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Shop ‘til It Stops June 19, 2011

Posted by Peter Varhol in Strategy, Technology and Culture.
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There was a time, only a few years ago, when I could walk into Circuit City or (preferably) CompUSA and buy just about any piece of mainstream computing hardware or software I wanted. For a wider range of products, I could go to PC Connection, Tiger Direct, or other online vendor.

I suppose Dell, way back in the day, was the first to change that model, requiring that you buy only over the phone (initially) or online (when that became feasible). I didn’t seem to mind that; I’ve bought plenty of Dell systems over the last twenty years. But once again, I could buy peripherals and software for those systems anywhere. We had a decoupling of hardware and associated software.

Apple changed all that, first with iTunes, now more definitively with the iPhone App Store. You can only buy iPhone apps in the iPhone store. Others are trying to emulate the app store concept, though not to the level of control of some of the others. Apple requires that developers seeking a space in the App Store provide the executable application, source code, and screen shots. Apple reserves the right to accept or reject an application for just about any reason (it does offer guidelines, but the guidelines are broad enough to provide Apple with a wide range of discretion).

There’s a lot of good in the level of control Apple exercises in its App Store. The apps (with a few well-publicized exceptions) are mature and useful.

But Apple also uses that control to promote its business interests. I suppose it would be naïve to think otherwise, but it seems to me that being accommodative rather than controlling results in a better business.

Now Apple appears to be taking it one step further, with guidelines that seemingly prohibit linking to websites for the purpose of commerce. Apple wants you to buy from the device (iPhone or iPad), so that it can get a cut of the purchase price. The app in question is Kindle for iPad, which is likely soon to be doing hundreds of millions a year in sales.

I realize that Apple isn’t doing anything that any other vendor would like to do, given similar market power. And more power to Apple, I suppose. But imagine a world where all device vendors can implement and enforce such a policy. It’s simply not very pretty, with monopoly stores and enormous pricing power, to say nothing about deciding which apps win and which lose.

The Internet did an enormous amount of good in eliminating the middleman in commerce, cutting out costs simply for passing on a certain distribution model. We’re on the verge of losing that good.

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