Inside Steve's Brain - Leander Kahney [92]
In 2006, RealNetworks teamed up with SanDisk, the number-two player manufacturer in the United States behind Apple, to pair their hardware and software offerings à la the iPod. Cutting out the middleman—Microsoft’s PlaysForSure—the companies instead opted for Real’s Helix digital rights management, which promised tighter integration.
Sony, which has decades of hardware expertise but little or none in software, has set up a software group in California to coordinate development across the giant’s disparate product groups.
The group is run by Tim Schaaf, a former Apple executive, who has been anointed Sony’s “software czar.” Schaaf has been charged with developing a consistent, distinctive software platform for Sony’s many products. He will also try to foster collaboration between various product groups, each of which works in its own “silo.” At Sony, there’s historically been little cross-pollination between isolated product groups, and there’s a lot of repeated effort but little interoperability.
Sir Howard Stringer, Sony’s first non-Japanese CEO, reorganized the company and empowered Schaaf ’s software development group to address these problems. “There’s no question that the iPod was a wake-up call for Sony,” Sir Howard told CBS’s 60 Minutes. “And the answer is that Steve Jobs [is] smarter at software than we are.”
Most significantly, Microsoft abandoned its own PlaysForSure system in favor of the Zune, a combination player, digital jukebox, and online store.
Although Microsoft pledged to continue to support PlaysForSure, its decision to go with its new vertically integrated Zune music system was a clear message that its horizontal approach had failed.
The Zune and Xbox
The Zune comes out of Microsoft’s Entertainment & Devices Division, a unique hardware/software shop that technology journalist Walt Mossberg characterized as a “small Apple” inside Microsoft.9 Run by Robbie Bach, a Microsoft vet who rose through the ranks, the division is responsible for the Zune music players and Xbox game consoles. Like Apple, it develops its own hardware and software, and runs the online stores and community services that its devices connect to. In spring 2007, the division unveiled a new product, an interactive, touchscreen tabletop called Surface.
The division has in its sights Sony and Nintendo, as well as Apple, and is pursuing a strategy it calls “connected entertainment”—“new and compelling, branded entertainment experiences across music, gaming, video and mobile communications,” according to Microsoft’s website.
“It’s the idea that your media, whether it’s music, video, photos, games, whatever—you should have access to that wherever you are and on whatever device you want—a PC, an Xbox, a Zune, a phone, whatever works and in whatever room it works,” Bach told the San Francisco Chronicle. “In order to do that, Microsoft has taken assets from across the company and consolidated them in this division. . . . We’re working on the specific areas of video, music, gaming and mobile, and also trying to work to make all those things come together in a coherent, logical way.”10
But to make it work in a coherent, logical way, one company has to control all the components. In technology jargon, this is known as “vertical integration.”
When the Chronicle asked Bach to compare Apple’s and Microsoft’s approaches to consumer devices—horizontal versus vertical integration—Bach danced about a little, before acknowledging the strengths of his competitor’s approach. “In some markets,” he said, “the benefits of choice and breadth play out successfully. On the other hand, there [are] other markets and what people are really looking for is the ease of use of a vertically integrated solution. And what Apple demonstrated with its iPod is that a vertically integrated solution could be successful in a mass way.” Bach admitted that his division is adopting Apple’s “vertically