Imagine that you have this crazy idea of a new category of consumer products. It sounds wild and crazy because it’s like creating and meeting a consumer need which does not exist – right ? Nobody asked for it, really.
But, well. You have a basis of 200 000 applications to start from, you have a great set technologies, a fantastic organization at hand, all marching in for you. Even more, you have an easy access to top executives in most industries, eager to sign up partnerships with you…then you have a huge number of vocal fans and lots of FREE press coverage on the day it gets released (even the cover of the Wall Street Journal).
Well, there is one guy who has all of that, and unfortunately it’s not you, it’s not me, it’s Steve Jobs. The iPad got released (for those who were on Mars yesterday, it’s a new tablet which looks like an iPhone but bigger).
So the question is: why should we be scared ?
As a preamble, let’s assume it will probably successful, albeit it could take time, since a new category is damn harder to impose than a new phone:
- It looks fantastic and creates desire.
- There is indeed room for a ’4th screen’, after the TV, mobile and laptop. Good to have a screen you can use as an electronic eframe, casual ebook and game station with a normal screen-size and intimate experience, and all other new stuff (eg. watch a video teaching you a recipe in the kitchen while cooking), and finally watch what you want without social compromise…
- It’s done by Steve (see all reasons above)
Then, it’s successful…good for us and Apple, no ?
One second, let’s go back to the 80′s and the rise of the PC standard. A few (nerds) remember, but the PC standard was competing in the 80′s against not only against the Macintosh (which survived), but many other similar competitors (from Amiga and Atari mainly). The main difference was that IBM, who invented the PC standard as you use it, had made it completely open to other manufacturers and operating systems. This created enough incentives for other manufacturers, then sufficient supply of PC in the market to incentivize software providers to create software for it. There was, though, one point: software providers did not want to make multiple versions of their programs on multiple OS. So the OS/2 by IBM lost the battle, as Microsoft was quick to secure deals with PC manufacturers and get dominant, leading to fewer software on OS/2 and its defeat. People eventually complained about it, leading to legal suits as we know them, but Microsoft’s de facto standard definitely boosted the market.
Now, what’s happening with the ‘iphone experience – and OS’ moving to more categories ? Apple as a provider is not only controlling the device (closed), the OS (also closed), but the application market platform (closed, as there is only one market). So, compared to Windows, it goes one step extra along the value chain, by making the ‘app market’ a part of the platform, and the company itselfs in the middle of every financial transaction. One extra scary step.
Yes, a standard creates efficiency just as it did with Microsoft and boosts overall market penetration…but it does also create huge power. Network effects, when reaching a critical mass of demand and supply, will re-enforce itselfs towards monopolistic situations. Imagine that Apple would be the controller of the biggest chunk of the info goods market: music, movies, books, games, magazines, TV broadcast, etc… It would take a piece of each sale, and this piece would grow with its power . So, the choice of the iPhone OS vs the Macintosh OS had probably more to do with value capture than technology – here is my bet.
Scary ? Well, it depends on how far they could go with this category…The good thing about the iphone is that by staying in the premium category, it left a void to other phone providers and so OS (such as Android or Windows mobile) to grow too, leaving some competition in the OS market. The iPad is choosing a different path, with a price point relatively low at $499. It’s a bit like for the ipod: many versions from lower to higher price points…And the power of Itunes in the music market is already causing a few eyebrows.
Ok, it’s all very speculative, so let’s not worry for now…. That’s what I will tell to myself when I buy my Ipad.
Are you scared? (Steve, feel free to comment too).
alexvdm
Good article. Though I’m a big Apple fan, I have been thinking along these very same lines. My question is: is that closedness really a bad thing, all in all?
One could easily argue that the PC held up technological innovation by years. Compare the capabilities of a late-80′s Amiga, with the same era PC. The proprietary companies have continually been able to provide superior technologies. Standards are great in some regards, but they do come with a cost.
I haven’t reached any final conclusions, just some thoughts…
Dusty, thanks and fully agree with your comments. Another difference was that in the 80′s the much smaller amount of software providers and the smaller size of the overall private demand made the emergence of a single winner inevitable on the OS side. That may be less true today, so we may see something like 3 or 4 standards co-existing, providing the benefits of a wealth of applications at still a reasonable part of the value taken by Apple and the likes.. thoughts as well.
iPod, iPhone, Macs and now iPad. Wonderful.
I need a iPat for spending so much… but the forth is the most challenging proposal…
The only obstacle for me on the iPad is not the lack of relevance/necessity of the product to my life or the ‘closed’-ness of their service, but convincing my wife that it’s needed…after satisfying myself with the rest.
All are just very sweet pieces of hardware. There’re plenty of attraction just in the hardware themselves, but the real ‘value’ for most are at the servers of Cupertino.
Fundamentally, what people are buying is not just the ‘Apple’ brand/design and the accompanying status, but also the powerful ‘eco-system’ that is the content ‘access’; namely iTunes, iBookstore, and the relevance to life of the iPhotos, Mobileme, Time Machine, and the thousands of apps they’ve managed to outsource yet control, etc. all universally accessible via easiest user interface. Closed-ness is needed to keep service quality high and reduce clutter. Take this away and you’re just left with some very high end spec PC/hard-drives….
As long as Apple’s software content and entertainment portfolio in music, books, video, communication and applications are updated and stay relevant to our daily lives – basically people want to enjoy life – they’ll succeed in whatever piece of hardware they launch, whether it’s a Pad, Laptop, Phone, or Pods…. I’m just scared of how relevant they have become to all of our lives…
Tak – thanks for your comments and additional content! Indeed I think too future relevance of Apple in daily life is the fight of the decade – with Microsoft and Google definitely taking it up too.
Wow.. Nice post.. Thanks for the nice info