Uncommon Wisdom

Feb 23 2011   4:07PM GMT

Apple gets push-back from app providers over revenue

Tom Nolle Tom Nolle Profile: Tom Nolle

Apple, already facing an anti-trust review or two, is now getting growing push-back from app providers over the subscription-sharing rule. Apple wants a cut of every subscription, meaning that it want apps that sell something to sell only through Apple’s store and not directly to the consumer. If dissent spreads here, it could be a worse problem for Apple than government scrutiny.

From the very first days, Apple has fostered a closed ecosystem model to the greatest extent it could, bucking a general industry trend toward opening software and systems to third-party exploitation. Google announced its own program for an Android store that’s considerably more financially friendly to publishers and streaming audio/video apps, which only puts more pressure on Apple.

The rumors of a lower-priced iPhone and even iPad are further indications that Apple is worried about competition from Android. Just as the PC-compatibles shunted Apple aside in the desktop wars of the 1980s, Android-based devices are threatening to diminish Apple’s market share and marginalize it with developers—those who aren’t already upset by Apple’s store policies. But Apple loses in any price war even if it wins, because Apple is always seen as a player that sustains higher margins. With Jobs’ health now clearly a problem, the difficulties could be harder for Apple to work through.

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