“Under the most strictly held conditions of temperature, pressure and humidity, the organism will do as it damn well pleases.”
-- Legendary science joke
“Move electrons, not atoms”
-- Nicholas Negroponte
Friends often ask me, "What makes Apple so different? Aren't they just another company that makes expensive computers?" Today, I ran across an example, just one of many, that explains how Apple thinks. Follow me along.
Focus on the Customer, not Money to Exclusion
Indeed, some would like us to believe that Apple is merely a premium brand for the well-heeled. It's a red herring that comforts other companies. But after years and years of experience, Apple has learned a few things that other companies still fail to implement. The current ruckus over Redbox provides an instructive example.
To understand how Redbox came to file suit against Warner Home Video, 20th Century Fox Home Entertainment and Universal Studios Home Entertainment, we have to look at Hollywood's video distribution strategy. Believing that many different customers want to acquire video in many different ways, Hollywood has embarked on a dual pronged strategy: lots of different distribution channels plus total control over each.
What this means is that Hollywood is all too willing to distribute movies to theaters, sell DVD discs, Blu-Ray discs, license streaming (via, for example, Netflix), license Video on Demand (VOD) to cable and satellite companies, and allow Apple and others to sell or rent digital versions, even in high definition. But on their schedule.
However, because Hollywood movie studios take the risk, foot the bill, and own the content, they feel justified, compelled really, to dictate every detail of the distribution. That might work until too many channels get out of control.
Notably, along came Redbox and started a very successful business renting movies for a buck at their 15,000 famous red kiosks. That, of course, depends on contractual access, the ability to purchase the latest movies from intermediate distributors.
The studios mentioned above took an immediate dislike to this entrepreneurial spirit because it undermined other channels, so they instituted a blackout period to keep hot movies out of the hands of Redbox until other channels provided appropriately pleasing profits.
What this boils down to is a matter of vision and judgment. When you put physical media out there, some enterprising people are going to figure out a way to give customers something they weren't getting before. In this case, easy $1 rentals without a late fee.
The lesson here is that when your primary motive is to maximize profit, you take a path that doesn't always put the customer first. Think about it. Apple has worked hard to convert a rather plain-faced, dowdy BSD Unix into a beautiful, graceful star. It took a boatload of passion and devotion to excellence to do that. The effort was not a mass market approach.
Technical Complexity Requires Simplicity of Vision
The outward manifestation of that devotion to excellence is to do the very best job you can delivering the best possible technology. That means not being everything to everyone, and it means paring away, not adding too. That's Steve Jobs' enduring vision, and it will be his legacy.
Apple is highly focused on the Internet delivery of video. That's a conscious decision based on an understanding of technology and how it develops -- even though, for now, "packaged media" has 88 percent of consumer dollars. Just looking at the dollars, one would think that Apple would be all over Blu-ray like suds on beer. Apple is looking farther down the road.
Accordingly, Apple is providing one channel for the delivery of video and managing it through iTunes, focusing on the user experience. Essentially, when a company focuses on the UE rather than a shotgun approach, designed to maximize profits via brute force, they tend to make money naturally instead of doing it in a way that annoys the customer. Thats how Apple achieves those long lines and crowded retail stores.
Redbox is also trying to improve the UE of renting a movie. They were able to do so because the movie studio policies combined strict control with scatter gun distribution and left a giant hole in the customer experience. Redbox is making making money because they filled that need.
Customers do as they damn well please.
Apple doesn't leave too many holes either. Apple thinks about the consequences of its approach, in general. It works to predict undesirable outcomes and steer clear. Often, the customer has no choice but to go along for the ride. It's like going into a grocery store and finding that there's only one brand of organic chicken. You can complain about the higher price and lack of selection, but your body will be happier for it.
What's also interesting is that when a company engages in too many products with too many features, it's hard to develop improvements. Conflicts arise. In the case of Redbox, the studios have instituted that stopgap blackout period that has earned a lawsuit. It's a finger in the dike, and, sooner or later, one runs out of fingers.
It's hard to lay out a long term plan when the basis of your business is a broad, complex approach to the market. Having a vision for a single way of doing things makes it easier for technology to evolve. For example, consider the following sequence:
- iTunes. Rip, mix, burn
- iTunes video
- iPod touch
If Apple had not developed a simple foundation and built on it, the company would not be be in a good position to move smartly to mobile video. For example, suppose Apple had gotten envious and delved into selling Blu-ray players. Then executives in the (hypothetical) "home video" division at Apple would now be whining about the proposed iTablet putting their division out of business. Powerful VPs who squabble and have turf to protect can sink the best of companies.
In other words, Apple doesn't try to blanket the whole market. That creates too many product conflicts. Instead, it focuses on the customer experience, limits choices, pursues excellence, has a long term plan, and keeps things simple and focused enough that natural technical evolution can take place. That's the true basis for innovation.
What if the Hollywood studios had a similar vision? Perhaps they would work together to obtain better control of the video pipe into the home. Then slowly dispense with all forms of physical media, create a fabulous user interface, and deliver movies directly into living rooms, cutting out all the middlemen: Redbox, Apple, Netflix, Blockbuster and Amazon. Regrettably, they're still on this "packaged media" binge, a short term fetish, fueled by the lingering success of the last century's success, the DVD. If that's a vision, it's one looking backwards.
So, once again, it appears, just as iTunes brought the needed coherence that the music labels couldn't muster, Apple is going to do the same thing to the movie studios with a new data center and a mobile video tablet. The vision, if you will, is video entertainment (and newspapers, magazines and books by the way), direct from the data center to the iTablet. What could be simpler?
But first, Apple has to build a bigger data center.