Apple greed: Apple tax

Posted: July 13, 2008 in society
Tags: ,

This is the kind of corporate greed and desire to control the market that I absolutely hate. And it makes me wonder sometimes whether I should just dump my desire for Apple products again onto the junk pile of broken dreams in form of realisations of being conned again by slick marketing. And it doesn’t matter that Apple’s behaviour is systemic; there are other companies who of course lack the power and therefore arrogance of the likes of Steve Jobs. Of course there’s always the argument then of Apple product quality, but after my experiences with the Air I’m not so sure about that either. Anyway, thanks to Neatorama for the following post:

Wonder why the iPod is so expensive as compared to other MP3 players? Well, sure – it looks and works great – but is quality necessarily the main driving force behind its high prices?

Perhaps not. Here’s an article in Popular Mechanics about the secret “Apple Tax”:

Last year, when Apple introduced the original iPhone and the latest generation of iPods, another new product came out of Cupertino, Calif., but this one received little fanfare. It was a proprietary authentication chip. The chip works like a silicon key that unlocks streaming video functionality on iPhones and iPods and generally authorizes the devices to work with approved accessories. The advent of the “auth chip” made it impossible for any third-party company to produce iPod-compatible gadgets without dealing first with Apple—the only company selling the chip. Previous-generation iPods could output video over a generic $2 iPod video cable, but new phones and iPods require officially licensed Apple cables—and these can cost up to $50.

The chip has become a headache for many accessory manufacturers, who complain that they sometimes have to compromise on quality to pay for the chip and other Apple licensing fees, while still maintaining price points consumers can afford. “If we didn’t have to pay Apple for the dock and auth chip, we could have made a much better speaker for the same price,” said an official at a major electronics maker, who, like several sources for this story, requested anonymity because of fears that speaking with the press could jeopardize his company’s relationship with Apple.

  1. rodney says:

    Are you so sure that apple is the reason for that authorization chip?

    And why can’t I rent movies for my original video ipod? Apple or MPAA?

    I am tired of blogs bitching about apple & threatening to go elsewhere You want to be productive? Find something else. Let us know how its working for you.

  2. Curmudgeon Geographer says:

    Why is it Apple’s greed when the authentication chip is really just one more step to guard against tools that could strip DRM off video. Apple sells video (TVs and movies). If there is any greed it truly lies at the feet of the studios who demand DRM on video. Why is it Apple’s blame when the studios are the ones who insist it?

  3. mark says:

    Isn’t the new authentication chip really the result of the studios’ DRM requirement for video output? And the whole process of having approved video accessories is also tied to that, ensuring that commercial copyrighted video can’t be taken out of the “system”. Just like HDMI on TVs and computers.

    So to protect its iTunes store, as Apple has contracted to do with the studios, it developed a chip to ensure the video can’t get out, and it’s decided the best way to protect stuff is to not allow anyone else to have the knowhow on how the chip is designed. There might be other ways to do this, but none as secure as what Apple has chosen.

    So yes, it is a pain. And yes, it drives up the cost. But that’s the current price we pay to have digital video. And NBC Universal still refuses to sell video on iTunes because they think Apple doesn’t do enough with regard to protecting their video …

  4. Brett says:

    Or perhaps Apple realized that, because few people actually used the external video output video from their iPods, they could reduce the iPod’s size, weight, and cost by locating the necessary additional video circuitry in the video adaptor.

    That way, only people who need the feature end up paying for it.

    Regardless, Apple’s so-called “greed” should not be surprising as they are a not a charity, but rather a corporation who’s goal is the make a profit by providing desirable goods and services… which clearly they do.

    If you feel that Apple products are not worth the money (as many vocal critics seem to), then by all means boycott them.

    Personally, I have generally felt that Apple products were a good value.

  5. (Insert cue where the open source crowd reminds you that DRM was a contractual requirement imposed by the RIAA.)

    I’ll give you “greedy”. I’ll even give you “trying to control the market”. Those are matters of opinion and perspective. But I don’t understand how “not giving open access to the ipod dock” supports those arguments.

    Apple believes that “gear” should be made/used like we use other electronic-based appliances (microwaves, DVD Players, stereos, coffee makers, etc.) and not designed as a platform for other people to make money off of.

    After they achieve the goal of “making a complete piece of gear”, THEN they think about developers.

    A Mac comes with most of what 90+% of non-IT/hobbiest would ever do with it. Ditto AppleTV. Ditto iPod. Ditto iPhone.

    From a developer perspective, THAT is being greedy and controlling the market. Not giving open access to a port is commonplace in the world of microwaves, DVD Players, stereos, coffee makers, etc.

    – Nomad

    P.S. Also, The iPod is expensive because it’s what the market will bear. They started out $499 for 5GB. The capacity inched up and the price inched down… but they still charge as much as they can because people are willing to pay it. It’s amazing what being #1 in customer satisfaction, #1 in reliability, and #1 in customer service year after year after year will do for your brand.

    Do you think Ralph Lauren could still charge $65 for a Polo shirt with $25 knock-offs available at every department store if they didn’t last freaking forever? They are well-built shirts, in addition to being a classic design.

    Sure, many people buy them for the logo alone; but if they went down in quality, it would be a scandal and they’d fall out of fashion faster than DeLoreans and The Macarena.

  6. James Katt says:

    The iPod/iPhone accessory business is a multibillion dollar market.

    iPod users snap up the accessories. They love them.

    The iPod accessory makers make a ton of money on making accessories.

    The only complainers are the cheap tightwads.

    If you can’t afford it, don’t buy it or get a better job.

  7. mark says:

    Maybe I missed it, but I thought you could sell accessories that attach to the iPod dock connector without paying any fee to Apple. However, if you do this, you can’t use the Made for iPod “stamp-of-approval” because Apple has not tested your device. And of course, you get no support from Apple about how to use the dock connector.

    Or did that change?

  8. mathue says:

    This whole Apple Tax is such non-sence that there’s nothing I could day to make it more clear.

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