By Alok Saboo on May 3rd, 2010
The past week was full of Apple – Adobe drama over flash on iPhone/iPad. Apple has been reluctant to approve flash on the iPhone OS. However, for the first time, Steve Jobs communicated his thoughts in an open letter on why Apple may never approve flash on its products. You can read the entire letter (it is nice read), but the key points are:
- Flash is a closed (proprietary) system, where Adobe as has the sole authority for future enhancement, pricing, etc.
- There are better substitutes for Flash. H.264 already appears to be the standard in online video-format. The App store already has plenty of entertainment to make up for the absence of Flash.
- Flash is less reliable, secure, and does not perform well on Mobile devices.
- Flash eats up your battery juice.
- Flash is not optimized for touch screen interfaces.
- Flash adds another layer between the (iPhone) platform and the developers, and ultimately results in sub-standard apps and hinders the enhancement and progress of the platform
In a response, Adobe CEO Shantanu Narayen indicated that Apple was to be blamed for many of the problems [Jobs] alluded to and almost trashed every point that Jobs made.
So what is the truth?
There is an element of truth in stories from both sides, but I feel there is more to it than meets the eyes. Given that Android is (or will soon be) supporting Flash, I am tempted to believe that Jobs’ claims may not be 100% accurate and here’s my rationale behind this assertion.
Against the “invisible hand” hypothesis:
Adam Smith, famous economist, coined the metaphor of invisible hand, which refers to the self regulating nature of the marketplace. The fundamental argument is that market forces of self-interest, technology, customer choice, competition, demand and supply are capable of (re)allocating resources optimally.
The above argument would suggest that if Flash were indeed a sub-optimal option, consumers would eventually move away from Flash. Would you really want to further reduce the lousy battery life of your iPhone to half (if the claim was true)? The ascendance of H.264, arguably superior video codec, is a case in point, which suggests that superior technologies reigns supreme. This suggests that Apple has no rational reason to block Flash. Let the consumers make the choice. Given that typical Apple consumers are fairly well informed and educated, we can expect them to make a optimal choice for themselves.
Now that we have ruled out the rational motivation to block Flash, let us look at the economic incentives for Apple.
- Apple would not be able to control what the users experience on their products. With the App store, Apple has a draconian control on what consumers experience on Apple products. With Flash, Apple would not able to exert this influence (although I am still not sure why Apple wants to do that).
- More importantly, Apple would not be able to monetize the Flash content. Currently, Apple charges a 30% commission on all sales made through the App store. If consumers could get many of these apps on the Flash platform, why would they pay for them on the app store? This would mean significant loss of revenue for Apple.
- Also, currently, the number of apps on the iTunes App Store is a significant competitive advantage for Apple. If both Apple and Android (and other platforms) start supporting Flash, developers might start developing Flash apps that would run on all smart phone platforms to economize efforts, mitigating the competitive advantage from Apple.
Looks like all the pieces of the puzzle are fitting together!!
To me, it seems there are huge economic incentives for Apple to block Flash. Apple’s open letter appears to be a plain eye-wash. It is not surprising that the feds are considering to launch an investigation into whether Apple is violating anti-trust laws in this process.
It’s all money honey!!! Please share your thoughts and spread the good word!!