- Apple’s insane profitability has the other big guys jealous and freaked out.
- None are stupid enough to try to compete with Apple on Apple’s terms.
- The way to beat Apple is to redefine the game by making apps irrelevant and by making mobile just a piece of the equation.
- The “Experience = Stuff / Time” model is a great way break the conversation down to really understand what is going to happen.
In 1999 I had an epiphany that the future of consumer products would be connected. I then spent the next 12 years of my Microsoft career trying to drive that vision.
No matter what product I was working on, moving the connected experiences ball forward was always in the back of my head. Over time, I created a thought model for how this new, connected world, would be different than before. I’d joke that John Gage of Sun actually had it right when he said “The network is the computer”. But that pithy quote is not rich enough to fully describe the vision.
This is how I came up with “Experiences are Stuff over Time”:
An end-to-end user experience is a cohesive combination of devices, people, brands, channels, services, and content that improves over time.
(You really should read that post)
Over time I became increasingly frustrated that the industry at large (and Microsoft) was moving too slowly. For example, the bet on TCP/IP as the basis for all networking was supposed to ensure there was a common lingua franca for all devices. But every company’s desire to own vertical integration meant standards like UPnP became fragmented and neutered. The underlying complexity of TCP/IP didn’t help. It’s crazy that in 2012 it is still so difficult to get a home network working reliably all the time.
I believe, however, that we are now on the cusp of this finally changing.
And ironically enough it is Apple’s phenomenal success in both defining “Apps” and “Mobile” through their deep vertical integration that is going to cause this sea change.
Why? Because Apple’s shockingly insane profitability will cause the big competitors (Google, Microsoft, Facebook, Amazon) to compete, and they will not try to compete on Apple’s terms. They are smarter than that, and they’ve all read Art of War.
In the Art of War, Sun Tzu teaches combatants to avoid direct confrontation and instead to create opportunities from the relative weaknesses of the enemy. Apple is so strong right now that any competitor would be criminally stupid to attempt to try to compete directly. Competing directly with Apple would mean building a vertically integrated ecosystem where the components of the end-to-end user experience is provided almost exclusively by one company. From channels (e.g. retail), to people (only those with Apple products), to devices (all the way to the silicon), and even content (apps exclusive to Apple devices), Apple’s strength comes from this vertical integration.
But this leads to where Apple is potentially weak: End-to-end experiences where the components are heterogeneous within (e.g. multiple device manufacturers) and across (e.g. one company provides a service and another provides content).
I’ve articulated that I think the right way to think about consumer products is from the consumer’s perspective, and that Experiences = Stuff / Time works as a thought model. Consumers want and love cohesive end-to-end experiences across all of their devices, involving many people, via multiple channels, powered by a range of services, and full of content. Go read my post on it again.
Apple has nailed cohesiveness by removing complexity from the equation through vertical integration in devices, people, brands, channels, and services to differing degrees:
- Devices – Particularly for iOS, Apple has complete vertical integration. Lesser so for Mac (still relies on Intel).
- People – Deep vertical integration. Most Apple Experiences are exclusive to people in the Apple ecosystem.
- Brands – Couldn’t be more deeply integrated.
- Channels – Deep integration, but some leverage of other channels. Primary: iTunes, apple.com, and the Apple stores. Secondary: iPads at Walmart and iPhones at ATT stores.
- Services – Most Apple successes are in areas where they are the most deeply integrated with their own services. iTunes. Siri. iMessage.
- Content – The one place Apple has chosen to support broad heterogeneity; mostly because content is the most diverse component of any experience.
This deep vertical integration has worked well for Apple. But it also provides limits (not everyone wants or has only Apple devices).
Both Google & Microsoft demonstrated recently that they are not willing to try to compete directly with Apple. If Google really wanted to go directly after Apple’s model they would not have delivered the Nexus 7 as a zero-margin, cut-rate tablet co-branded with Asus. They would have, as I previously suggested they would, created a new consumer brand all their own.
If Microsoft really wanted to go directly after Apple, the Surface would not be “just a design point”, but would be the only WinRT device on the market.
What both companies are clearly doing instead is building a range of services that are available across a wide range of devices. This is the new battle ground between Microsoft and Google (and to some extent Amazon & Facebook) is on delivering end-user value across any device, integrated with multiple services, combining powerful brands, and pulling from the best content sources all sold through multiple channels.
(That’s just another way of saying “Experience = Stuff over Time”, by the way).
This new battleground is not about apps. It is not about mobile. It is not about tablets. It is about Experiences.
And I love watching it unfold.
Let me know your thoughts with a comment below.