quick note: I originally wrote this piece on 6/17/2011, and never got around to posting it. Therefore as I publish this now on 2/19/2012 there may be some outdated information (which I have tried to addend). If any links are broken please let me know in the comments section below.
Thoughts on Price
Price is everything for a market economy. To quote one of my favorite NPR programs, Planet Money, “Prices communicate a lot of information.“ (jump to 11m 03s and listen until 13m 45s, but the whole piece is VERY good podcast). This communication works best when there is competition.
When you choose to pay $8 for pizza from Store Alpha that’s almost as good as an $18 pizza from Store Beta, you have already communicated to Store Beta that you think their pizza is not worth $18. In response Store Beta will drop prices or make a deal with GroupOn! to convince you try their pizza. If Store Beta was the only pizza joint in town, the only way you could communicate with them is by simply refusing to patronize their store. This would work fine since you can live without pizza (well maybe you can), or make your own.
I will assume no one will argue with the idea that a monopoly is harmful for consumers and the market at large. Without [enough] competition there is no pressure to reduce prices, simultaneously the drive to innovate disappears (that Gizmodo article is an excerpt from the book, The Master Switch: The Rise and Fall of Information Empires). You end up paying more than you would in a competitive environment and the product may never improve. AT&T was broken up in the 1980s, but much like the replicators from Stargate or the T-1000 from Terminator 2, it reformed in the early 2000s (please bear with me on these geeky references, I’ll stop now).
AT&T hasn’t changed much since reemerging. Whether it’s:
- hiding the secret $10/month DSL plans after being forced to provide reasonable rates
- Limiting choice of handsets, which is to say back when AT&T had the exclusive rights to the iPhone in the U.S. there were maybe 2 or 3 Android phones on their network, all of which were pretty awful ones running dated Android OSes. They felt no need to offer their customers better Android handsets since they had the iPhone. As the iPhone exclusivity neared an end, AT&T touted how its phone lineup is going to be diverse. (Notice now that Verizon and Sprint both have the iPhone, AT&T is actually advertising Samsung’s Android phones!)
- AT&T dropping the unlimited data plans for 200MB/2GB tiers (and now 300MB/3GB tiers), not allowing you to use that data for your iPad 3G. (Other carriers do this too but AT&T “innovated” these pricing plans).
- In the recent T-Mobile/AT&T merger marketing exemplifies the AT&T machine at its best (hired bloggers, calling upon groups they have financially supported to now support their efforts to acquire T-mobile). Thankfully that merger’s been denied by the FCC.
For a non-AT&T example, how about we take a look at how Comcast executives threatened to cut funding to a small nonprofit group (which supports programs for young women) when the nonprofit tweeted about the recent hiring of Commissioner Meredith Baker, someone who at first oversaw the NBC/Comcast merger (though Baker claims she backed off being involved as soon as the offer came from Comcast).
When you lose choice, you lose the easiest way to communicate with business (the ability to speak through price), and then you slowly lose any power you had as a consumer.
That was a long introduction but ultimately I want to argue how Apple’s App Store is akin to a market monopoly. Many of you might already know that Apple’s iTunes Music Store charges up to $1.29 for the hottest singles, whereas on AmazonMP3 you can purchase those same songs at $0.69. The AmazonMP3 songs play the same on your iPod as the iTunes mp3s do, yet people still purchase from iTunes because to them apparently the convenience of drag-n-drop within iTunes is worth the extra $0.60/song. (Hint: iTunes can be set to automatically add any MP3 purchases you make from Amazon to its database!)
Worse than mp3s of course is the App Store. Currently the only, ONLY, as in ONLY place you can purchase and install an app on your iPhone is through the Apple App Store. There is a tremendous upside to this: for this loss of freedom Apple promises to provide good policing of apps, making sure junk apps don’t make it onto the store. (This is something Google has had issues with on Android, and is now working on a solution). Apple wants to make sure malware doesn’t make it onto your iPhone.
In fact Apple has taken this idea and brought it to the Mac with OS X Lion and the upcoming Mountain Lion, they prefer you purchase software from their digital store. With OS X Lion a vocal minority complained about having to download the OS through the AppStore (a 4GB download) and Apple relented and made available a very pricey $69 USB stick w/ the OS installation files. With OS Mountain Lion, that option is no longer available. What’s the point, I guess, if you’re going to make machines that don’t have optical drives? Eventually I imagine Macs will only ship with SD card slots and Thunderbolt ports (USB adapters will hook into these Thunderbolt ports).
Anyway, essentially what Apple is hoping for is the loss of freedom, the ability to drive prices down by having a choice in purchasing software, is balanced by the security of Apple-approved/signed software through a single source.
This would be like if I went to my Subaru dealer to replace my Cabin Air Filter (the thing that filters the A/C and heater air coming into my car). The part costs around $15-30 depending on which make and brand you purchase. In fact my dealer recently quoted me $110. Now some of that price includes labor involved to install the thing but by going to a dealer for this, or for brakes, or whatever, I’m more assured that original equipment manufacturer (OEM) Subaru products are used, compatibility is 100% and the mechanics involved are knowledgeable in how Subaru engines and cars work. But can you imagine if I had to go to Subaru for every upgrade or repair on my car? I would be out of luck if I had no alternative to Subaru.
Although I love Windows Phone 7, it too locks you into Microsoft’s store.
Choice in App Sources with Android
With Android you have many choices:
- Android Marketplace (Google’s official channel for apps)
- Amazon Appstore (often cheaper or with better deals than Google’s store)
- Sideload. (Meaning you can download a file straight to your phone and install it yourself with the touch of button). Some Android phones purchased with a contract from carriers are locked and unable to sideload apps.
- Many many more! Check this link: “10 Top Android Market Alternative App Stores”
So does it work? Yes. Amazon’s Appstore has a “free app of the day” which can save you a lot of money over the long haul.
Boom, you just saved $4.99 on Mahjongg Artifacts at the Amazon Appstore.
Want the WolframAlpha app? $2.99 on Android Market:
On sale right now for $0.99 at Amazon ($2 saved).
More Apps on sale at Amazon’s Appstore:
(Twilight: The Movie Game on sale, 50% off!). To download apps from the Amazon Appstore, you simply need to follow these steps.
Many Android users are not aware they have this choice. If you’re running an Android phone, it’s time to take full advantage of what the platform offers to end users.