05.06.07

Apple is the new Sony…

Posted in General at 10:06 pm by matt

Black is the new White.  No, wait, white is the new white.  Most of Apple’s products these days come in white, so it must be in, right?  Just as we perceive colors to have certain properties, we also see companies as having certain properties.  For example, many people see Apple, Dell, and HP as all companies that make “computers.”  Well, that’s correct, but we all know that Apple does more than just make computers.  They make iPods, AppleTVs, and of course, the iPhone!

However, what really makes Apple different?  Ultimately, I feel that it’s the business model.  First, look at how Dell works.  They’re extremely efficient at building Wintel, Win-AMD-tel WinAMDtelbuntu boxes, but they don’t innovate.  That’s not entirely accurate, they do innovate, but not at the level I’m talking about.  Fundamentally, Dell can only release a product that Microsoft (or someone else) gives them the software for.  Maybe that will change, but, fundamentally, not soon.  Let’s take a few examples.

  • The Dell Axim – great handheld device, but at best, all Dell did is market and manufacture the thing.
  • HP’s handheld devices – same thing – they’re building a device with someone else’s software, whether it’s a Palm device or a Windows Mobile, they’ve still basically only sold a device, not the whole package.
  • All Media Center PCs — it’s Microsoft’s software, installed on some metal and silicon put together by other companies.

Why does this matter?  “It’s the software, stupid.”  That’s where the innovation is.  Basically, the point I’m trying to get across is that all Dell and HP are doing is putting their “brand” on a bunch of parts they assemble.  They are trying to play the branding game, but they don’t really control their product line.  They’re trying to pretend they’re car manufacturers.  Yes, a BMW is a nice car, and yes, I’m probably going to get something better for my money when I buy a BMW than when I buy a Toyota Yaris.  However, I see the market Dell and HP play in different than that.  I think it’s more like the market for Gas.  Sure, there are slight differences between how Royal Dutch Shell and Exxon Mobil refine crude oil into gasoline, but gas from either one still combusts the same way.  Both the oil companies and the box makers are taking a commodity [crude oil | windows + metal + plastic + silicon chips] and turning it into another commodity [gasoline | a PC]

This is Microsoft’s model.  They have come to this place of dominance where the manufacturers make whatever it is that Bill gives them the plans to make.  This is Microsoft’s plan.  They want to be in this special place where they can tell everyone else what to do. (See: Origami) The profit margins are good there!

Apple’s model is a bit different.  They control everything.  If they want to do something a little bit differently, they can.  If Apple wants to include Firewire in their product line, wham, done.  If they want to take their OS, strip it down, and build a special purpose product, they can do that. (AppleTV runs a stripped down OS X)

What does this mean? Apple can do things that Dell and HP can’t.  Because they own their operating system, but for greater reasons, because they have the engineering capability to do it, they can build whatever product they want, and they can make it integrate with a number of other products you already have or can buy from them.  They are in a unique position that NOBODY else is in.  Sony can’t compete with this, because their PCs have to conform to Windows, and Dell doesn’t do anything original.  Rather, Dell doesn’t TRY to do anything original because it’s not part of *their* business model.

What does this mean for the future?  This is the point of this post.  Apple is the new Sony.  Apple, in the age of connected devices, has such control over their products, that they are capable of producing the kind of “consumer electronics” that we want to buy.

Here’s the theory.  Consumer electronics devices are getting more complicated.  They are basically becoming custom purpose PCs.  Dell and HP and the like are limited to giving us what Microsoft says they give us, which is Windows (and maybe if you pay more you can get some extra features).  Apple can produce a single purpose computer in the way that Dell cannot.  This is exactly what’s happening with the AppleTV.  So, Apple can leverage its OS / Application Development expertise into building customized, single purpose boxes.  Because of this, it’s going to look like Apple is becoming a “consumer electronics” company.  In other words, because of Apple’s unique position, they have and will continue to outdo the likes of Sony to the point where Apple will BECOME the next Sony.

1 Comment »

  1. Greg Wilde said,

    May 15, 2007 at 7:59 pm

    Good points, but Sony has fallen from grace. Actually companies like Samsung have moved forward relative to Sony.

    There are those who say that next next step from the Agricultural Revolution to the Industrial Revolution to the Information Revolution is the Design Revolution. If that is true, and there is substantial evidence to support that notion, then Apple is certainly the leading consumer electronics firm in the Design Revolution. That is why financially Apple could afford to expand their Cupertino campus, one of the most expensive locations from which to operate in the world. They could justify that decision because their core competency is design and that is where the design talent is located.

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