iPad: does anyone need another computer?
I answered that question in the negative out of pure instinct, but when you hear that Lulu is already signed on for a publishing distribution deal for iPad, you think – oh yeah, once again Apple doesn’t make devices, they make new business models. And exceedingly few companies are comfortable in that game.
Andy Ihnatko at the Chicago Sun-Times is just flat -out ebullient, in way that transcends fanboy excitement:
In fact, after a week with the iPad, I’m suddenly wondering if any other company is as committed to invention as Apple. Has any other company ever demonstrated a restlessness to stray from the safe and proven, and actually invent things?
Good question: Is your company restlessly invented new things?
Apple’s true killer app: disruptive business models
Great analysis from Paul Denlinger at The China Vortex about the upcoming Apple Tablet, and what its real impact will be on the market.
As Denlinger points out, most people assume that the secret of Apple’s success is their reliably sexy user interface. Sure, that’s a critical factor in its dominance of the premium computing market – the stuff works and is beautiful. What makes Apple so influential as a company is its ability to change business models, making everyone else a follower.
Sure, iPod was a great little device, but others had portable MP3 devices, however ugly. It was iTunes that got people thinking of MP3s as legitimate purchases instead of illicit stolen files. The music publishing world is still reeling, and Apple is the number one music retailer in the world. The iPhone is not only cool, it introduced the App Store that allows each phone to be user-customized, with prices set by the free market. They don’t yet own the market, but the word “app” is now an accepted concept in the business lexicon. Sexy brings you to the dance, and wonky, quantifiable, innovatively-engineered business models take you home.
And so what awaits the Tablet?
Now, in order to make the Apple Tablet a real success, it has to have certain functionality which will not cannibalize iPhone and Mac notebook sales. This is why it’s point of attack will have to be on books, magazines and the publishing industry. It will offer developer tools for Apple’s digital publishing solution. Already there is talk about Apple’s new SDK for this new platform.
My prediction is that this new SDK will make it apparent why Apple has not been friendly about offering Adobe’s Flash access to the iPhone, since Apple’s solution will offer much of the same feature set as Adobe Flash, but will be more tightly bundled in on the front and back ends to the device and to the store. (Steve Jobs likes closed ecosystems where he controls the whole experience.) Tough times for Adobe’s Flash and Microsoft’s Silverlight: all dressed up and nowhere to go.
Speaking as an author, the industry is ripe – no, begging – for disruption. And as usual, it’s the Googles and Apples who notice first.
This will be fun to watch.
Music’s digital decade
Courtesy of Forrester Research, a great graphic describing the innovation of the music industry, from 25 billion euros in 2000 down to 10 billion euros today.
Competitive Futures has been using the music industry as the poster child for strategic disruption since the beginning of the decade. I remember discussions with music executives around the turn of the millennium. Mostly, they were caught in the “moral” indignation of “kids” “stealing” music when they should be paying $18 (closer to $30 in Europe!) for static music media.
My favorite discussion was with an industry exec who attempted to sell me on the notion that “Compared with going to the movies, which is $8, a CD is a great investment because you can play it again and again. It probably should be $100 or something.” Nice. Try.
The conclusion: just because you don’t want to face reality doesn’t make it have less impact.
2009: Collective disaster / 2010: Individual success
Psychologically, many are glad to have 2009 behind us. It is difficult for people to work in conditions where so much seems out of control, ready to collapse at any moment. The moment seems to have passed. The one facet of 2009 that was clear was the willingness, often at great long-term cost, for government policymakers to keep the status quo with our major institutions. For 2010 – 2020, we can use this political reality, and make more solid plans.
This is not to say that we think that everything is back to “normal.” Have a look at our strategic outlook last year on the major drivers of disruption; none of them are fundamentally different.
Disruption will continue to be the theme of 2010 -2020; those megatrends still hold. Still, the likely stability of 2010 is something you can use.
We have one lesson for clients about studying the future: Just because there is a crisis doesn’t make it a crisis for everyone. When you make solid strategies, disruption can become massive opportunity. In the past decade, the music industry has melted down. It is not a catastrophe for Apple, who launched billion-dollar devices that changed the landscape of media, and then followed up by becoming the world’s largest music retailer. The oil crisis of the 1970s took Shell to the top of the petrochemical industry. Look ahead, think differently, make bold decisions and catastrophe for some can mean success for you.
Perhaps last year many were attempting to avoid the collective catastrophe that comes when all of our institutions catch on fire at the same time. This year, choose your own success.
Google Chrome OS: The last few 20th century business models break down
So Google is coming out with its own operating system, which shouldn’t really surprise anyone. It will likely be lightweight, simple, cool and functional like pretty much everything they do. And also evident is the fact that Microsoft should now be hyperventilating, as this development takes direct aim at its aging business model while also pointing at the future of computing.
Google is now threatening to bust the trust owned by the world’s richest man. You may remember a fantatastic, precient essay by Neal Stephenson entitled “In the Beginning Was the Command Line,” in which the author of Cryptonomicon and Snow Crash pointed out the near absurdity that the world’s wealthiest businessman made his money selling operating systems, as opposed to chemicals or railroads or minerals or something real and industrial. The untold riches in the production of user interfaces really did seem surreal at the time.
If you think about it, though, their business model was strikingly industrial in the Henry Ford, mass market vein. In the Golden Age of Microsoft, computers all hungered for standardization and interoperability if they were to function as something other than an electric paper weight. Whoever could forge that infrastructure could make stupid amounts of money – not unlike the railroad or the telephone. Not only did the infrastructure model pay off for Microsoft, they also harnessed Henry Ford’s mass production model, shipping out millions of individual boxes of “software” to individual users about the globe. It “scaled up” but at massive profit to the manufacturer.
And now you can officially say the 20th century is over. Even Microsoft, a digital age company, has succumbed to the new business models of the future. Google’s new operating system is harnessing all the aspects of the next generation business model. Google OS will be free, perfect for a variety of small, light devices intended to access the internet and cloud-based services. It’s not that you won’t be able to run Microsoft’s operating system and software tools – it’s just that they will no longer be the only game in town. Their competition will need to come from innovation, customization, and service rather than size, exclusivity, and scarcity that stems from limited technologies.
Record companies have learned this the hard way.
Newspapers are learning this the hard way.
Telecom is learning this the hard way.
No doubt, large and unwieldy, Microsoft will learn it the hard way as well.
Now…what about your industry? What will it need to learn? And will you be proactive, or will you be happier learning it the hard way?
Next business models: Relationships, not distribution
Jeff Jarvis is talking about the bankruptcy of Young Broadcasting, but his observation applies to many industries:
It’s a failure of distribution as a business model. Distribution is a scarcity business: ‘I control the tower/press/wire and you don’t and that’s what makes my business.’ Not long ago, they said that owning these channels was tantamount to owning a mint. No more. The same was said of content. But it’s relationships (read: links) that create value today.
Actually, I’m not so sure it’s links per se. If there’s anything Twitter is teaching us, it’s that you want an actual dialogue with people who follow you and your products, not just search engine optimization.
Business models: Compensation, not control
Gerd Leonhard is one of the hardest working guys in the world right now, criss-crossing the globe and trying to figure out the future of making money off music, books, movies, and other content. (Guys like me really appreciate that!)
He has noticed that the “sue the customer” trick didn’t work (ahem) and that a new business model for content is badly needed.
Here, his mantra is “compensation, not control.” Watch the whole thing:
Brand building in a world without major media
There’s too much awesome stuff in this video to only highlight a few points. Wine Library’s Gary Vaynerchuk passionately dishes about entrepreneurialism, passion, and brandbuilding in the new economy.
Most important point – content used to be dictated by major media companies who simply won’t exist in a few years. So make your own connections to real human beings and create your own business model.
Like much these days, chaos is leading to totally new opportunities – but we must be ready to take advantage. The entrepreneurial spirit has never been more important.
Education and the next generation
Another extraordinary riff on why the education system might be up for a major shake up:
Investing in Car 1.0 on the eve of Car 2.0
The new Tom Friedman article is essential for its analysis of the coming shift in business models. Like every other human with a functioning brain stem, the Detroit Bailout stinks to Friedman:
…America’s bailout of Detroit will be remembered as the equivalent of pouring billions of dollars of taxpayer money into the mail-order-catalogue business on the eve of the birth of eBay. It will be remembered as pouring billions of dollars into the CD music business on the eve of the birth of the iPod and iTunes. It will be remembered as pouring billions of dollars into a book-store chain on the eve of the birth of Amazon.com and the Kindle. It will be remembered as pouring billions of dollars into improving typewriters on the eve of the birth of the PC and the Internet.
And I did not know this about gas mileage 100 years ago:
Do not expect this innovation to come out of Detroit. Remember, in 1908, the Ford Model-T got better mileage – 25 miles per gallon – than many Ford, GM and Chrysler models made in 2008. But don’t be surprised when it comes out of somewhere else. It can be done. It will be done.
And it will happen to more than just this industry.
About Eric Garland
Eric is one of the world's pre-eminent thoughtleaders in forecasting and strategy. He helps leaders of business and government make critical decisions about their futures.Connect with us
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