pretty much the only company willing to invest in building up said ecosystem in the first place.

This is the biggest challenge facing Apple competitors. It is no longer enough to simply come up with an iphone alternative. They need to come up with an even better experience than what the Apple ecosystem currently offers.

Can it be done? Looking at the state today, my answer is a resounding “No”.

And this is why I believe Apple will go on to be even more successful. Consider that half of apple users still use only one apple device - the iphone. This means that they are using a lot of non-Apple hardware, which in turn means that there is still an incredibly huge untapped market of iphone users for Apple to market their hardware and services to.

Apples strategy of providing useful lifestyle products that integrate is (trying) to be used against them in this trial.

Whether that is a legal concept or not I don’t know, but it would seem to me any company that didn’t offer consumer life style products and didn’t discuss ways of selling more of the products to their customers is not doing their duty. With Apple this is labeled as lock-in.

Even as I said above, if one owns every apple product and wants out then it’s a simple three step process…that will likely cost you money. No guarantee net cost is $0 though.

 

[Michael Scrip]

Forget smartphones... a long time ago there were tons of computer platforms too.

Atari ST, Commodore 64, Amiga, OS/2, etc.

But Windows and Macintosh survived. And Linux.

There are only so many platforms that a market can sustain.

The fact that Android and iOS hold 99.999% of the smartphone market is simply a result of the market and its users.

 

[hans1972]

All companies deemed to be monopolies are done so by opinion of the Federal government, as per the government's interpretation of relevant antitrust law. Companies are free to challenge those opinions and their resulting sanctions in the courts.

Being a monopoly in the US isn't illegal. Also a congressional committee doesn't have any such power.

The executive branch may reach a conclusion that Apple is doing something illegal with regards to antitrust laws, but then they have to actively sue Apple to force them to stop or change.

 

[hans1972]

Are the EU antitrust regulators armchair lawyers as well?

Apple Accused by EU of Anti-Competitive Behaviour in the Music Streaming Market, Sides With Spotify

The competitive laws of EU is very different from the US.

A congressional subcommittee can be compared to a committee in the EU parliament. They can enact laws.

The EU Commission is the executive branch and can reach legal conclusion which is binding on Apple unless they appeal. The US executive branch can't do the same.

 

[RedRage]

With Apple this is labeled as lock-in.

That’s what their execs literally call it in the article 😆😆😆

 

[BootsWalking]

Being a monopoly in the US isn't illegal. Also a congressional committee doesn't have any such power.

The executive branch may reach a conclusion that Apple is doing something illegal with regards to antitrust laws, but then they have to actively sue Apple to force them to stop or change.

Nobody has claimed being a monopoly is illegal.

 

[visualseed]

The term “lock in” to me sounds like a load of “sour grapes” by disgruntled competitors who realise that they are unable to compete with Apple.

The way I see it, the reason why Apple is doing better than ever (and why I believe this will continue to be the case) is because their long-term strategy of building a comprehensive ecosystem of devices and services is resonating with consumers. Apple products connect with consumers, and Apple is able to do so while pushing through iPhones that are priced higher than ever.

When a customer buys an iphone, they are not just getting an iphone. Instead, the iphone is a portal into an Apple world which offers benefits from entertainment solutions (TV+, Apple Music, arcade), the most powerful consumer computers in the world (M1 Macs) and incredibly personal computing (Apple Watch).

To put it another way, Apple is able to have such a comprehensive ecosystem because it is pretty much the only company willing to invest in building up said ecosystem in the first place.

This is the biggest challenge facing Apple competitors. It is no longer enough to simply come up with an iphone alternative. They need to come up with an even better experience than what the Apple ecosystem currently offers.

Can it be done? Looking at the state today, my answer is a resounding “No”.

And this is why I believe Apple will go on to be even more successful. Consider that half of apple users still use only one apple device - the iphone. This means that they are using a lot of non-Apple hardware, which in turn means that there is still an incredibly huge untapped market of iphone users for Apple to market their hardware and services to.

Over the years I bought a lot of expensive PocketPC (Windows Mobile) and Palm Apps for various “smart phones”. I had my email and contacts stuck on BlackBerries for years. I never gave any of that a second thought or felt that I was “locked in“ when I moved over to the iPhone. This was before it even allowed apps or syncing any media to it other than music. It was already a better and more compelling product than the competition even before Apple had copy and paste figured out. While the competition focused on adding gimmicks and useless features to their phones, Apple built an ecosystem. That ecosystem is not a “lock-in.” It is a service just as useful and compelling as the products that connect to it. I don’t see what the alternative is, because as a customer I have no desire to piecemeal a comprehensive service offering together with disparate services from multiple vendors that don’t embrace the same philosophy that made me choose Apple to begin with and hobbling Apple’s ability to do it first party is a detriment to consumers with no measurable benefit.

 

[I7guy]

That’s what their execs literally call it in the article 😆😆😆

There is no such thing as lock-in even being described as such. Can you go from windows to Linux? Android to iOS? iOS to android? I’m not sure how else a design driven approach to encourage your customers to buy more of your products and churn less can be described though.(with much less verbiage)

 

[bsolar]

There is no such thing as lock-in even being described as such. Can you go from windows to Linux? Android to iOS? iOS to android? I’m not sure how else a design driven approach to encourage your customers to buy more of your products and churn less can be described though.(with much less verbiage)

You can but with significant switch costs if you are invested in the previous platform, which is by definition what vendor lock-in is.

Now about Apple's situation, let's cite from the article the first sentence from the first quoted statement by Eddy Cue:

Who's going to buy a Samsung phone if they have apps, movies, etc already purchased? They now need to spend hundreds more to get to where they are today.

Those "hundreds more" are dollars, and are the dollars a customer invested in Apple's ecosystem would need to additionally pay to, as the article states "get where they are today" on the Samsung platform by switching from Apple's.

So, what Eddy Cue is arguing in the rest of the quoted statement is that Apple should better leverage this investment consumers make into their ecosystem because it makes it harder for them to consider switching to other platforms, and it describes how the iTunes gift cards system should be used as tool to implement said strategy.

TL;DR: It's 100% a vendor lock-in strategy, basically by-the-book.

And I know you argue this switch cost is insignificant, but your opinion on the switch cost is irrelevant: Apple's management definitely did not consider it irrelevant and it's their intent which is being discussed.

 

[I7guy]

You can but with significant switch costs if you are invested in the previous platform, which is by definition what vendor lock-in is.

Now about Apple's situation, let's cite from the article the first sentence from the first quoted statement by Eddy Cue:



Those "hundreds more" are dollars, and are the dollars a customer invested in Apple's ecosystem would need to additionally pay to, as the article states "get where they are today" on the Samsung platform by switching from Apple's.

So, what Eddy Cue is arguing in the rest of the quoted statement is that Apple should better leverage this investment consumers make into their ecosystem because it makes it harder for them to consider switching to other platforms, and it describes how the iTunes gift cards system should be used as tool to implement said strategy.

TL;DR: It's 100% a vendor lock-in strategy, basically by-the-book.

And I know you argue this switch cost is insignificant, but your opinion on the switch cost is irrelevant: Apple's management definitely did not consider it irrelevant and it's their intent which is being discussed.

That entire argument falls apart because the same type of rational applies if one wanted to go from windows to Linux or PlayStation to Nintendo. Regardless of what Eddie Cue says on these consumer platforms there is a cost factor switching, which I noted above. Some may care about the cost some won’t. It’s a choice though… especially going from windows to Linux. I would think this does not go unnoticed.

 

[bsolar]

That entire argument falls apart because the same type of rational applies if one wanted to go from windows to Linux or PlayStation to Nintendo. Regardless of what Eddie Cue says on these consumer platforms there is a cost factor switching, which I noted above. Some may care about the cost some won’t. It’s a choice though… especially going from windows to Linux. I would think this does not go unnoticed.

I don't see how the same rationale applying to e.g. Windows to Linux makes the argument fall apart: it's notorious that Microsoft enjoys a massive vendor lock-in on Windows, making the switch to competing platforms very difficult and expensive. The same applies to the other vendors you cited.

You seem to be under the impression that vendor lock-in is something special or very isolated, but actually is a very common situation. Have e.g. a read of the Wikipedia article, which lists many examples.

 

[I7guy]

I don't see how the same rationale applying to e.g. Windows to Linux makes the argument fall apart: it's notorious that Microsoft enjoys a massive vendor lock-in on Windows, making the switch to competing platforms very difficult and expensive. The same applies to the other vendors you cited.

You seem to be under the impression that vendor lock-in is something special or very isolated, but actually is a very common situation. Have e.g. a read of the Wikipedia article, which lists many examples.

It’s really surprising about this revelation that if you buy vendor a products and want to go to vendor b that there should be a cost involved and things just don’t go plug and play.

That this could be is because designing products to the lowest common denominator would result in no innovation or much less innovation. That is to say that standards aren’t needed or warranted.

For example video and audio standards were stuck to VHS tape standards in 2021.

 

[hayden1250]

What does billionaire have to do with anything? Please provide your proof that people aren't going to give up their Apple devices.

Also me

 

[visualseed]

AFAIK 150 millions was "only" the cost of developing the device itself, which is only a part of what was required to successfully bring the iPhone to market.

As example, one of the motivations behind the development of the original iPod was the overlap between mobile phones and portable music players and Apple enjoyed a huge share of the market in the latter and the ability to extend the already established iTunes ecosystem to support their new device. Lacking that, such ecosystem would have to be realized too.

This is not to discredit Apple's innovations and ingenuity, it's more to highlight how the iPhone's success cannot only be attributed to the device itself and if one wants to consider the investment a competitor or new-entrant would have required, the cost of the groundwork Apple had already in place would also need to be factored in.

At the same time both Samsung and Nokia had handset businesses that dwarfed Apple’s iPhone and Mac business combined. Even Motorola high on Razr sales could have taken the market with little effort if they were willing to take the risk AND create a product that resonated with customers. The iPhone was already a runaway success long before any of the “lock-in” features were well established. At the time, most people were critical of Apple for taking a “lock-out” position. For the first 4 or so years the phone was pretty hostile towards users and eschewed many of the cloud centric services we take for granted today. The phone barely played nice with other devices in Apple’s own product lineup. Even so, well-funded competitors in a position to exploit this did little to capitalize on it. While they focused on selling devices, Apple focused on winning over customers and keeping them happy.

 

[bsolar]

It’s really surprising about this revelation that if you buy vendor a products and want to go to vendor b that there should be a cost involved and things just don’t go plug and play.

Which part of "very common situation" was not clear?

Furthermore, the issue here is not simply that Apple built sophisticated products which by nature are highly integrated and so difficult to switch from. The issue is that Apple's management clearly debated strategies to leverage and increase the switch cost for consumers, meaning that such switch cost is not something which merely "happened", but something which was at least in part arbitrarily inflated.

 

[mikethemartian]

Over the years I bought a lot of expensive PocketPC (Windows Mobile) and Palm Apps for various “smart phones”. I had my email and contacts stuck on BlackBerries for years. I never gave any of that a second thought or felt that I was “locked in“ when I moved over to the iPhone. This was before it even allowed apps or syncing any media to it other than music. It was already a better and more compelling product than the competition even before Apple had copy and paste figured out. While the competition focused on adding gimmicks and useless features to their phones, Apple built an ecosystem. That ecosystem is not a “lock-in.” It is a service just as useful and compelling as the products that connect to it. I don’t see what the alternative is, because as a customer I have no desire to piecemeal a comprehensive service offering together with disparate services from multiple vendors that don’t embrace the same philosophy that made me choose Apple to begin with and hobbling Apple’s ability to do it first party is a detriment to consumers with no measurable benefit.

Well the measurable benefit of diversifying is you wouldn’t be giving one company full control of your device and data.

 

[bsolar]

At the same time both Samsung and Nokia had handset businesses that dwarfed Apple’s iPhone and Mac business combined. Even Motorola high on Razr sales could have taken the market with little effort if they were willing to take the risk AND create a product that resonated with customers.

As stated, having the groundwork in place is not enough if innovation and ingenuity are not there too.

The iPhone was already a runaway success long before any of the “lock-in” features were well established. At the time, most people were critical of Apple for taking a “lock-out” position. For the first 4 or so years the phone was pretty hostile towards users and eschewed many of the cloud centric services we take for granted today. The phone barely played nice with other devices in Apple’s own product lineup. Even so, well-funded competitors in a position to exploit this did little to capitalize on it. While they focused on selling devices, Apple focused on winning over customers and keeping them happy.

It's also true that Apple's original strategy was not perfect and it took them years to accumulate enough experience and change route. As example they originally never expect the popularity of native Apps.

Anyway my point was that the 150 million figure is only for the device itself, which is misleading to consider alone if one wants to gauge the "cost" of bringing the iPhone successfully to the market, which includes much more.

 

[visualseed]

That entire argument falls apart because the same type of rational applies if one wanted to go from windows to Linux or PlayStation to Nintendo. Regardless of what Eddie Cue says on these consumer platforms there is a cost factor switching, which I noted above. Some may care about the cost some won’t. It’s a choice though… especially going from windows to Linux. I would think this does not go unnoticed.

The biggest argument, for me, is not the cost, it’s the value proposition is not there for the effort. 90% of stuff will transfer just fine. There may be some old DRM’d music and movies stuck in Apple music and Apple TV that will require those apps on android and for me to keep subscribing to those services, there may be some iOS only apps that I rely on with no Android counterparts, but that’s not really Apple’s fault and nothing is going to make a developer develop for a platform they don’t want to. But the bottom line is even if I go though the trouble of doing it, no matter how seamless, I don’t get what I believe to be a better experience. So I guess, apple locks me in by having a better product and service.

 

[visualseed]

As stated, having the groundwork in place is not enough if innovation and ingenuity are not there too.



It's also true that Apple's original strategy was not perfect and it took them years to accumulate enough experience and change route. As example they originally never expect the popularity of native Apps.

Anyway my point was that the 150 million figure is only for the device itself, which is misleading to consider alone if one wants to gauge the "cost" of bringing the iPhone successfully to the market, which includes much more

There is nothing misleading about the $150m figure. To look at it another way Microsoft spent $8billion on Nokia to try to capture the smartphone market and failed miserably. Apple didn’t spend that on R&D and Marketing combined for the entire 2000-2010 decade. Other companies had (and have) the resources to compete and tried. They just did not have the ability to execute. One could argue that apple has better brand recognition and customer loyalty, which is true, but that was a hard won reputation as they spent most of their existence being labeled as “beleaguered” and continually on the verge of bankruptcy in the eyes of the media.

 

[visualseed]

Well the measurable benefit of diversifying is you wouldn’t be giving one company full control of your device and data.

In what metric is that measured with? Given the number of cloud-based services that have been acquired or abruptly shut down over the last few years leaving me and other customers high and dry, I don’t consider frustration a benefit.