Apple and Closed Systems: Is Yesterday's Disadvantage Today's Advantage?

When I began teaching software law in the 1980s, it seemed that there was a disproportionate number of cases involving Apple Computers (usually as the plaintiff). In comparison with Microsoft, Apple was viewed as espousing a proprietary, closed system. As such, it was not surprising that Apple was an active litigant in those days, in stark contrast to the emerging software behemoth from the Pacific Northwest. Not surprisingly, Apple helped forge the countenance of software legal protection in that period.

The problem for Apple, however, was while it may have been great in the courtroom, it did less well in the marketplace. The Mac did not gain widespread customer traction and the company faced serious challenges to its long-term viability. The common wisdom at that time was that a major factor in Apple's decline was precisely its closed system, proprietary outlook, in comparison, for example, to Microsoft, which invited third-party developers to create as many applications as possible for the Microsoft operating system. When one joins this with the emergence of the open source movement at the end of the 1980s, the accepted mantra was that open systems were in, closed systems were out.

Fast forward to today. Coming home from work today, I listened to a New York Times podcast. The focus of the podcast was on the seemingly endless upward trajectory of Apple and its products. The emphasis was on the so-called Apple eco-system, especially the ITunes model for contents and the functionality of the Apple operating system across the entire array of Apple products (namely the iPod, iPhone and iPad). What characterizes this eco-system is the fact that it is closed--indeed, the iTunes was described as particularly so--in comparison e.g., with the Google Android open source initiative.

The suggestion was that the current winner is in fact Apple, thanks in no small part to its closed system approach, rather than Google, with its open source orientation. In other words, the same closed system orientation that is popularly attributed as a major factor in Apple's decline in the 1980's is now being trumpeted as a major reason for its current success. Not everyone accepts this characterization, it should be noted, and the podcast did mention the contrary position that the closed system orientation would ultimately be the source for Apple's decline. This, however, seems to be a minority view.

If this be correct, this reversal of the relative competitive advantage of open v closed systems is a fascinating development. This is especially so, given the almost sacrosanct place that open systems and collaboration holds in the hardware and, particularly, the software space. In that connection, I also wonder what role the strength of the Apple mark and brand plays in connection with the claimed advantages of its closed-system approach across its multiple platforms and products.