Writing Assignment 2 - Essay Example

Writing Assignment #2 For this activity, I will be examining an article published in the New York Times in February about Apple's move to further control its iTunes app store. Particularly, the report focused on the initiative to prevent applications from selling anything like e-books within their published applications. This is the same as banning all mini app stores such as the Amazon Kindle app or the Sony Reader Store. The idea is for all trading transactions to be performed within the iTunes app store exclusively and not through other means.

This policy is actually not surprising because Apple has been known for its tight control of its products. For instance, iPod and iPhone users cannot download music and applications to their gadgets using other means besides the iTunes software. Third party applications being entered and sold in the app store also have to meet very stringent requirements as well. This case is a classic example of monopolistic market structure. It provides very clear and very limited choice for customers to either buy and use the product or simply do without it.

The same goes for publishers and application developers. They could adhere to Apple's regulation otherwise they will be prevented from selling their products. The dynamics of the system all boil down to one single seller - Apple through its app store and iTunes. Any attempt of entering the market is useless because of these mechanisms. There is no competition. Both consumers and publishers cannot do anything about it despite the restrictions and monopolistic policies. The sheer number of Apple users empowers the company to do whatever it wants through the principle of economies of scale.

The demand for the Apple brand is high as demonstrated in the spike in Apple sales as well as in the way consumers anticipate the launch of new Apple products. In addition, apple owns the hardware and the software that run their unique and innovative platforms. This is unlike other products whose hardware is manufactured by diverse producers and run on independent and open-source operating systems. Apple took pains in developing its own operating systems to go with its own hardwares and have effectively instituted measures in order to protect its difference from the rest.

Currently, Apple has sued Samsung for allegedly copying the design of its iPad for the latter's Galaxy product line. It is very clear that Apple is vigorously pursuing a monopolistic strategy with its drive to control all of the products, platforms and services within its umbrella. The company has effectively profited from this strategy because it has all the resources to do so – innovation and power. Reference Miller, Claire and Helft, Miguel. “Apple Moves to Tighten Control of App Store.

” The New York Times. Web. 20 April 2011. Article: Apple Moves to Tighten Control of App Store By CLAIRE CAIN MILLER and MIGUEL HELFT Published: February 1, 2011 SAN FRANCISCO — Apple is further tightening its control of the App Store. Some application developers, including Sony, say Apple has told them they can no longer sell e-books within their apps unless the transactions go through Apple’s system. Apple rejected Sony’s iPhoneapplication, which would have let people buy and read e-books from the Sony Reader Store.

Apple said on Tuesday that it was still allowing customers to read e-books they bought elsewhere within apps.  For example, a Sony app could still access books the customer bought earlier from Sony’s store. But Steve Haber, president of Sony’s digital reading division, said on Monday that Apple had told his company that from now on, all in-app purchases would have to go through Apple. “It’s the opposite of what we wanted to bring to the market,” Mr. Haber said. “We always wanted to bring the content to as many devices as possible, not one device to one store.

” Apps like the Kindle app from Amazon.com and the one that Sony submitted open up a browser window when a user wants to buy something. This allows the app makers to argue that technically the purchase is happening on the Web, not within the app. Apple is now saying the app makers must allow those purchases to happen within the app, not in a separate browser window, with Apple getting its standard 30 percent cut of the transaction. At the moment this applies only to e-book purchases. “We have not changed our developer terms or guidelines,” Trudy Muller, an Apple spokeswoman, said Tuesday.

“We are now requiring that if an app offers customers the ability to purchase books outside of the app, that the same option is also available to customers from within the app with in-app purchase.” The requirement may signal a shift for Apple. The company has made more money selling hardware than music, e-books or apps. If people could have access to more content from more sources on their iPhones and iPads, the thinking went, then they would buy more devices. The move is also surprising, as Apple has indicated recently that it would be more collaborative, not less, with magazine publishers and other content producers that want more control over how to distribute content on the iPad.

“This sudden shift perhaps tells you something about Apple’s understanding of the value of its platform,” said James L. McQuivey, a consumer electronics analyst at Forrester Research. “Apple started making money with devices. Maybe the new thing that everyone recognizes is the unit of economic value is the platform, not the device.”