Apple Still Loves Amazon
Tuesday, May 12, 2009 at 7:42PM A lot of people seem to think that Amazon is somehow taking money away from Apple with the release of their iPhone-optimized Kindle marketplace. Eric Sherman says "Amazon Outsmarts Apple App Store", while Seth Weintraub says the Kindle app "seems to circumvent Apple's 30% cut of the store proceeds", and wonders "will Apple let this stand"?. Meanwhile, Charles Starrett seems to be hoping for a legal scrap, having titled his post about it "Amazon opens iPhone-optimized Kindle Store, conflict expected?".
Okay, I'm all for keeping an eye on Apple. But, does everything have to be a big deal? Time will tell, but consider me skeptical about this being an issue! This is simple business, and it would make no business sense for Apple to restrict other companies from doing this.
It looks to me like Apple is focused on their iPhone platform business. They give us awesome hardware, languages and tools for building apps, and then handle distribution, accepting payment, and so on.
This is great for developers, since these things have previously been an expensive part of the business. 30% (Apple's cut of the revenue) for distribution costs is actually relatively cheap in the software biz. And it's great for users (App Store interface lameness notwithstanding), who benefit from the creativity of developers who couldn't enter the markets that existed before.
One of my favorite iPhone OS 3.0 features-to-be is In-App Purchasing. Developers can charge a fee from within the application for more content (books, subscriptions, game levels, etc.). Apple will handle the money side of things through the user's iTunes account, just as with apps. For users, this means they can buy another book or the next level of armor for their game character without having to give yet another company their credit card number.
It's also great for developers who can avoid maintaining the related backend infrastructure, and is yet another stellar way to make money for Apple. Apple is fanatically focused on the user experience, both in the App Store (this will tame the explosion of separate e-book applications, for example) and on the iPhone. Developers can now offer a better user experience, so Apple says "mission accomplished"!
Does anything contractually restrict any iPhone developer from bringing their own way of selling content? Unlike distributing your warez through the App Store, I think this is an opt-in feature. In Amazon's case, the infrastructure is already there, and all users of their Kindle app already have their credit card on file. Why would they opt-in, especially at Apple's 30% rate?
If Apple did take on a legal battle with Amazon, it would be pointless and suicidal. You can bet every other powerful or high-profile company who might consider content distribution through the iPhone would be in Amazon's corner. None of them will want to pay 30%, especially when they've already incurred infrastructure costs of their own!
Good business sense says Apple ought to let this one go with their blessing. "Yes, please use our phone as a platform for everything and anything you can. And, if you need a quick, cheap, user-friendly way to charge users more, feel free to use ours. It's super-user-friendly. But, if not, thanks for keeping people engaged with their iPhones."
Thanks, Apple, for keeping me engaged with mine :-)
Reader Comments (2)
As many people noted in the 9to5 article, that whole idea that Amazon is 'bypassing apple store' is ludicrous.
The Apple Store 30% tax is pretty specific to the proceeds of the sale of the application software, not all goods and services purchased using an iPhone application.
That doesn't even make any sense, especially when Apple's in-app sales fulfillment isnt even live yet.
I think the part the OP was confused on is that some people sell books as apps on the iPhone, and jumped to some conclusion that that was some kind of Apple-mandated technique for distributing ebooks. Its not.
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