In my previous blog, I talked about consumers wanting
convenience at an affordable price. This week, I am going to take a closer look
at how Apple is dominating the world by offering convenience built into its
products at an affordable price. First, how do I know convenience built into
products at an affordable price is important to consumers? One way is how I
feel great when I buy a shiny new product and it feels wasteful when I pay for
a service I could potentially “DIY.” Normally I am the type of person
who needs huge piles of data to justify my point of view, but not this time
around; this time I am going with my instincts and emotions instead of mountains
of data. Consider the following examples from Twitter…
- @codinghorror: Geek Squad's in-home "diagnose and repair a computer" service is $299. iPad is $399.
- @_OMFGitsCody: Who needs geek squad when you can do it yourself?
- @_denny79_: @KozmicKris I use both for iPhone and iPad. Easy to use
- @TheRealEddieM: @ShukMadeULook let me know bro yea I mean iPhone is popular but the reason its popular is because it's plain and easy to use
Apple went from a bit player to
world domination[1] by introducing the iPod in 2001 and the iTunes Store in 2003. The iPod made it
possible for consumers to carry 1,000 songs on a single device, instead of carrying
about 80 CD’s or 18 pounds. The iTunes Store made $0.99 songs available to sync
with the iPod, instead of forcing consumers to buy entire albums for $15 each. Before
iTunes, if you bought an album from each of your 10 favorite artists, you would
spend $150 or approximately $1.25 per song. After iTunes, you could buy your 3 favorite
songs from each of your 10 favorite artists for less than $30. This powerful
combination brought Apple 5 billion downloads by 2008. In 2007, Apple made
things even more convenient for consumers by combining the iPod with a phone to
create the iPhone. In 2010, Apple introduced the iPad which went onto sell 14.8
million units in its first year (75% market share of tablet PC sales).[2]
Apple dominates everybody by integrating content with its devices thus creating
value for consumers by making convenience at an affordable price.
Now, let’s play a bit of Jeopardy… “Alex, I’ll take ‘Ways
to defeat Apple’ for $1.8 trillion.”[3]
So far, Amazon has mounted an impressive response in going head-to-head
with Apple’s iPad by introducing the Kindle Fire. Amazon has over 20 million
movies, TV shows, songs, magazines and books available on the Kindle Fire.[4]
Rumor has it, Amazon is even planning on launching a phone to
complete with the iPhone.[5] Unfortunately for Amazon, consumers already invest $4.1
billion annually in content through the iTunes Store[6]
which makes them less willing to switch to the Kindle Fire. Have you ever tried
syncing content from the iTunes Store with non Apple products?! It is an
infuriating process with seemingly endless steps and hours of pain.[7]
However, simply copying Apple isn’t a winning strategy, even if Amazon can
magically find a way to make it easier to sync the iTunes Store with its
products. Second place is merely the first loser.
The only way to defeat Apple is to get ahead of Apple, to
succeed where Apple has failed, to build Apple TV before Apple does. Imagine a
future where you no longer pay $75 per month for 315 channels you don’t need or
even want... What if you paid $3 per channel per month for the 12 channels you
actually want to watch ($36 total per month)? Or what if you paid $1 per
episode for the 24 episodes you watched ($24 total per month)?
Although
Apple introduced Apple TV in 2007, Apple has not been able to duplicate the
success of the iPod and the iTunes Store because content is not readily
available for it. Just this week, Apple took a significant step forward by
allowing consumers to join Netflix through Apple TV and Apple handles the
payments via its iTunes back channel.[8] In
a twist of fate, Microsoft, who once upon a time dominated Apple, is potentially
on the verge of turning the tables on Apple once again with the Xbox 360.[9] In
the past year, consumers have increased the time spent on the Xbox Live by 30%
to more than 80 hours per month using this service. Microsoft is creating value
for consumers by making home entertainment more convenient than ever before. Consumers
are already using the Xbox 360 to play video games and increasingly now they
are able to find and watch their favorite TV shows without even raising a finger
by using the Kinect voice-search.
Who’s
going to defeat Apple? Who’s going to seamlessly integrate content with the TV to offer
consumers convenience at an affordable price and claim the $1.8 trillion prize?
Share
your experience, your ideas, and invite other to participate in the
conversation. I am interested in what you think.
It's an interesting thought, and certainly some subscription services are trying something similar. I think the biggest challenge would be going straight a la carte for channels. Unlike the music industry which was okay with selling singles for decades before iTunes came along, content providers in digital television have been less open to unbundling their channels. http://en.wikipedia.org/wiki/A_la_carte_cable_television
ReplyDeleteAgreed. You would need a merger or consortium involving major players across hardware & content providers.
ReplyDelete