Inside Steve's Brain - Leander Kahney [93]
What Consumers Want
These days, more and more technology companies talk not about products, but about “solutions” or “customer experiences.” Microsoft’s press release announcing the Zune music player was entitled: “Microsoft to Put Zune Experience in Consumers’ Hands on Nov 14.” The release emphasized not the player, but a seamless customer experience, including connecting to other music lovers online and off, via the Zune’s WiFi sharing capabilities. It was “an end-to-end solution for connected entertainment,” Microsoft said.
The market research firm Forrester Research published a paper in December 2005: “Sell digital experiences, not products.” Forrester pointed out that consumers spend a fortune on expensive new toys, like big high-definition TVs, but then they fail to buy the services or content that bring them to life, like high-definition cable service. The firm recommended: “To close this gap, digital industries must stop selling stand-alone devices and services and start delivering digital experiences—products and services integrated end-to-end under the control of a single application.”11 Sound familiar?
In September 2007, at a special press event in San Francisco, Steve Jobs leapt on stage with a big grin to introduce the iPod Touch: the first finger-controlled iPod. During the ninety-minute presentation, he unveiled a cornucopia of Christmas goodies, including a completely revamped line of iPods and a WiFi music store coming to thousands of Starbucks coffee shops.
Industry analyst Tim Bajarin, president of Creative Strategies, who’s followed the tech industry for decades and has seen it all, is not easily bowled over. Nonetheless, after Jobs’s presentation as he stood in the aisle talking to reporters, Bajarin was shaking his head in disbelief. Ticking off the items one by one—new iPods, the WiFi music store, the Starbucks partnership—Bajarin noted that Apple had a full lineup of killer gadgets at every price point and a comprehensive media delivery system. “I don’t know how Microsoft and the Zune competes with something like that,” he said. “The industrial design, the pricing models that set new rules, the innovation, WiFi.” Now he was shaking his head more vigorously. “It’s not just Microsoft. Who out there has the ability to compete with that?”
In the thirty years since founding Apple, Jobs has remained remarkably consistent. The demand for excellence, the pursuit of great design, the instinct for marketing, the insistence on ease of use and compatibility, all have been there from the get-go. It’s just that they were the right instincts at the wrong time.
In the early days of the computer industry—the era of main-frames and centralized data processing centers—vertical integration was the name of the game. The giants of the mainframe business, IBM, Honeywell, and Burroughs, sent in armies of button-down consultants who researched, designed, and built the systems. They built IBM hardware and installed IBM software, and then ran, maintained, and repaired the systems on the customer’s behalf. For technophobic corporations of the sixties and seventies, vertical integration worked well enough, but it meant being locked into one company’s system.
But then the computer industry matured and it disaggregated. Companies started to specialize. Intel and National Semiconductor made chips, Compaq and HP made computers, and Microsoft provided the software. The industry grew, spurring competition, greater choice, and ever-falling prices. Customers could pick and choose hardware and software from different companies. They ran databases from Oracle on top of hardware from IBM.
Only Apple stuck to its whole-widget guns. Apple remained the last—and only—vertically integrated computer company. All the other vertical integrators, companies that made their own hardware and software—Commodore, Amiga, and Olivetti—are long gone. The ones that remain—IBM and HP—have changed their business models.