How Apple will lead us all to our doom.

“The cylons were created by man. They evolved. They rebelled. There are many copies. And they have a

plan.”– Quote From The Opening Credits of Battlestar Galactica, Season 2.

There is a line in the new Battlestar Galactica series where Kara “Starbuck” Thrace finds out that she’s the Harbinger of Death and that she would eventually lead the rest of the human race to it’s doom. It’s a very scary moment – and a very cool one. The hero of the piece becoming the anti-hero, in one scene. In one line.

It’s not quite the same with Apple but like Starbuck, they also have no desire or no plan (hopefully) to lead us down this path – but it’s this path or context or future that I keep getting glimpses of, not in one but multiple industries that keeps me thinking about where all this is headed.

All of “this?” Yes, “this.” Multiple things. Let’s look at some examples.

 

Music / Movies : Apple invented the iPod. Created iTunes. And inked legitimate, beneficial deals in everyone’s favor with all the major record labels. That was about ten years ago. Today, iTunes is unquestionably the number music retailer in the online and offline world. Customers benefit. But are all customers benefiting? How many local bricks and mortar CD and Video shops have gone bust during this time? Of course the lawyers and journalists will blame piracy. But pirates will always pirate. They’re still downloading today. The legitimate buyers meanwhile, have actually shifted their buying patterns. Buying online (from Apple, Amazon etc.), buying single songs (instead of CDs) and renting digital movies (instead of DVDs and VHS – and having to have the pain of returning them on time). So who has really contributed more to this decline of offline retailers? And once these shops are gone, they’re gone – leaving only the struggling giants like HMV as options. And here’s the point – the day where you just head down to that store to hang out with a friend or your dad/mum or lover – to pass the time, discover a new CD together, borrow a title that you last watched when you were a kid…those days are gone.

 

Videogames / Developers : Apple takes 30%. You take 70%. Amazing deal. Developers are obviously in ecstasy over this. I know this. I talk to them every day. But what is the long term path for this as an industry? I’ve puzzled over this ever since for quite a while and all the more since I’ve always been engrossed in videogame production. Let’s take my example, which I admit from the onset is a VERY generalized one. A big games publisher like say Ubisoft or EA has multiple studios to manage. And dozens of staff under each of them. There’s marketing, programming, project management etc. It takes say two-three years to produce a PlayStation 3 game by as an example, a hundred (likely much more) people. That’s a hundred salaries x three working years. Say the game sells at $50 and does a half a million copies (very well). That’s  $25 million in revenue which seems great, and as a very basic math model (without taking into account channels like distribution, advertising etc.) work out to about an annual salary of each staff member of $83,333 a year – which seems okay. Not amazing or bad but something we could all go to work for and work on. That is IF the game does well. More importantly it also creates a model that people can aspire too. Students can be inspired towards, universities can build courses to model after, advertisements and that whole ecosystem can be put into place in gaming magazines and other media.

Now this model. This new $0.99 an app, I take 70% model – how does this fit into the picture? I just can’t see how large studios like the ones above can make the same great PS3 / XBOX 360 games with the same staffing and then downsize the game and sell it for $4.99 on iTunes. Maybe they can and have to now. I’m sure they will have to adapt in the future. But what will this “adaptation” bring? Downsizing? Dumbing down on content? Who will ultimately suffer?

Take this path down even further. With downsizing, where will the resources be for the large scale productions needed for console gaming? Reduced content will in time produce reduced experiences. Will consumers (already flocking to iOS devices) hasten their pace away from consoles even faster? Where does that leave Nintendo / Sony / Microsoft?

Same line as the music / movie example. Remember the time when you could physically go down to the game store, choose the limited edition packaging, rush home, rip off the shrink-wrapped box to find if the game publisher had been cheap in producing only a black-and-white manual instead of a full color one or worse still just included a lousy disc / cartridge (I love Nintendo for how much stuff they throw in, so not environmentally friendly, but so old-school)? Remember those days? Well they are numbered. The future is digital distribution and your browsing window is a little blank box with a word in it called “Search.”

And let’s talk about developers for a minute before we change gears. “Those” developers. The ones that haven’t made a fortune for $0.99 games that everybody plays this year and forgets about the next. What lies in their future when they realize that 70% of not much is, not much. Do they give up and join a “Big” games publisher like Ubisoft or EA? Well errr… Do they join a big gaming manufacturer like Sony or maybe Nintendo…ummm. Most likely, they join a corporation. Get a real job. Maybe develop an accounting software. You know, grow up and stop doing “foolish, creative things.”

 

Telcos / Mobile Phone Companies : This one’s a sensitive thing. I know many people have ill-feelings about the telcos. Actually it’s a kind of a strange thing. Telcos have always provided communications and networks to people you need to contact. And in return, they just give you a monthly bill. Sometimes, the bill is wrong, people freak out. Most telcos also throw in attractive handphones that are heavily subsidized in return for locking you in to a plan you would have had to pay them or someone else for anyway. In return you get a phone for about $0-200 that you would have had to fork out between $500-$1000. Now with Apple and Facetime and Google and GoogleVoice – people are “happy” to call telcos a dumb pipe. I find this funny. Telcos have ALWAYS been a pipe. Whether you label that as being a dumb or not depends on your level of definition, the same way feature phones suddenly became “stupid” because awesome phones became “smart.”

I don’t think I’ll talk about RIM or Nokia. They’re pioneering, respectful companies who are have contributed immensely to this industry. They deserve better than what they presently have from their current outlook and share prices. But they are also can’t seem to compete against, reality.

No industry has had such shake-up to it’s mix and status quo as the telecommunications one since the introduction of the iPhone. Again analysts and journalists would argue that it’s for the good of the consumer. And it is. It’s not my intention to take sides. But that’s also such a generic, useless statement at times. It’s not good if it’s your father, or brother or sister-in-law that has just got fired because one of these or many other companies had had to downsize or re-organize or re-think their strategies. Arguably again, because of events set in motion by one company.

 

Summary : We live in an amazing point in our civilization where there is so much convergence of art and science and technology. But if we’re not careful, so much of what we have, of pop culture, of real tangible experiences could be relegated to memories of the past. I can no longer visit my favorite comic store – they went bankrupt. I can no longer visit my favorite outlet of CD / Videostore – they had to close outlets due to revenue. The record (yes, vinyl record) store I still go to is located at a 3rd rate hotel shopping complex that probably hasn’t been renovated in over fifty years. And let’s just say that the other tenants there don’t have branches in Milan, Paris or Tokyo.  As a video-gamer, I fear for Nintendo, I really do.  They’re trying their hardest – dual screen, motion sensing, 3D, eShop Store, controller with a screen?!?  – what else would you do?

So it’s just a theory. One dark vision of the future. Kara “Starbuck” Thrace,and her merry band of copiers (Google, HP, Microsoft etc) will lead us to a digital revolution promising  unrivaled content (apps), green pastures (at least 70%) and standardized ecosystems (all online, no need to put on your shoes for that) – for one and all.

It’s going to be a very interesting ride, but definitely not a comfortable one for all.

“The iPod and iTunes ecosystem was created by Apple. It evolved. Platforms were burned. People rebelled. There are now many copies. And they each have a plan.”

 

P.S. : In case the reader doesn’t know (me). This isn’t about hating Apple. If anything it’s about how far behind I feel Apple has left the competition and how it’s carved this path into the future. It certainly isn’t Apple’s fault and it’s pretty much everyone else’s everytime they choose where to shop and what to spend their dollar on. People didn’t care about portable digital music until the iPod, didn’t care about ecosystems until iTunes, and didn’t care about apps until the iPhone. We haven’t even touched on their (amazing award-winning) hardware yet.

I’ve spent my dollars on Apple products for the last two decades of my life.

Advertisements

About this entry