Five classic Apple marketing tactics that lock you in
- — 05 November, 2009 03:43
Once you enter the Big Tent of Apple, it's exceedingly hard to find the exit.
Over its 33-year history, Apple has consistently elected to limit consumer choice, creating a situation known as "lock in." As soon as you start buying stuff from Apple, you'll find it difficult to move to products made by someone else without losing everything you've already paid for.
Of course, many people don't want to leave Apple's tent. After all, it's filled with iPhones and MacBooks and other cool stuff. And Apple is hardly the only business that tries to lock in customers--wireless carriers (including Apple partner AT&T) are probably the worst offenders. Nor is Apple the only vendor to use one product as leverage to push others onto consumers (let's declare Microsoft the champion there).
But no other technology company exercises the same amount of control over what its customers can and can't do with the things they bought. Part of this approach is due to Apple's deep belief that a closed digital ecosystem with limited options benefits both Apple and its customers. Part of it is due to an all-consuming desire for control on the part of the ringmaster, otherwise known as Steve Jobs.
The bottom line: Apple makes great products, but its marketing practices limit your choices and cost you more money. Here are five classic examples of how the company has done it.
1. iPod and iTunes
When the iPod arrived in fall 2001, followed by the iTunes Music Store in spring 2003, few early adopters realized the commitment they were making by buying their media player and their media from the same source.
Due to Apple's digital rights management setup, until April 2007 any music you bought from iTunes could play in only three places: on an iPod, within registered iTunes software on a limited number of computers, or on certain Motorola phones (that nobody bought).
If you wanted to move the songs you bought at a buck apiece to a cheaper player from a competing manufacturer, you had two options: an onerous process in which you burned your songs to a CD and then reripped them as MP3s, or quasilegal software that essentially did the same thing using your hard drive instead of a disc.
The last vestiges of DRM-protected music vanished from iTunes two years later. Apple offered to remove the DRM from the music that iPod owners had already bought, as well as to bump up the sound quality, for an additional 30 cents a track. (Gee, thanks, Apple.) Of course, movies and TV shows sold on iTunes are still copy-protected and cannot be legally converted to a DRM-free format.
Locking content to hardware cost consumers money--especially when first-, second-, and third-generation iPod batteries began failing. Consumers could either shell out the cash for a new iPod or pay Apple as much as $100 (plus shipping) to put a new battery in their existing device. In June 2005 Apple settled a class-action suit filed by iPod battery victims, offering a $50 voucher toward future Apple purchases (excluding downloads) and another year of warranty support.
Over the last three years, consumers have filed multiple antitrust suits against Apple alleging that the tight connection between the iPod and iTunes constitutes a monopoly; these have been consolidated in a federal class-action suit currently under way in Northern California PDF.
Daring Fireball blogger John Gruber acknowledges Apple's lock-in advantage with iTunes, but echoes what many Apple supporters often claim: The company's hands are tied by content providers.
"When you buy a movie through your Apple TV, and the movie is in a DRM-protected format that will not work on home theater systems from other companies, it makes you less likely to switch," he says. "But what choice does Apple have? They can sell DRM-protected movies, or they can sell no movies at all."
Actually, Apple has at least two other choices. It could license its Fairplay DRM technology to other hardware manufacturers and allow multiple devices to play media purchased on iTunes, as Amazon does with its video-on-demand service. Or it could use its market power to push for one of the industry-wide DRM schemes proposed by Disney, Sony, and other parties. (Given the close ties between Steve Jobs and Disney, though, Apple might eventually endorse the digital rights scheme that the Mouse House favors.)
2. iPhone and the App Store
It's sad but inescapable: If you want a sexy iPhone in the United States, you also have to date its ugly stepsister, AT&T. Your alternatives? Take your chances with iPhone unlocking software (and hope that Apple doesn't release an OS update that turns the phone into a brick), or move to Europe, where you have a somewhat broader choice of carriers. Locked (though heavily subsidized) phones are an unfortunate fact of life in this country, a situation not unique to the iPhone.
The iPhone's software shop, on the other hand, is a dictatorship. Apps for the iPhone are available only from the App Store in iTunes. And North Korea's Kim Jong-il has nothing on the people who run the App Store, whose decisions about what apps may be sold seem more capricious as time goes on. Apps that duplicate (or improve upon) features available from Apple or AT&T are strictly forbidden--hence the ongoing controversy over Google Voice, an application that would allow VoIP calls over the iPhone, if only Apple would approve it.
iPhone owners have had the option of jailbreaking the handset, which allows them to install apps not approved by Apple while voiding the warranty (see the dangers of unlocking, above). With changes that Apple has made to the iPhone 3GS, however, jailbreaking may no longer be possible.
Apple claims that jailbreaking the iPhone violates its copyrights and the Digital Millennium Copyright Act. Digital-rights organizations like the Electronic Frontier Foundation beg to differ.
The EFF's Fred von Lohman argues that iPhone owners should be free to tinker with their phones, especially when they can add capabilities that App Store programs don't yet provide. He notes that "the courts have long recognized that copying software while reverse-engineering is a fair use when done for purposes of fostering interoperability with independently created software, a body of law that Apple conveniently fails to mention."
By comparison, things are slightly different for the open-source mobile OS Google Android, whose owners can buy apps from multiple online stores (including AppVee, Handango, and MobiHand). Android apps also undergo an approval process; Google says about 1 percent of apps are rejected. Still, according to Wired, several iPhone developers booted from the App Store are opting for the friendlier environs of Google's mobile OS, which some say allow them to be freer with both the OS code and the phone features when they're creating apps.
With each major mobile platform developing its own app stores, more differences may emerge. As its competitors grow in popularity, the iPhone App Store may have to relax some of its restrictions or risk driving away more developers.
3. Mac Computers and Mac OS
Ever since the Second Coming (aka the return of Steve Jobs to Apple in 1997), the Mac has been a tightly controlled, closed system. The result? High prices and limits on the options you can get with Mac hardware.
For example, you still can't buy an Apple machine with support for Blu-ray drives. And although Apple has cut prices--in part due to some aggressive Microsoft marketing--the average Mac still costs some $900 more than the average Windows PC, according to the latest figures from The NPD Group's retail tracking service.
"The Mac showcases the traditional lock-in method of tying software to hardware," says Rob Enderle, principal analyst with The Enderle Group. "This is the act of making the OS and certain core software inexpensive or free, and subsidizing it by high-margin hardware. It's a classic misdirection, and it works as long as there isn't a third party who can compete with a more reasonably priced package (which is what Psystar is trying to do)."
Psystar's attempts to market hardware capable of running the Mac OS have resulted in an ongoing legal battle between it and Apple; few observers give Psystar much chance of winning that fight.
The main advantage to the marriage of Apple hardware and software is "a unified source of service," notes Jake Widman, who has written about Apple for two decades, most recently for bMighty's blogs. "You made everything in this box; you fix it."
Reopening the Mac OS to third-party manufacturers, as Apple did in the mid-1990s, might lower prices but increase support pain, Widman adds. "I recently compared the cost of a Psystar with that of a Mini (and the old Mini, before the recent bump), and ended up wondering how much hassle one was willing to put up with in order to save $120."
Has the closed Apple ecosystem resulted in more-reliable, better-supported systems? Apple has traditionally fared well in consumer hardware-reliability surveys (including PC World's). This year, however, Apple fell to a distant second behind netbook maker Asus in reliability data collected by Rescuecom, an independent customer-support vendor. Recent glitches with the Snow Leopard OS and performance problems with the newly introduced iMacs also suggest that the Mac platform could be losing its purported quality advantage.
4. Installed Software and Extra, Unwanted Apps
Apple has a history of taking advantage of its iTunes-iPod/iPhone headlock to promote its other products and services. For example, in March 2008 many Windows users were surprised to find Apple's Safari browser installed on their systems--a little gift left by the latest iTunes update.
At the time, Mozilla CEO John Lilly lit into Apple for the practice. "It undermines the trust relationship great companies have with their customers, and that's bad--not just for Apple, but for the security of the whole Web," Lilly wrote.
After enough people complained, Apple made an infinitesimal change, creating a "new software" category in its update app but leaving installation as the default.
In July 2008 Apple's iTunes update began quietly installing the company's MobileMe online data-sync service without any notification to the user.
In September of this year, Windows blogger Ed Bott noted that again Apple tried to use updates to an existing software program (Boot Camp) to install an iPhone Configuration Utility, even though he had never used an iPhone. Apple subsequently removed that program from its Windows Update utility. To this day, if you update the QuickTime video player, it will also look to install iTunes, regardless of whether you've ever owned an Apple device.
With the exception of MobileMe, which costs $99 to $149 a year, none of these software programs generate revenue for Apple. But they do serve to pull users further into Apple's ecosystem.
5. Shoes and Spies
In March 2007, Apple applied for a patent on technology that allowed it to pair a garment with an electronic sensor, as it had done with the Nike iPod Sport Kit. That kit allowed owners of Nike shoes to track their speed, mileage, and other data on their iPods. Apple's objective in the patent: to prevent users from removing the sensor from the Nike shoe and putting it into shoes from a different manufacturer--what New Scientist's Paul Marks called "DRM for your wardrobe."
Two months later the company filed for a patent on technology that would prevent Apple devices from accepting a charge during certain circumstances. This tech would prevent a thief from recharging your iPhone or iPod, but it could also keep you from charging the device if you tried to sync it with an "unauthorized" PC. And last August the company filed for a patent on sensors that would record "customer abuse events" on Apple products; the data from these sensors would presumably be used to deny warranty repair claims by documenting damage that was the customer's fault.
Apple is certainly within its rights to patent such technologies; what these applications show, though, is that there is seemingly no limit to what the company wants to control.
Many such lock-in examples exist, to be sure, and we'd like to hear yours, in the comments below.
The question is, do Apple fans care? Widman, for one, says, "Choice is overrated. As a consumer, I'm more interested in something that works."
It's a reasonable argument--but also a costly one. Is it really worth it?
When not outraging the Apple faithful, Contributing Editor Dan Tynan tends his geek-humor empire at eSarcasm. He would also like to point out that, no matter what you might think, he is not a Microsoft Fanboy.