iPhone could be hurt by Apple's culture

Apple is allowing history to repeat itself because of the self-destructive culture that it has built around its shiny toys.

According to the New York Times, which is famous for being Apple’s unpaid press office, Apple’s closed culture is begging a repeat of the situation where Microsoft eclipsed the Apple-Mac.

The Times’ logic is pretty valid, the same we have been banging on about. However coming from an outfit which pens only pro-Apple stories it is unusual.

Basically: in the early 1980s, the Macintosh dealt with huge amounts of competition that ran Microsoft software. Jobs’ answer was the same as it is now. Close off everything and have absolute control of the machine. In a few years, Microsoft all but sidelined Apple.

The Times senses that things are starting to slip out of Jobs’ paws. Americans, who are Apple’s largest customer base, now are buying more Android phones than iPhones and in a year Android will have erased the iPhone’s once enormous lead in the high end of the smartphone market.

Toni Sacconaghi, an analyst with Sanford Bernstein said it is not clear if openness will ultimately prevail as it did on the PC.

At the same time there is no reason to suggest it wouldn’t. In a surprise move the New York Times, which has been doing its best to run down Microsoft’s Windows Mobile 7, has finally admitted that the operating system is going to be a rival to Apple too. This means that RIM, Microsoft, Google and even Nokia can’t be counted out from giving Jobs’ Mob a good kicking.

Apple’s response has been to free up the iPhone sales by ending the exclusive deals that it once hatched with the likes of AT&T. Next year the iPhone will move to Verizon.

David B. Yoffie, a professor at the Harvard Business School who has written recent case studies on Apple said there are too many rapid innovations taking place in an open environment for Apple to compete with. If Apple comes out with a new iPhone model once a year, Android phones with new features will hit the market often.

The other danger is that as the numbers of Android phone users grows, the outfit will grow more attractive for app developers.

Being the New York Times, it claimed that Apple’s App Store, with more than 250,000 applications, enjoys a large advantage over the Android Market, which has about 80,000. It claims that Apps made for the iPhone tend to be of better quality.

However it sheepishly admits that edge may not last. Again it is Apple’s control freak culture which is screwing up things. Developers find Apple’s tight control over the App Store a nightmare.

Having pointed out that history is repeating itself, the Times feels the need to defend Apple, we guess in case it does not get a free exclusive iPhone 5 when it comes out.

It claims that history will not repeat itself because Apple is incredibly rich and can afford to invest heavily in research and development.

But that is a poor excuse. Apple had lots of money in its pocket when it started to lose ground to Microsoft. Microsoft has been floundering around for a couple of years, despite being cash rich.

It claims that the iPhone is being helped by the iPad and the iPod Touch because consumers like being able to access the content and applications they bought on iTunes and the App Store on multiple devices. All up Apple has sold more than 120 million iOS devices.

But the “we have a big user base” argument does not really cut it either. All those products can be made much cheaper on Android. Next year it is likely that we will see a flood of Tablets which are half the cost of an iPad and do not ship with Apple’s controls. In fact the only reason that Apple has done so well in the tablet market is that there has been no competition.

That is not to say that Apple will be killed off. One thing differs dramatically between this situation and the 1980s. There is much more competition in the smartphone market than there was in the PC industry in the 1980s. This could work in Apple’s favour and prevent it being wiped out.

But Apple should pay attention to what the Times is saying. If even Apple’s tame lapdog suggests that history might be repeating itself, then Jobs’ Mob needs to pay attention. Of course paying attention to other people’s views is not something that Steve Jobs is famous for.