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Apple's PR Nightmare: Open and "Fragmented" vs. Closed and "Integrated"

Eric Hernaez

Over the weekend, I opined that closed app stores — meaning app stores, like iTunes, that restrict users from loading software from other sources (known as sideloading) — would not survive in a market where comparable alternatives, such as Google's Android OS, exist in an open ecosystem.

In Apple's Q3 earnings call yesterday, Steve Jobs addressed the issue square on. In what many observers called a rant, he framed the issue not as open vs. closed, but as "integrated" vs. "fragmented." Among the points he made:

"Many Android OEMs install proprietary user-interfaces to differentiate themselves from the commodity Android experience. The user is left to figure it all out. Compare this with iPhone where every handset works the same.

We think the open vs. closed is just a smokescreen to try and hide the real issue, which is: What's best for the customer? Fragmented vs. integrated. We think Android is very very fragmented and becoming more fragmented by the day.

Open systems don't always win."

With the last statement, Jobs has set the stage for the next epic Internet battle to unfold. Surprisingly, he did it in a way that casts Apple as the bad guy. Because whatever the ultimate outcome may be, most people want to think that open will win.

The public is already taking sides:

To buttress his position, Jobs used Tweetdeck as an example: when Twitter client TweetDeck recently launched its Twitter client on Android, it had to contend with 100 different version of Android and 244 different handsets. "The multiple hardware and software iterations present developers with a daunting challenge," he said. "Many Android apps work only on selected Android handsets running selected Android versions, and this is for handsets that were shipped less than 12 months ago." Tweetdeck founder Ian Dodsworth tweeted his reply: "Did we at any point say it was a nightmare developing on Android? Errr nope, no we didn't. It wasn't."

While jobs may be right in saying that open doesn't always win (I won't rehash the reasons why I think app stores won't survive), he has now framed the argument in an emotionally charged way that can only hurt his cause. While only time will tell whether closed triumphs over open in the mobile ecosystem, in the battle for the hearts and minds of the public, Apple is already losing.

By Eric Hernaez, Chief Executive Officer of Netmobo. More blog posts from Eric Hernaez can also be read here.

Related topics: Mobile, Web

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Comments

A followup in the call was interesting Jeremy Hitchcock  –  Oct 19, 2010 4:05 PM PST

A followup in the call was interesting where he said he would choose "closed"/higher quality over marketshare.  If you think about the Internet being one of the most open platforms with huge "marketshare" think about the struggle with interoperability.  Some would argue that we are still fighting that fight!

I don't have an opinion one way or another on open versus closed but because SMTP, HTTP, and DNS were designed to be so open is why they are successful and ubiquitous today.  If you were a company developing DNS 25-30 years ago, maybe you would have made different decisions about it's openness to aid in commercialization.  That open technology also gives way to it's many abuses like DDoS, spamming, and phishing.  Interesting dichotomy of alternatives and curious that they put a stake in the ground.

Jeremy, Apple's great breakthrough was the business Eric Hernaez  –  Oct 19, 2010 5:44 PM PST

Jeremy, Apple's great breakthrough was the business model, not the technology. Apple broke open the carrier walled gardens (in part because they had compelling technology).  Ironically, they created their own closed system.  It happens to be 1000 times better than what we had before, so nobody minds too much… yet.  But once the world starts taking smartphone apps for granted, the benefits of a truly open ecosystem will become evident, and the market will force Apple to open as well.  Open technology standards like DNS, HTTP and SMTP are a different animal.  I could go on and on, but here's a bit about how I feel on that subject http://bit.ly/bOYFu2

Integrated has already beaten fragmented in the past Martin Hill  –  Oct 20, 2010 8:13 AM PST

The iPod and the iTunes Music and Media stores are prime, recent examples of the "open" competition being utterly decimated by the vertically integrated model.

In the battle for the hearts and minds of the public, Apple is still winning, 275,000 - 300,000 iOS device sales a day versus 200,000 Android devices demonstrates that the general public absolutely loves what it sees in Apple.

-Mart

The Mind is a Funny Thing Eric Hernaez  –  Oct 20, 2010 9:50 AM PST

Mart, I love Apple products!  I am typing this comment on a MacBook Pro while I listed to tunes on my Touch.  There is no question that the good folks at Apple have consistently identified unfilled niches and delivered superior products.  My point was simply that, from a marketing perspective, saying "closed is good" is not a productive PR strategy.  People's first, gut reaction to that statement is negative, and all things equal, it will cost Apple more fans than it gains them. 

The issue you raise, about being able to maintain market leadership, is different.  That iOS figure includes sales for the hugely popular iPad, where clearly there is no other comparable product yet. Again, Apple got there first and established a formidable beach head.  Kudos to them.  But, I would bet you dollars to donuts that Android tablets will outsell iOS tablets in 12 months.

That's why he is changing the terminology Martin Hill  –  Oct 20, 2010 7:20 PM PST

Hi Eric, I understand your point. 

However, I think this is why Steve is obviously working to change the discourse stressing the terms "integrated" versus "fragmented" rather than "open" vs "closed".  Likewise, the App Store is "curated" rather than a "walled-garden" to stress the positive aspects compared to the wild west anarchy of the Android Marketplace.

We'll just see how many in the media would rather cast Apple as the good guy or the bad guy based on which set of terms they use.  My guess is plenty will continue to go for the latter since that will get the page hits.

-Mart

The quote was "Open systems don't always Eric Hernaez  –  Oct 20, 2010 9:20 PM PST

The quote was "Open systems don't always win." A bad choice of words for somebody that is trying to change the discourse.  Who can blame the media for jumping on it?

The "open" meme is already out there Martin Hill  –  Oct 20, 2010 11:18 PM PST

The problem is that the "open always wins" meme has been flooding the blogosphere in recent times, so it's not surprising Steve felt the need to debunk that phrase.  It's pretty difficult to do that without mentioning the word "open" in the first place. 

As I say, he said that word but has pretty consistently always worked to steer the conversation back to stating the advantages of the Apple model by using phrases like "integrated" vs "fragmented" etc.

If I was a betting man I might almost have taken up your bet regarding the iPad vs Android tablets because Android is by no means whatsoever a shoe-in to tablet dominance.  In contrast, it is the iPad that holds all the cards based on recent history.

The iPod with 70-80% market share for the past decade has demonstrated irrefutably that the vertically integrated model can and has completely obliterated the massed ranks of "open" competitors in the media player market, a market which is closely aligned with the "media tablet" market.  The tablet market is also not beholden to the Carriers and subsidies which is one major reason for Android's rapid climb in unit sales in recent times.

Likewise, the iTunes Music and Media Store again with 80% marketshare has demonstrated how a "closed" ecosystem can crush the massed ranks of big name competitors from Microsoft's "open" Plays for Sure partners to Amazon to Walmart to Sony etc.

Repeat after me - Open does not always win - ;-) and the current lead of the iPad with all of the software, media and hardware peripheral ecosystem already in place makes for an extremely steep uphill battle for Android and other competitors.

-Mart

"Closed" fails the gut reaction test Eric Hernaez  –  Oct 21, 2010 8:22 AM PST

I never said that "Open always wins." In fact, I conceded that Steve Jobs might be right in saying that sometimes closed wins.  What I said was that people react negatively to the concept that closed is better, and that pushing that viewpoint is an uphill battle, and therefore a PR nightmare (which the subsequent negative press has proven to be true). 

For the record, I agree that an "integrated" approach is better in the music business. The dynamics in the music industry can be distinguished because its harder for a music act to forge a direct connection with consumers.  In contrast, developers will have the tools and the inclination to do that in the near future, and so open will ultimately win in the "apps" business.  Let me know if you change your mind about the bet ;)

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