The One Who Owns The Customer Wins

Once upon a time software developers owned the customer relationship. We knew who purchased our software and could talk directly to them. We lost in mobile when the app stores became the only way to sell software because we no longer had a direct relationship with our customer. We had to jump through hoops to get responses to product questions, even to understand why a customer purchased and how we could get them to buy more. Apple and Google, the primary providers of app stores, owned that relationship instead.

Every industry has suffered. Why do musicians still make money from touring and, except a rare few, not from album sales? Because musicians can talk directly to their biggest fans through concert venues. It’s the only way for independents to survive and thrive.

When I think about the IBM-Apple deal, I only need the answer to one question: who owns the customer relationship? If it’s IBM then long-term the deal will fail for Apple. IBM’s ownership means they get to understand what the problems inside the enterprise are, they get to understand what additional things the enterprise needs and IBM gets to sell it to them, which builds a stronger relationship. If Apple owns the relationship then the primary benefits will accrue to them instead.

A friend who had worked at Apple during the time period told me a story: in the late 80s and early 90s Apple put lots of money into Aldus and Adobe and other companies focused on the desktop publishing market. This was not just in the form of investment but also in the form of co-marketing and promotion. By 1995, though, Microsoft came calling and despite the money invested by Apple, Aldus and the rest all jumped at the chance to prioritize Microsoft and their 95% market share. Apple was left holding the bag.

My friend told me this is why Apple has such a mixed relationship with developers. On one hand Apple needs them to be successful; on the other hand if any of them are too successful they could leave Apple holding the bag again. As my friend put it, Apple wants to keep developers bare foot and pregnant.

I think the lesson learned wasn’t that the developers could jump ship and leave Apple holding the bag. Instead it is that Apple couldn’t have anyone standing between them and the customer. Direct sales, Apple stores, staying in consumer markets, iTunes, the app store, these are all things Apple did on purpose to maintain their strangle-hold relationship with the customer.

This is Tim Cook’s challenge with IBM. Logically IBM has the customer relationship in this deal. After all it is IBM who have sales people standing inside the companies it is trying to sell. Did Apple give up too much control over that relationship or just enough?

Interestingly, this is also what all of us mobile software developers need to do, too. If we can wrestle back control of our own customer relationship, at least we have a fighting chance to succeed again.

3 thoughts on “The One Who Owns The Customer Wins

  1. re: Apple and IBM.

    I think what you’re missing here is that there is no “lose” in this scenario for Apple. Apple doesn’t own the enterprise market, and their company DNA dictates that they’ll never be good at it because that would distract them from what makes them great–the consumer-centered focus. Any sales and expansion of the iOS/AppStore ecosystem in the enterprise for Apple is gravy for them, because they’d probably wouldn’t reach those customers anyway.

    • They will lose if enterprise ends up being half their revenue and then IBM figures out how to yank the business away from them for a higher margin partner. I’m not saying that will happen but it could. That’s the obvious one. I’m sure there are another dozen non-obvious outcomes that could hurt Apple.

      Someone argued that it was Apple’s way of selling to enterprise without selling their soul. I can buy that but still think not owning the customer relationship could have weird, unintended consequences.

  2. Perhaps, but that a a lot of ifs in the undefined future. Even if that’s the case it’s still “found money” as far as Apples concerned, because these are customers that they’re not only not reaching, but which they can’t reasonably reach at all.

    Bit the other benefit for Apple is that IBM’s selling iOS devices legitimizes Apple for big business in a way that nothing Apple could try would ever accomplish. In big business, IBM’s endorsement benefits Apple in reputation even for companies that aren’t IBM customers. And this is an effect that will persist even if IBM changes its strategy in the future.

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