Dominant market positions can do strange things to a CEO and his or her leadership team. In the case of Apple, the company’s massive iPhone and iPad successes are leading it to miscalculate pricing of content on those devices. You can check out the Forrester analysis here arguing that ultimate fees from content providers to app platform players should be in the 5% range — a long way from Apple’s 30%.

iPhone, iPad, and Android apps are not sideshow novelties — in my estimation they signal a cataclysmic shift in the technology industry away from the Microsoft desktop standard and the cloud/Web paradigm. This is App Internet, representing a new model of applications that seamlessly combine the power of local devices with the scale of the cloud. App Internet is positioned to shift activity away from the Web to the app experience — forever changing many, many markets. A recent Forrester survey shows that among tablet users, 39% spend more time using the web browser, 45% spend about the same amount of time using apps as using the web browser, and 16% spend more time using apps. These are the formative and critical moments in the development of the App Internet market — the winners could become dominant for decades.

And Apple is blowing it. It risks replaying the PC wars of the early 1980s when Microsoft welcomed everyone into their development world while Apple stayed “pure” and scared away its allies. We know what happened — the world has had to use a lowest-common denominator PC operating system for decades, with excursions into wonderful places like Vista. This time around, Apple’s hostile position could result in a 2014 App Internet market that looks something like this: 80% Android, 10% Apple, 10% Other. I can’t wait to see Larry Page running around a stage in a sweat-stained turtleneck hoarsely shouting “Developers, developers, developers, developers…”

Apple has to play chess here, not checkers. It has to stay reasonable and accommodating and play for the ultimate prize — dominance of the App Internet. If it doesn’t, we’ll look back at this moment and call it the top for Apple.