Analysis of IT news

Wednesday, August 13, 2008

3rd party apps on the iPhone

Steve Jobs is notorious for being a control freak, which of course rubs off on the whole company. The latest example of that behavior has been the absurd level of control that Apple has over 3rd party development and applications on the iPhone.

On most platforms development is pretty open. Once you've acquired a Software Development Kit (sometimes free of charge, sometimes not), you're free to write and sell whatever application you want. This has always been the norm on personal computers. And yes, that includes the Apple II and the Mac. Likewise, a big part of the success of Facebook has been to let anybody create applications for its website. If you look from that lens it looks like Apple is running towards a wall.

But the open development model is not the only successful model. Case in point, Nintendo introduced a new business model when it launched its NES video game console in the mid-'80s: sell the console at production cost and make money by taking a cut on each video game published for the console. The license to publish a video game for the NES not only wasn't free but came with a lot of strings attached. Nintendo had control over a *lot* of things. Restrictions over the content (not too much sex or violence), licensees were not permitted to release the same game for a competing system until two years had passed, Nintendo would decide how many cartridges would be supplied to the licensee, etc. Despite all these constraints, the NES has been very successful, thank you very much. This strategy started however to backfire when its Nintendo 64 faced strong competition with Sony's PlayStation, with some editors jumping ship.

The morale of the story? As long as you have the mojo you can do pretty much whatever you want and people will follow (consider Microsoft dictating its will to PC manufacturers!). But once there are other serious players in town you might want to revisit your plans.

Now, let's have a look at Apple's restrictions on 3rd party iPhone applications:
- You need to sell them on iTunes. Not a big deal. iPhone users probably don't care what site to get iPhone apps, and are used to use iTunes anyway.
- Apple takes 30% of the application price. I'm sure no 3rd party company is happy about this, but as long as the iPhone delivers a lucrative market they'll keep accepting that deal.
- The NDA developers need to sign is crazy. 3rd party developers aren't even allowed to share tips with fellow developers on forums. They're supposed to develop on their own, without any contact with anybody else. Now, the effect of this constraint highly depends on the quality of the SDK. Besides, I wonder however if some underground forums guaranteeing anonymity will pop up.
- Apple can pull the plug on any application (and it already has), without of course any explanation. This is probably the most important factor, as we'll see below.
- Apple can remotely disable applications at their own discretion. This is more likely to turn off users who want to hack the iPhone and install various applications not approved by His Majesty Steve.

So if I had to take a guess I would say that, at least in the short term, Apple will get away with it. As long as the iPhone market is hot, developers will bite the bullet and develop applications for it.

Another factor is the type of applications that will become popular on the iPhone. As long as the apps are nice little games and nice little utilities, nothing will change. The big question is: what if/when someone develops a killer app on cell phones? If that was you, would you be comfortable developing it on the iPhone knowing that Apple can tomorrow come up with a competing offer and kick you out? What if that killer app is forbidden in the first place because it's dealing with the iPhone's wireless capabilities - something which is explicitly denied by Apple? Could the iPhone lose its mojo to another smart phone this way?