Kenny Hemphill
iAds will make yet more profit for Apple, but the company must change its attitude to developers to ensure that its renaissance continues.
As I write this, Apple is on the verge of passing Microsoft to become the second biggest company in the US, behind Exxon Mobil. It’s just been placed third in Brandz’s annual survey of the most valuable global brands and is so close to IBM that it seems inevitable that by next year it will have taken second place in that list too, this time behind Google.
It recently announced another quarter of record earnings – something that happens so often that the words ‘record quarter’ must now be a part of the press release template for all the company’s financial results. And it’s sitting on a pile of cash so big that it could pay off a significant chunk of Greece’s national debt, were it so inclined.
Did I mention the iPad? Any doubts that it might not prove as successful as the iPhone or iPod have been washed away in a tidal wave of enthusiasm and a healthy flow of orders. If you thought last quarter’s numbers were impressive, wait until you see those for April-June. Things, in other words, are going pretty well for Apple. Even the potentially disastrous loss of an iPhone 4G, or whatever it will be called, hasn’t done too much harm. None of the features discovered by Gizmodo were particularly surprising and the bad publicity at the moment is being shared between Gizmodo and the California police.
That could, however, change very quickly. Big companies with healthy market share, fat profit margins and over-flowing order books have a habit of either exploiting their success, as Microsoft did with its desktop OS monopoly, or becoming fat and lazy, and failing to see the threats ahead, much like Nokia has done these past few years.
In Apple’s case, there’s little chance of laziness setting in – not while Steve Jobs is at the helm. But its attitude towards app developers over the past year or so has become increasingly arrogant. The approvals system for apps, for example, is a mess and shows no sign of improving. Complaints are given short shrift and developers are more or less told to deal with it or go and play somewhere else.
The biggest developer of them all, at least as far as Mac users are concerned, is Adobe. Without Photoshop, Illustrator and InDesign, the Mac wouldn’t have prospered as the platform of choice for creative professionals. Yet Apple treats Adobe in exactly the same way with regard to Flash support on the iPhone and iPad. It’s one thing to have taken a strategic decision not to allow Flash on the iPhone OS, but it’s quite another to allow the relationship with a key developer to break down quite so spectacularly.
The biggest indication of Apple’s attitude towards developers – and customers – might well be iAd, its new advertising platform for the iPhone and iPad. Apple describes iAd as a platform that will allow apps to display ‘feature-rich media ads that combine the emotion of TV with the interactivity of the web’, and we know that developers will share the revenue for ads that appear in their apps. We also know that ads will be ‘targeted’. Given just how much our iPhone knows about each of us, that targeting could take many forms, from the type of app in which it’s displayed, to the apps, music and video we’ve bought from iTunes, to our current geographical location.
These won’t be cheesy banners or Adwords-style text ads. They’ll be television-type adverts from some of the world’s biggest companies, and pricing will be set accordingly. So far, so idealistic. However, as often is the case with Apple, the detail is likely to be less attractive. How big a revenue share will developers be given? You can bet your bottom dollar it will be non-negotiable.
Will ads be displayed in paid-for apps or just free ones? Few people would complain about being presented with adverts in a free application: we’ve become used to that model on Spotify, YouTube and on the Internet in general. However, being shown an ad in an app for which you’ve paid will be less easy to accept. While newspapers and magazines have always charged for purchase and displayed advertising, most people accept that without the adverts, the cover price would have to be much higher to make any publication sustainable.
Given that we’ve all been buying apps for a couple of years, and that stories abound of developers making a decent profit – albeit that those making a fortune are in a small minority – that argument will be difficult to justify on the iPhone. The appearance of adverts in paid-for apps is likely to cause roars of disapproval.
There’s no doubt that iAd has the potential to be a huge money-spinner for Apple and could be a welcome source of revenue for developers and publishers. However, if Apple displays the arrogance and apparent contempt it has shown to partners recently, it may find itself very unpopular indeed.
