Inside Steve's Brain - Leander Kahney [91]
Jobs was delighted with the software—he’s a lover of digital video—but soon realized that iMovie’s magic wasn’t conjured up by the software alone. To function properly, the software had to be used in conjunction with several other components: a fast plug-and-play connection to the camcorder; an operating system that recognized the camera and made an automatic connection; and a suite of underlying multimedia software that provided video codes and real-time video effects (QuickTime). It occurred to Jobs that there weren’t many companies left in the PC business that had all these elements.
“We realized Apple was uniquely suited to do this because we are the last company in this business that has all the components under one roof,” Jobs said at Macworld in 2001. “We think it’s a unique strength.”
After shipping iMovie, Jobs turned his attention from digital video to digital music, and he forged the biggest breakthrough of his career—the iPod. The iPod is one of the best examples of Jobs’s new systems approach. It isn’t a stand-alone music player, but a combination of gadget, computer, iTunes software, and online music store.
“I think the definition of product has changed over the decades,” said Tony Fadell, senior vice president of the iPod Division, who led the hardware development of the original iPod. “The product now is the iTunes music store and iTunes and the iPod and the software that goes on the iPod. A lot of companies don’t really have control, or they can’t really work in a collaborative way to truly make a system. We’re really about a system.”7
In the early days of the iPod, many expected Apple would soon be overtaken by competitors. The press was constantly touting the latest “iPod killer.” But until Microsoft’s Zune came along, each device was essentially a stand-alone player. Apple’s competitors were focusing on the gadget, not the software and services that supported it.
Apple’s former head of hardware, Jon Rubinstein, who oversaw development of the first several generations of the iPod, is skeptical that competitors can overtake the iPod any time soon. Some critics had likened the iPod to Sony’s Walkman, which was eventually eclipsed by cheaper knock-offs. But Rubinstein said it is unlikely the iPod would suffer the same fate. “The iPod is substantially more difficult to copy than that Walkman was,” he said. “It contains a whole ecosystem of different elements, which coordinate with each other: hardware, software, and our iTunes music store on the Internet.”8
These days, most of Apple’s products are similar combinations of hardware, software, and online services. The AppleTV, which connects computers to TVs via WiFi, is another combo product: it’s the box that’s wired to the TV, the software that connects it to other computers around the house—both Macs and Windows PCs—and the iTunes software and store for buying and downloading TV shows and movies. The iPhone is the phone handset, the iTunes software that syncs it with a computer, and network services like Visual Voicemail, which make it easy to check messages.
Several of Apple’s iLife applications connect to the Net. Apple’s photo software, iPhoto, can share pictures over the Net via a mechanism called “photocasting,” or order prints or photo books online; iMovie has an export function for posting home movies to homepages; Apple’s backup app can save critical data online; and its iSync software uses the Net to synchronize calendar and contact information among multiple computers. None of this is unique to Apple, of course, but few companies have embraced the hardware, software, and services model so comprehensively or effectively.
The Return of Vertical Integration
Apple’s competitors are starting to wise up to the virtues of vertical integration, or this whole-systems approach. In August 2006, Nokia acquired Loudeye, a music licensing