Saturday, May 29, 2010

Congratulations Apple; You're Now Number One on the Justice Department Antitrust List

Congrats Apple; your market value now exceeds Microsoft.

You’ve earned it; you deserve it.

You pioneer technology. True innovation.

You have product.

Congratulations Steve Jobs. Fortune Magazine in its November 23, 2009 issue saluted you as the Business Figure of the Decade, if you would "The Decade of Steve."

From the first mass produced desktop, to the Apple II+, to the Macintosh, IMac, ITune, IPod, ITouch, IPad, and IPhone, and the Apple Store. That doesn't even include the non-Apple Pixar.

Your software is clean, easy to use, and virus resistant.

You and Google’s Droid are fighting it out in the smart phone market as Microsoft tanks.

What about Bill Gates, Paul Allen and Microsoft?

IBM was stupid to give them control of the operating system of the IBM PC such that they could market it to any IBM compatible desktop. Firefox didn’t exist then.

Bill Gates and Paul Allen did not even have a operating system, so they paid a reported $100,000 to Seattle Computer Products for 86-DOS, the basic operating system for the IBM PC. DOS gave Microsoft the monopoly on the operating system, from which Microsoft crushed competitors such as Word Perfect, Netscape, and Lotus. Microsoft's predatory and exclusionary monopolistic practices earned antitrust prosecutions in the United States and Europe. Even IBM exited the market.

Yet Apple survived with a small, but profitable share of the market.

Steve Jobs was forced out of Apple in 1985, but was called back in 1998. Apple’s achievements since his return have been incredible. Any doubt as to the popularity of Apple’s products can be demonstrated by a simple walk at the two South Coast Plaza malls. If you look into the Sony Store you will be greeted with the sounds of silence as you can hear a pin drop. The Apple Store often has lines outside the store into the mall.

Apple’s success is from creating new products. Microsoft’s success is from tying software into its monopoly operating system. Microsoft is trying again with Bing to combat Google, but it's no substitute.

Steve Jobs and Apple; true technology pioneers! Many of the ideas were scoffed at by experts. The Apple store had no products to sell. Why buy an IPod when everyone had a Sony Walkman? Itunes – no way. The IPhone was too expensive, etc.

Steve Jobs and his dedicated team at Apple brought us technology we did not know we needed.

And now Apple has to pay a price for its success.

The Justice department has initiated an investigation into Apple for its pricing strategies and other marketing practices with ITunes and the music industry.

This Administration so believes that all good comes from the public sector that it cannot tolerate success in the private sector except as a political talking point.

The purpose of the private sector is to be taxed, regulated, and squeezed.

Apple should be rewarded for its success, but not in this Administration. Private success must be investigated, if not punished. Unlike Microsoft, it has not entered into blatantly monopolistic practices.

ITunes at an affordable 99 cents opened up a whole new business for the music industry at a time when its existing model is imploding.

Apple’s reward is 28% of the nation’s prerecorded music, hardly a monopolistic share.

CD sales are dropping, and Apple’s share of the rising MP3 market, the market it pioneered, is 76%. Competitors exist, but their products are not as competitive. Remember Microsoft? It’s Zune is a marketplace failure.

Apple passed Wal-Mart two years ago as the largest retailer of music in America. Both Wal-Mart and Amazon have about 12% of the market. Apple has succeeded against some of the best retailers in the world.

In addition, ITunes brings efficiency to the music distribution industry. Digital music avoids the costs of manufacturng and shipping CD's and LP's (they still exist), retailers, costly returns, and lets consumers purchase only the songs they want.

Pioneers with superior technology, lower costs, and efficiency should be rewarded, and they are by the marketplace.

But not this Administration.

Hang in there Apple, and here’s wishing decades of good health to Steve Jobs. Even this Administration will not be able to crush your creative, visionary genius.

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