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Apple's Newish In-App Purchase Policy

By Kevin, on Tuesday, March 1 2011 (Apple)

A follow up to my Apple vs. Sony post. Apple has specifically stated that if you link to a website store in your app, anything digital you offer for sale on that website store has to be made available to app users via an in-app purchase. Apple charges developers 30% of the in-app purchase price.

John Gruber at Daring Fireball wrote an article covering these topics as well, I pretty much agree with everything he wrote and reinterate some of his points below.

Again the big question here for consumers is how does this affect Amazon Kindle app. Apple just accepted an update from Amazon last week that still includes a button that has a link to the Kindle Store on each page. So to date Apple appears to be OK with Amazon. They may be waiting for iOS 4.3 to ship before enforcing the policy with Amazon, or they may be in dicscussions with Amazon, or they may just be ignoring Amazon. It's Apple, all three are likely.

Even if Apple rejects the Amazon Kindle app from the store it's doubtful they'll delete the app from everyone's devices. Although they have the capability, Apple has never done this (which puts them ahead of Amazon, who has deleted several books from Kindles.)

A bigger question is why is Apple doing this? And many seem to be saying "Oh my god Apple is so unfair" or "30% is too much money!" I'll take a shot at answering these.

Why is Apple doing this? I see two reasons behind this. One is about books and magazines. Apple doesn't want iBooks to become irrelevent in the ebook market. Currently a book publisher that wants to make ebooks available can go to Amazon and have the book available on way more devices, including Apple's, than if they negotiate with each ebook reader individually. If Apple can reduce the use of the Amazon Kindle app on iOS devices it will force those publishers to either create their own apps and sell the books with in-app purchases, or to make books available via iBooks. Either way the publisher gets 70% of the price, Apple gets 30%, Amazon gets circumvented. Win-win for Apple, and no loss to the publisher (Amazon's cut is 30% or worse on Kindle books, so the publisher doesn't lose money this way.)

The second reason is this: Does Wal-mart allow Costco to setup little stores inside of their stores? Hell no. Apple feels the same way. They went to all the trouble of creating this awesome device, and awesome market, and now they're getting circumvented? That would piss them off a great deal. So they're putting an end to it. By the way, Amazon does allow other companies to sell stuff via Amazon's web site. I'm curious to what cut Amazon takes from those companies. Would be an interesting perspective to the "30% is too much money" argument.

Does it hurt the customer? Not immediately. Customer's probably won't lose access to any current applications. If Amazon's app gets pulled I believe it will be Amazon's decision to pull out, not Apple kicking them out. There is the potential that some developers may decide to opt out of developing for iOS because the costs, but I don't see that happening anytime soon while the iOS has so many more people actually buying apps (with real money) than other platforms.

"Apple is being unfair." Apple is only being unfair to resellers. If you want to setup a web store and cater to iOS users with a custom app, Apple wants a cut. If you're a publisher you're already used to giving a cut to various retail outlets. Apple's deal may actually be better for them. But if you're an aggregator of content and you already negotiated taking a cut from publisher, Apple's 30% is probably coming from your cut. And you may be screwed. Apple doesn't really care, they want to bring publishers direct to the customers, not through multiple layers of middle men.

Is 30% too much money? I honestly don't know. Amazon wanted more, when they were the only game in town, then Apple undercut them and they dropped their own pricing pretty quickly, suggesting 30% cut is more than generous. Press releases announcing price cuts are greeted much more enthusiastically than announcements of price increases. If Apple determines 30% is keeping away too many publishers or developers, they can lower later. As a consumer I don't really care what the deal is between the publisher and Apple. Just as I don't really care what the deal is between Costco and the various manufacturers. I'm looking at my total cost. If Apple reduces the 30% cut will app prices drop? Some may, but I actually think most developers would keep the extra money (and there is nothing wrong with that!)

I think publishers are currently using to paying way more the 30% to get their books on shelves of bookstores. They have to pay the author, editor, the printer, advertising, the middle men, etc... If they negotiate directly with Apple or Amazon or Sony or Barnes & Noble they know they'll get 70% of the price. They'll still need to cover the author, editor, and advertising but other costs are eliminated, Apple is now the middle-man for all the other stuff (bandwidth, storage, store front development costs, etc...) and it comes out of the 30%. Currently publishers are most likely avoiding ebooks because they don't want to risk their paper book sales, which are probably still larger than their ebook sales. So they'll keep the prices artificially high while they transistion. I expect prices of ebooks to start dropping in 4 or 5 years as paper book sales tank.

Tinkerers are smarter than you

By Kevin, on Sunday, January 31 2010 (Computers)

Lots of words going around about how the iPad is the beginning of the "tinkerers sunset." In other words the apparent locked down nature of the device is going to bring an end to the tinkering people do with thing like their computer.

I call bollox. When I was a kid I began tinkering on one of the most open systems around, the Apple ][+ at high school, then the Apple //e at home. Those systems cost $2000+ dollars. My high school, a private catholic school, had around 7 Apple's, a handful of PET computers, and some weird mainframe in the corner. A handful students were tinkerers and sat around in the computer room over lunch and after school. There were occasional fights over who had a computer because there weren't enough. Whoever didn't get one ended up at a desk either hand marking up code, or reading the f*in manuals.

Now we have a $499 device (equivalent to a $250 device in 1984). I'm sure many schools, especially those expensive private ones, are looking to give one to every single kid. Resource limitation of 7 computers -- gone.

The Apple //e had one language available for free. Applesoft (or BASIC). When I wanted to learn a new language, 6502 assembler, i had to pirate an assembler package I couldn't afford.

Now, FOR FREE, Apple will give you the entire development environment for both the Mac OS X and iPHone OS. This is the same environment Apple themselves use to produce applications for the Mac and the iPhone. So far the current enviornment is WAY better for tinkering than when I was a kid.

Now we get to the part the death of tinkering claimers is bring about the death of tinkering. If you write an iPhone app you can't "officially" load it on your iPhone for free, you can only run it in the simulator. You need to be a paid member of the Apple iPhone Developer Program. Cost is $99 a year ($50 in 1984). Once you're a paid member you can load ANY program you write onto your own device. Apple does not approve apps you are loading on your phone, just the ones you want to make available via the iTunes App Store.

Except, you can jailbreak your iPhone. Jailbreaking means getting rid of the Apple requirement for apps to be signed by Apple to run (it's different from unlocking, unlocking an iPHone means allowing the celluar components to work with other cell providers.)

Just as I was willing to pirate an assembler package to learn a new language, any tinkerer worth their salt is going to know how to jailbreak their phone and skip the whole Apple approval process.

Is jailbreaking legal? Not completely. The DMCA copyright extensions would provide Apple a way of trying to legally shut the practice down. To me it's a lot more ethical than the pirating I did. I personally oppose the DMCA extensions and would love to see them repealed. But at the same time Apple hasn't enforced these provisions. They've not shutdown [Cydia] (http://cydia.saurik.com/store/) the app store for jailbroken apps. They haven't sued a single jailbreaker (more than the RIAA can say.)

Even if Apple starts hammering down on jailbreaking they won't really have any more affect than the anti-pirating measures companys put in place to prevent what I did.

I GUARANTEE you, put an iPad or iPod touch or iPHone in the hands of every teenager at a school and you will have tinkerers. Damn good ones. Ones that will learn to circumvent your locks. Ones that are smarter than you.

The iPad

By Kevin, on Thursday, January 28 2010 (Apple)
2 comments

I do like the iPad. I think its a new category of device. Fat iPod is a visual description but I think it does the device a disservice. I can't count the number of times I've talked to people that have gone to a dual monitor on their computer. It changes their workflow, they feel more productive, etc.... Technically that's just a fatter computer but it's made them use it in a different way.

I have the same feeling about the iPad. It's a dual screen iPhone and it's going to trigger different uses and workflows. Things you don't even think of until you have it in hand.

Most specifically what the iPad ISN'T is it isn't designed to replace any device you have now. It's not an iPhone replacement (or even an iPod Touch replacement). It's not a laptop replacement. I've even seen it said that it'll fail because it doesn't replace an XBox. Well duh it's not an XBox. Neither is a netbook, neither is a laptop, neither is a Mac Pro.

I think everything left out that people complain about was left out on purpose because it actually made the product worse. Given that the original iPhone was called the Safari Pad (http://arstechnica.com/apple/news/2008/03/safari-pad-tech-used-to-create-iphone.ars) it's obvious Apple has been working on this for a long time. My guess is they made lots and lots of prototypes and tried them extensively and if it was awkward or not working, out it went.

The use case I see for this is when you are sitting down. Recliner, couch, airplane seat, less so an office chair (unless next to the monitor of your "real" computer). iPad will spend most of it's time in your hands. Next most common will be propped up (probably by the case), the dock less than that (I'm sure there are people that will dock it with the keyboard and leave it that 24/7 but I think this will be rare outside the blogging/writer adopters.)

I also think this device will be left at home far more than smaller devices. I'll leave it on the arm of the couch when I go to work. Unless it works alot better for taking notes from the virtual keyboard then I'm picturing, I don't think i'll take to meetings with me (I do take notes on my iPod Touch). When I travel I definitely take it. For business travel I'll take it WITH my work laptop, not instead of. For personal travel I think it will be sufficient on it's own. At the bar, restaurant, bathroom I still use my iPod Touch.

Most common complaints I see are:

  • No phone - duh, it's a 10" device. You don't want to put this up to your face (by the way, I believe VOIP will work on the device.)
  • No back facing camera for taking pictures. Really? You want to pull out a 10" device to take pictures. Give me a break. Your phone is faster and more portable.
  • No foward facing camera. I thought about this one for awhile. On the surface it makes sense for things like iChat and Skype, but think about my use cases. If the most common use case is sitting down with the iPad in your hand, it's going to be in your lap. A camera would be angled straight up your nose. Even if you're tilting your head down the angle makes your head look huge. Next use case is propped up on a table. In landscape mode the camera would point at your chest (unless you angle it back more, then you're back to up the nose.) Portrait mode, on a dock might work, but unless you're very short I think this camera would shoot. your chin. To me a video chat works best with the camera at eye level. Which is a rare position for the iPad.
  • USB/firewire/HDMI - I don't want cables dangling all around me on the couch. The camera connection adds a USB to connect a camera will be curious to see how useful this is.
  • No 1080p - duh, the device is 10". 1080p at 10" is stupid waste of disk space, and you're already limited to at most 64 GB on
  • Only up to 64GB memory - it's thin and cheapish device. More memory is expensive, and the device has to be thicker, and heavier. This one will change over time. I'll never argue against more space (my iTunes library is over 500 GB, so the more I can put on a portable the happier I am).
  • No tethering from iPad to iPhone - this would be nice to avoid another data charge. I'm hoping for a wifi tethering mode in a future iPhone OS (similar to mifi functionality.) I'm guessing this was more a carrier decision than an Apple decision. I'd also like to tether to the iPad if it has 3G.

So what I see is Apple has come up with a nice device that supplements your other devices. It isn't designed to replace any of them, especially not combinations of them. Apple wants to sell lots of devices so their design is specifically set to be an additional device, not a replacement for existing ones. I can clearly see a use for Computer, iPhone/iPod Touch, and an iPad as a group of devices. Those whining it isn't awesome because it doesn't let them dump their existing devices don't know what they're talking about.