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Walmart Does End Run around Apple iStore

August 12, 2011 | Author: Ibex Marketing

My accountant once gave me some sage advice: “Pigs get fat, but hogs get slaughtered.” A little greed is okay, but when you start gouging your source of sustinance, you may discover that you end up going hungry. Consider the case of Apple’s iStore and its policy concerning content for iPhones and iPads. Apple insists on getting its 30% cut of the proceeds from any content transactions.

According to a report by Reuters, this new policy has caused Walmart to change the way iPad users access its Vudu video rental and purchase service. Instead of an app, they get an icon that opens the website in a browser. The user can then rent or purchase content directly from the website without the aid of a dedicated app. And Apple gets bupkis from the transaction.

I seriously doubt that the loss of the Vudu revenue is going make any difference for Apple’s balance sheet, but if enough retailers decide to follow suit, it could have an impact. Apple has a good thing going, but the management should remain humble enough to limit their greed. If it costs less to work around paying the commission, companies will do so. And as quickly as the iPad has shot up, it can always crash back down just as quickly. (Does anybody remember a company called IBM that decided that their industry-leading personal computer needed a new proprietary expansion slot design?)