As Ryan tweeted, this really is “condensed years of blog posts and project experiences into a 30-minute talk.”
Mr. Ben Thompson at his best. The article is so good. Important piece to my business theory puzzle.
You’ve read that software is eating the world, but this goes deeper.
I suspect that nearly every industry will belatedly discover it has a critical function that can be digitized and commodified, precipitating this shift. The profound changes caused by the Internet are only just beginning; aggregation theory is the means.
“Fasten your seatbelts”, 15 minutes of business insight.
Another one by Ben Thompson about how Microsoft is seemingly becoming in terms with the new reality:
The cloud, though, changes that. Once you remove the burden of support and maintenance – that’s handled by the service provider – it suddenly doesn’t necessarily make sense to buy from only one vendor simply because they are integrated. There is more freedom to evaluate a particular product on different characteristics, like, say, how easy it is to use, or how well it supports mobile. And it’s here that Microsoft products, particularly the hated SharePoint, were found to be lacking.
Ben Thompson writes about Google and what could eclipse it:
I think Google is quite safe when it comes to search, and that they will be a very profitable company for the foreseeable future. I just suspect we will all think differently about that dominance when it’s a small percentage of total digital advertising, just as we thought differently about IBM’s dominance of mainframes in the age of the PC, or Microsoft’s dominance of PCs in the age of the smartphone.
Ben Thompson says it:
Utimately, though, Samsung’s fundamental problem is that they have no software-based differentiation, which means in the long run all they can do is compete on price. Perhaps they should ask HP or Dell how that goes.
In fact, it turns out that smartphones really are just like PCs: it’s the hardware maker with its own operating system that is dominating profits, while everyone else eats themselves alive to the benefit of their software master.
Ben Thompson writing for stratēchery:
Think about commerce in the same time periods and contexts I recounted above: in the time of addresses and telephones, most commerce involved driving to the store. It was a purposeful and burdensome activity, rather like a scheduled phone call. In the era of the web, ecommerce became a word, but it still entailed going to a computer, a journey that seems simple, but in reality is often far removed from the motivation to buy, which may arise from an ad seen on TV, or a dress in a windows, or the recommendation of a friend. With mobile though, and particularly with messaging, the omnipresence of both a communications channel as well as a purchasing channel means the separation between the thought of buying and actually making a purchase is very small indeed.
Josh Bersin about knowledge workers:
A “Power Law” distribution is also known as a “long tail.” It indicates that people are not “normally distributed.” In this statistical model there are a small number of people who are “hyper high performers,” a a broad swath of people who are “good performers” and a smaller number of people who are “low performers.” It essentially accounts for a much wider variation in performance among the sample.
Marco Arment writing:
They did everything that the press, analysts, and prevailing wisdom at the time were telling them to do. Everyone was pressuring them to be more like Apple, so they tried.
The problem isn’t that they botched it (although they did, in some ways). The problem is that Microsoft isn’t Apple, and Microsoft’s customers aren’t Apple’s customers. They tried selling a more Apple-like attitude to their customers, most of whom don’t want and won’t tolerate an Apple-like attitude. That’s why they’re not Apple customers.
Michael Mace writing for his MobileOpportunity blog:
I believe Google’s mission statement to “organize the world’s information” is no longer a meaningful guide to its actions. To me, the company looks less and less like a unified product company and more and more like a post-modern conglomerate.
The idea behind the “Internet of Things” is that network connectivity is moving into almost everything. If that’s Google’s investment thesis, it could rationalize an investment in almost any industry. Appliances? Absolutely. Shipping and logistics? You bet.
Ben Thompson excellent again. The price of undifferentiated software converges to zero and therefore three main business models he sees are:
- Software free + hardware where you make profit margins
- Software free + advertising
- Software as a Service for businesses where the competitive environment will provide ever better products that the businesses have no problems to pay for.
My contention is that app time will impact many of these incumbent media and that both the effect and the consequences will be hard to measure in advance or even ex post facto. These new media objects are not measured easily and therefore are flying under the radar of traditional metrics used by the industry. Such absence of reliable measurement is one of the hallmarks of a disruptive shift in industry: You can’t perceive what you can’t measure and you certainly can’t manage it.
I believe the logic for Apple is that usage of the products determines their value and therefore placing powerful software in the hands of more users means they will value the entire system more. This leads to the notion of greater “stickiness” or “lock-in” but also to higher satisfaction and loyalty, rate of upgrades and even more third party purchases and yet more usage.
This is the virtuous cycle platform custodians seek to engender. This is what Apple is trying to build and the transition of apps into the system bundle is part of this re-enforcement.
One wonders how long before Apple’s approach becomes the norm for other platforms.
Thomas R. Eisenmann answering the question what is entrepreneurship:
[…] entrepreneurship is the pursuit of opportunity beyond resources controlled.
The article goes much deeper, of course.
The 5C is, effectively, an iPhone 5. Same A6, same camera, same just about everything — except for the most obvious difference, its array of colorful plastic shells.
In marketing, what looks new is new.
This is the first year when last year’s specs remain good enough to serve as the mass market new iPhone. Take a look at apple.com today and note which new iPhone appears first: the 5C, not the 5S. Which phone did they show a commercial for during the event? The 5C.
In summary I’d say that the C signals the beginning of the “good enough” phase which was also evidenced by the increasing mix of the older models during the last year. Financially it shows up as lower ASP, which, as the graph above implies, I expect to drop to $600 and lower during the next year. Margins may not be affected much as the C is still very highly priced relative to its cost of production.
Finally, if the good enough alternative is being “pinned” by Apple as the mid-range it also begs the question of why there isn’t a specific “low end” version. It took six years for Apple to fork the product into two variants. Maybe it will take another year for it to stretch to a third.