chao's clips tagged apple

How Apple Could Mess Up, Again

chao — Sat, 25 Mar 2006 19:52:14 -0000

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Apple is doing phenomenally well these days. It seems it's doing a textbook job of maintaining huge market share in digital music players, long after most experts thought that share would erode. And it's doing so with the same proprietary strategy that many thought would never stand up to an onslaught from the likes of Microsoft (MSFT), Wal-Mart (WMT), and Yahoo! (YHOO). Can Apple keep it up?
I don't think so. Look at any industry -- not just computers and MP3 players. You also see it in aircrafts and software, and medical devices, and over and over. During the early stages of an industry, when the functionality and reliability of a product isn't yet adequate to meet customer's needs, a proprietary solution is almost always the right solution -- because it allows you to knit all the pieces together in an optimized way.

But once the technology matures and becomes good enough, industry standards emerge. That leads to the standardization of interfaces, which lets companies specialize on pieces of the overall system, and the product becomes modular. At that point, the competitive advantage of the early leader dissipates, and the ability to make money migrates to whoever controls the performance-defining subsystem.

In the modular PC world, that meant Microsoft and Intel (INTC), and the same thing will happen in the iPod world as well. Apple may think the proprietary iPod is their competitive advantage, but it's temporary. In the future, what will matter will be the software inside that lets users find exactly the kind of music they want to listen to, when and where they want to, with minimal effort.

Daring Fireball: The iPod Juggernaut

chao — Sat, 25 Mar 2006 19:50:14 -0000

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Apple isn’t giving iPods away, but they do seem to be charging less for them than what the market would bear. During the holiday season last year, for example, Apple was apparently selling iPod Nanos as fast as they could make them; I think it’s a fair bet that they could have sold just as many for, say, $50 more apiece. Instead, they priced them lower, putting additional pressure on their competitors and making iPods appealing to a broader segment of the market.

Apple can do this and still make a hefty profit because their overwhelming market share means they’re getting volume discounts on expensive components such as flash memory, tiny hard drives, and LCD screens. This means Apple can sell comparably-equipped iPods for less money, yet still make more profit. (According to Apple’s quarterly financial statements, they typically make about 20-25 percent profit per iPod.²)

In short, and I mean this in the nicest way possible, Apple’s iPod competitors are totally fucked.

If they can’t win on features, and they can’t win on design, and they can’t win on price, what’s left? Their best remaining chance would be for Apple to somehow screw things up on its own, but considering recent history, that seems highly unlikely.

An Evening with Steve Wozniak

chao — Mon, 19 Dec 2005 07:08:40 -0000

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An Evening with Steve Wozniak

Computer History Museum
1 hr 30 min 56 sec - Oct 24, 2005
www.computerhistory.org