Steve Jobs of Apple
I was reading about the music business recently and remembered something I’d read in the December issue of Wired Magazine. It was an article about Doug Morris, the CEO of Universal Music Group (UMG), arguably the largest music distributor in the world. Among the impressions I got in rereading this article was that UMG has now become the ”rival du jour” of Steve Jobs and Apple. As a techie and businessperson, I’m amazed at how long Steve Jobs has remained at the center of the business/technology nexus. It could be said that he and Steve Wozniak invented the concept of the personal computer. Job’s list of accomplishments also include popularizing the graphical user interface (GUI) through the Mac, setting new standards for computer-animated films through Pixar, pioneering an “all-in-one” desktop computer – the iMac, creating iTunes and the IPod, and most recently – creating the iPhone. For over 30 years, since the formation of Apple in 1976, Jobs has repeatedly managed to wed technology with profitability – no small feat. He’s had some setbacks and dry times, but he’s also hit the jackpot more than once.
Lest you think otherwise, I’m not an “Apple” guy. We do have iPods in our family and I do use an iPhone, but I don’t have any particular affection for Steve Jobs or his company. What intrigues me is his long track record of taking technology – particularly things others have invented but can’t seem to sell – and developing things consumers want. Think of the GUI and Xerox PARC and Pixar – which started as a special effects house under Lucasfilm. Apple has also mastered the art of creating new markets – convincing people that they absolutely need to have its latest creations. Think about the famous launch of the Mac in 1984 and the development of the iPhone – which combined features from PDA’s, the iPod, and cell phones – to virtually create the “smart phone” market. To be sure, there are now other alternatives to iTunes, the iPod, and the iPhone – but these products and services are bringing the market to saturation, long after (in technological terms) Jobs and Apple have made a killing as pioneers.
Jobs was visionary in seeing the impending explosion of digital music at a time when the big music companies were focused on increasing their profit margins from the sale of CD’s. In exchange for access to virtually all of their libraries, he gave the “Big Four” music companies (UMG, Sony BMG, Warner Music Group, and EMI) what they wanted – copyright protection. He did this by developing a proprietary scheme that works exclusively with iTunes and the iPod. At the outset, they didn’t care, particularly when he started to make big money for them. As noted in the article about Doug Morris, it’s only lately that they’ve begun to realize that Apple was well on its way to cornering the market for digital music. In 2008, about 20-25% of all digital music is expected to flow through iTunes. Now, the “Big Four” - led by Doug Morris – are banding together to restrict Apple’s access to their libraries and develop their own “consolidated” digital music service. The problem is, none of these companies has any real expertise at being service providers. All they’ve ever done is sell product.
In that regard, its hard to imagine Steve Jobs lying awake at night worrying about the Big Four. Even if they’re successful, Apple has already made so much money in the market it can be content to maintain a healthy share and compete on the basis of quality service. On the other hand, its also hard to imagine that Jobs and the folks at Apple don’t already have the next killer app or product in the development pipeline – ready to once again pioneer a new market. Who would you bet on?
Whooaa EssEff….
The “smart phone” market is dominated by RIM, the makers of the Blackberry with their “email push” technology. Palm OS is not bad, but unfortunately Palm cannot get their act together after their internal debacle with Palm Source (now called Access–they hold the Garnet platform). Hmmm, how many companies promote or utilize the iPhone corporately? Until the iPhone utilizes more than just iMap for business application, then let’s wait and see. Sony just could not get their back-ends off the ground in the last 5 years with their MP3 players…hence, Apple just whizzed by. Someone what asleep at HQ in Japan. Even Samsung has whizzed by Song in the HDTV market.
There has always been alternatives to the iPod, prior to Apple getting in the market. I guess the Y Gen believes that Apple has always been the pioneer or leader in technology…but in reality, Apple has been much more of a better marketer. Yes, the iPhone has scorched the competition in the smart phone sales area in the last 8 months. Guess what though, it’s through individual consumers and not business to business. Until corporate American adopts the iPhone as a “standard” for corporate business commmunications for email rather than the Blackberry, then the jury is still out on ‘Apple virtually created the “smart phone” market’. We’ll see what Microsoft Windows Mobile comes with for Apple’s iPod. Irony, eh? It was not too long ago–1997, that Microsoft invested $150M into Apple, thus making Bill Gates the richest man in the America at that time.
Also, let’s not forget that nine out of ten home computers sold in the U.S. comes with the Windows operating system already installed. Hey, I like the MAC OS…it’s a fantastic product…and just about dummy proof. But guess what…out here in reality land and in corporate America…finding a MAC as a computer platform is not common and not the standard.
Regarding the Big Four in the music business….would it be a shock to anyone if Microsoft partnered with the Big Four to become their “service provider” for digital music access?