The recent unveiling by Apple Inc. of its new iAd advertising platform extends the company’s array of inventive services for the iPhone, but also continues a distinctive collaboration-versus-confrontation dynamic between the giant technology trendsetter and its partner companies, according to iSuppli Corp.
Thanks to the phenomenal success of the iPhone apps store and iTunes, Apple is in a unique position to partner with best-in-class companies and offer innovative services, products and apps to the market—similar to what it hopes to achieve with the iAd, a feature in the new iPhone OS 4 scheduled for launch in the summer. However, Apple’s recent purchase of Quattro Wireless—the original developer of iAd—points to a somewhat similar modus operandi employed by Apple in the past, demonstrating a pattern of initial amicable association between Apple and its partner companies that then devolved into antagonistic relations.
To be sure, the strategy has contributed to making the iPhone an unqualified success. In the smart phone market, Apple was the only player in the Top 5 to achieve a substantial increase and consistent gain throughout 2009, growing its share from 10 percent in the first quarter of 2009 to 16 percent in the final quarter. In contrast, top-ranked Nokia Corp. saw only a 3 percent increase during the period and suffered a dip in the third quarter, while the share of No. 2 Research In Motion fell from 21 percent to 19 percent during the year. Rounding out the Top 5 were Taiwanese-2009 (Ranking by Percentage of Unit based HTC Corp. with 6 percent share and Motorola Inc. with 4 percent share.
iAd strategy continues Apple’s bold strategy
In the company’s announcement of the new iPhone OS 4, the iAd platform joins a host of major changes in the updated operating system, including multitasking, apps folders for organizing mobile applications, improved mail functionality,
iBooks and enterprise-related features for business users, such as better data protection. In the case of the iAd, developers will be able to embed ads into their applications, allowing iPhone users to interact with the ad without leaving the app. Apple CEO Steve Jobs says iAd not only presents additional revenue opportunities for iPhone developers but also provides users with improved advertising quality and access to ads. While iAd is the progeny resulting of Apple’s acquisition of Quattro Wireless, Apple’s moves in the past have been less direct but nonetheless ended up pitting the giant against its former partners. For instance, Apple originally partnered with Google Inc. for search and mapping capabilities on the iPhone, but Apple within two years achieved in-house capabilities for those functions and now is going after Google’s highly lucrative business.
The pattern was repeated in Apple’s relationship with Amazon.com. Although Apple allows the Kindle app from Amazon to run on the iPhone, Apple now has launched its own iBook store for eBooks and other electronic publications.
As these developments illustrate, Apple is acquiring valuable domain knowledge that is allowing the company to enter into competition with some of its partners, iSuppli believes. And while Apple’s actions could be viewed as a reaction by the company to the moves of its partners, they also can set in motion possibly antagonistic relationships.
Should Apple continue to operate in this manner, the company might find it difficult in the future to form an association with best-in-class partners—connections in which friendly partnerships at the beginning alter and then deteriorate into aggressive rivalry.
Labels: Apple , Iphone
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