Friday, August 06, 2004
Apple's proprietary strategy
I have posted in the past about Apple's proprietary strategy vis-a-vis its Itunes+Ipod business. There is a strong sense of deja vu in all of this. Cast your mind back to the mid-eighties and there was Apple with a great product. Then, a series of terrible business mistakes ensured that the great product was relegated to the fringes of the computing business where it remains to date. Is Apple about to make the same mistake again with its online music business, especially in light of its bizarre (since Apple makes most of its money of Ipods, not Itunes) spat with Real's Rhapsody music service? The Economist has some thoughts...
What on earth is Mr Jobs up to? In the 1980s, his crucial mistake was not to licence Apple's superior computer-operating system to other hardware makers—as Microsoft did with its clunkier DOS and then Windows, ultimately becoming a virtual monopoly. This time, Mr Jobs wants to get it right. He is, for example, letting Hewlett-Packard sell HP-branded iPods and PCs with iTunes pre-installed.
But his cold shoulder to Mr Glaser suggests that Mr Jobs is reluctant to make Apple's technology—its music format and copyright coding—an open standard. A proprietary strategy will be the most lucrative one if Apple can stay dominant (as Microsoft has with Windows), but runs the risk that rivals will topple it. Apple's old nemesis, Microsoft, is gearing up to do just that, with its own music service and copyright technology, code-named Janus, due out this autumn. For consumers, moreover, closed formats are inconvenient. Everybody who once bought records, only to buy the same music again on CD, will be wary of buying online without knowing that what is bought can play anywhere.
What on earth is Mr Jobs up to? In the 1980s, his crucial mistake was not to licence Apple's superior computer-operating system to other hardware makers—as Microsoft did with its clunkier DOS and then Windows, ultimately becoming a virtual monopoly. This time, Mr Jobs wants to get it right. He is, for example, letting Hewlett-Packard sell HP-branded iPods and PCs with iTunes pre-installed.
But his cold shoulder to Mr Glaser suggests that Mr Jobs is reluctant to make Apple's technology—its music format and copyright coding—an open standard. A proprietary strategy will be the most lucrative one if Apple can stay dominant (as Microsoft has with Windows), but runs the risk that rivals will topple it. Apple's old nemesis, Microsoft, is gearing up to do just that, with its own music service and copyright technology, code-named Janus, due out this autumn. For consumers, moreover, closed formats are inconvenient. Everybody who once bought records, only to buy the same music again on CD, will be wary of buying online without knowing that what is bought can play anywhere.
