Apple – New Policy, New Revenue Stream

The fact is that Apple in the past 10 years has revolutionized the industry in which it is, but also the company revolutionizes other industries. The fact is that the products and services that currently they offer give the company the potential to become one of the most powerful companies in the world.

However, the fact is that decisions that sometimes they make are not consumer-oriented. However, also the fact is that every business has the right to exploit the current market position to improve their own competitive advantage.

In the last several days, Apple has again made several decisions regarding the publishing industry and their popular iTunes platform.

How all of this started?

It started when The New York Times published that Sony says that Apple rejected their e-reader application. This application enables people to buy books from Sony and read them on the application via iPhone. This means that part of the revenues from the sales of the books didn’t go for Apple. The same principle is for Amazon’s Kindle application. Many have already considered this as a declaration of war on Amazon.

In late January, this year, Amazon announced that, in 2010, they sold 15% more e-books against paperback editions. This success of Kindle editions is not only because of the Kindle device that was sold by Amazon. The Kindle edition of books can be read on iPhone and iPad too. In the past few months, I have purchased five kindle editions of books that I read on the iPhone and expect to buy more books that would like to read on the iPad that I expect to be in my hands at the end of the month. This conclusion can be approved also by the fact that Apple has sold almost 15 million iPads in its first nine months of sales.

Normally, in this huge trend and the potential offered by the publishing industry, Apple the creator of the revolutionary iPad has nothing then selling hardware, because the Kindle application is free.

What Make Apple’s Success and Domination?

In 2001, the company launched the revolutionary product called iPod through which consumers can copy their music from a CD or download music over the Internet and store in a device through which they can listen to This product is a standalone product that stores music from various sources. However, the income of the company ended just after finishing the sales process.

In 2003, the company launched the iTunes Music Store, which is a specific way was integrated with the iPod. In such a way, they integrate music rights holders directly with buyers who can purchase music through iTunes. The excellent strategy that involves the company to change their business model and exact this strategy and the decisions make the company become what it is today.

In 2008, the company extends its iTunes platform for an iPhone by allowing users to search, download and buy applications. In such a way, they integrate the designers of applications with user applications. For each application sold, 30% goes for Apple – new revenue for the company.

In 2010, the company again, based on previous successes and well-evaluated customers need come out with a revolutionary iPad, which also uses, the same platform and in the same way to integrate designers and users with mutual benefit for all parties.

However, the latest trend of active use of these devices, content consumption that is not integrated via Apple led the company to threaten that will reject applications, which didn’t have sales integration through iTunes and not provide 30% for Apple.

What Will Happen?

We are all awaiting the response of Amazon as one of the biggest sellers of books that will directly be affected by such decisions of Apple.

30% is a large amount when it comes to books, and it is unlikely that Amazon will decide to abandon them.

The latest information came from The Wall Street Journal, which reported that Apple will reject all applications that do not charge through iTunes, and they will start to implement that from March 31st.

Who is Right, and Whose Not?

As a consumer and user of such services, my opinion is that Apple goes too far with its control on everything that is somehow related to its products.

On the other hand, it is business, there is nothing personal. Simply, they are using the current market position to provide more income.

However, it is best to find a common solution for each party, company, and consumer.

In any case, we will wait to see what will be next. This is an important turning point in choosing the right business strategy. Who will win the war? I hope that the end-users will not be the only ones affected.

Posted by Dragan Sutevski

Dragan Sutevski is a founder and CEO of Sutevski Consulting, creating business excellence through innovative thinking. Get more from Dragan on Twitter. Contact Dragan