Despite what Tim Wu thinks, open doesn’t ALWAYS win

open-closed

According to Tim Wu’s recent diatribe for the New Yorker online News Desk, open systems are always destined to win over integrated or closed systems, with one exception- a company with an integrated system that has a genius, such as Steve Jobs, at the helm. The whole gist of Mr Wu’s argument is that Apple needs another Jobs-like figure to continue to thrive, and that their inevitable decline has already begun. Ah, another Apple is doomed piece, how original. Yeah, let’s hold the phone on that one for a bit.

John Gruber has already given some excellent counterpoints to this argument, which you can read here. However, I thought I would chime in as well, since I have a little bit of insight into what Mr. Wu is talking about, as well. Even though I write about Apple products, which are part of an integrated system that is often called referred to as a “walled garden,” I also know much more than the average bear about open systems. You see, I program, service, sell, and train customers on open building automation and energy management systems as part of my job. I’ve been working with two different versions of the same system for 12 years now, so I have a very good feel of what open systems are all about, and how they stack up against competing integrated systems.

I will give Mr. Wu credit for one point. Open systems can be incredibly disruptive to a market that is ripe for innovation. The system that I work with took off in large part because of this, and it completely changed the industry I work in. Now, most of our competitors offer at least some form of this same system with their branding applied, even if they still sell their own integrated systems.

It is never been difficult to sell my customers on an open platform that can break them free of competitors that had them locked in to closed systems with no clear way to foster competition, or to completely break free. However, if there’s one thing that I have learned over my 12 years in this position, it is that open does NOT always win. That, and it doesn’t take any more brilliance to sell or create integrated systems than open ones, as Mr Wv seems to believe. There are areas where integrated systems either offer features that ours can’t because of its broader focus and nature, or present a much greater value for the customer because they are usually easier to install and cheaper to implement. Either way, open systems are not always going to be the best solution for everyone.

Here are a few examples where integrated systems tend to have an advantage:

Custom features- Because of the tightly knit together nature of an integrated system, it is possible for the manufacturer to build in custom programming and “hooks” that other, more open systems can’t get to.

Cohesive interface and operation- Because all of the pieces of an integrated system are either fully designed, or at least speced and approved by one manufacturer, they tend to fit together into a cohesive whole that is easier to seamlessly integrate into a unified system.

Ease of use for the customer- Fewer necessary tools and less complexity lead to a system that is easier for a customer to learn. I have trained hundreds of people on our systems, but because of their increased complexity (which is a tendency of open systems), it is difficult for a customer to learn and control ALL aspects of it. After 12 years, I have a total of ONE customer who is able to program and design his own system from top to bottom. Most give up quickly once they see how difficult it is to do.

Ecosystem- As we see with Apple’s App Store model, as well as Amazon’s book and Appstores, the integrated model is easier to manage when it comes to selling in volume and making money. There are fewer concerns with OS versions and incompatibility. These syetems also tend to be more easily curated, leading customers to feel more secure in their investments.

Single source solutions- An integrated system from a full service vendor (whatever the product) can become a gateway to providing services and products beyond an initial installation. This is far easier to do with a unified, integrated system.

Price- The more tightly integrated a system is, the cheaper it usually is to implement and maintain.

I can tell you from a lot of experience that, while the open system that we use has some advantages that our competition cannot match, there have been plenty of times on bid day where the integrated competitor that we faced won because of the items listed above. Our open system excels at delivering highly customized applications and interfaces, but not every job needs those custom applications. It is also amazing when it comes to integrating more than one existing system together into a single one. However, sometimes features available in an integrated front-end get lost in this exchange. Customers don’t like to hear that I feature they used to use got lost in exchange for openness.

In fact, for those jobs that don’t play to our system’s advantages, its power and flexibility can actually become a burden. It is much more difficult to deliver the same product for the same price with an open integration, than it is for our competitors working with a native, integrated system. In fact, this is become so much of an issue for the major corporation whose equipment and controls that we sell, that they are actually moving to a new integrated system of their own, leaving the open one that we use today behind.

With some of the pros and cons I mentioned in mind, here are some questions that I think need to be answered in regards to Mr. Wu’s arguments about open systems:

1. If open has shown itself to be the superior model, and always destined to win out (excepting for genius, of course), then why did Amazon choose to fork Android and create their own integrated system with it, rather than maintaining its openness?

2. Along the same lines, why have two of Google’s primary OEMs, Samsung and HTC, tried to create their own independent ecosystems on top of Android?

3. If Google’s open model is destined to win, then why are they struggling so mightily to profit directly from it themselves? Bear in mind how vastly this differs from the Apple vs Microsoft battles of years ago, which are constantly raised in comparison to the present day. Microsoft made massive amounts of money from licensing fees and selling software. Google makes almost none, in comparison.

4. If the open model of the desktop PC definitively won over the more proprietary Mac, then why are more and more computers that are sold today abandoning that model as fast as possible? Servicing and expanding current laptops, such as MacBook Airs and Ultrabooks, now ranges from difficult to impossible, as products are made in a more integrated way for the sake of size and cost savings.

5. Where does openness stand when it comes to the parts and pieces that make up our modern devices? Integration has shown itself to be the better model at the component level, where custom systems on a chip from Apple and Samsung are proving to the best, most efficient designs. They are capable of delivering more power, as well as greater efficiency. Apple has even gone further, customizing its chips beyond the ARM architecture to fully integrate them with their software. This helps Apple to squeeze more power and efficiency out of smaller, cheaper components. This has proven to be impossible with off the shelf parts.

6. Apple and Samsung are either outright own, or at least are heavily investing in securing their own, integrated supply chains. Both control their own destinies to a very high degree. This has placed a burden on their competitors, who often have to scramble to secure parts and components in high quantities for their devices.

As you can see, this is NOT a cut and dried argument. And don’t get me wrong. I’m not saying that integrated systems will always beat open ones. Not at all. My belief is that both models are necessary for healthy competition. Each model fits certain situations and certain customers better, so both of them have a vital role to play in mobile technology.

This raises another interesting question. Is Apple completely closed? Conversely, is Google completely open? The answer, in reality, is a resounding NO. I’ve put this to the test on the Apple side lately, as I have experimented with several Android devices over the last three months. With almost no difficulty, I was able to move all of my music over from iTunes to my Google devices. It has been DRM free for a while now. I was also able to bring in all of my iCloud Calendar, Contacts, and email. All it took was a couple of simple apps in the Play store to help with the Contact and Calendar, and then the correct IMAP settings for my email. It took a matter of minutes. In the end, for such a closed ecosystem, the only things I couldn’t access were iMessage and my documents that are stored in iCloud. In other words, Apple’s garden walls have a lot of holes, if you just look around for them.

On the other hand, Google is not completely open, either. While the core Android OS is available to anyone who wants to use it, their Google Experience apps and access to Google Play is a different story. A potential OEM has to meet a certain standard to gain access to those more proprietary pieces, which just makes good business sense on Google’s part.

I’ll also point out how Google held back the source code from their original Android version for tablets, Honeycomb, from the open source community. They were clear about their reasons. They didn’t want people using shoehorning it into phones before it was ready. Again, this isn’t total openness and transparency, but it is good business sense, and I don’t think they can be faulted for it. Again, don’t misunderstand me. I’m not trying to take shots at Google for this. Even though their actions don’t always completely line up with their words on openness, they have to walk a fine line between creating a complete free-for-all, and maintaining some amount of control over one of their most prized possessions.

I do give credit to Tim Wu for pointing out that neither Apple or Google are completely closed or open, respectively. However, I still think his arguments are far too cut and dried. Too simplistic. Maybe they hold up in a vacuum-  a black and white world where Steve Jobs designed every device and made every decision for Apple, despite the presence of talented managers and engineers, a board of directors, and shareholders. However, the reality that we all live in exists in millions of shades of gray, where things aren’t always as they appear on the surface.

Steve Jobs was a brilliant leader throughout his entire career. He did an amazing job of creating a vision for Apple, and then communicating it to others. However, he also did whatever any good manager does- he delegated. Genius or not, Apple would not be the profitable and highly regarded company that it is today if he hadn’t.

In light of this, Mr Wu’s greatest oversight in his article is that he stated “a firm gets to be closed in exact proportion to its vision and design talent,” but then switches gears, and puts all of the onus for Apple’s success onto one man in one position. If Apple had Steve Jobs at the head of a company full of imbeciles  then it wouldn’t really matter if they were open or closed, now would it? Mr Wu got it right, but then fell back into one of the worst of tech media standbys from the past year- “What would Steve do.” We’re past that now.

As for extrapolating Apple’s fortunes by reading stock prices, rumors, and analyst reports, you would probably have better luck getting your palm read by a fortune teller. Coming off of a strong holiday quarter, it isn’t as if the profits and market share have suddenly dried up. Now, there isn’t any sugar coating the issues that have come up in the past six months. There is some reason for concern, just not the mini-panic that has rippled through the analyst community.

However, it isn’t time to jump to conclusions yet. We have not seen what effect the newly reorganized management team will have on Apple yet. They haven’t even had their first major hardware or software release since the shakeup, for crying out loud, and Mr sounds ready to push Tim Cook right out the door. Here’s a better idea. Forget about open and closed and Steve Jobs. Take a look at the beautiful iterative hardware design that have come from Jony Ive over the last 10 years. This is the decorated and celebrated man taking the reigns of the most criticized area in Apple’s product catalog- the iOS UI. Let’s at least give this man and his team their well deserved shot to breathe fresh air into iOS before we declare that genius has disappeared from Apple, and that they are doomed to be defeated by their more open competitors.

 

Continue reading:

TAGS: , , , , , , , ,