Linked by alcibiades on Tue 30th May 2006 20:40 UTC
In the News Dell and its business model has been the focus of a lot of comment on Apple oriented forums in recent months. The Dell model is said to be unviable, and Dell's recent news is said to prove this. A limited endorsement of sorts for the so called "end to end model" in music has been published by Walt Mossberg in the WSJ. Recently a real sky-is-falling article with this theme has appeared here. This is a subject that matters. If the advocates of the so-called "end to end model" are right, it implies that the industry structure which allows us all to source hardware from wherever we want, and run a variety of OSs on it, is in danger.
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cr8dle2grave
Member since:
2005-07-11

...are doomed to be eaten alive by them.

The computer market is, with a few important provisos, a commodity market. Apple has long been a niche player in the computer market because it has opted to fight the inevitable by offering a so-called end-to-end solution. It's often said that Linux has been the primary cause for the flat growth seen in the Unix market over the last 6 years, but that, I believe, misses the primary economic motivator at play: commodity hardware. Sun didn't lose business to RedHat because CIOs picked Linux over Solaris, but because Linux was "good enough" while enabling a transition to commodity x86 hardware.

As regards music, it should be noted that the overall music industry has been a classic commodity market for a very, very long time. While the music itself is arguably not an interchangable commodity (a position which can tough to maintain after listening to radio for an hour or two), it is distributed in the form of standardized media (or standardized radio broadcast protocols) available from numerous suppliers and played on standardized equipment available from numerous suppliers.

Although Apple has done a surprisingly good job (much better than Sony's similar attempts) of leveraging its first mover status in the newly emerging market for online distribution so as to counteract the economic pressures which inevitably lead to market commoditization, they will fail in the end. I have absolute confidence that 5 years from now iTMS will be, assuming it still exists at all, a bit player in online music distribution. Unless, of course, Steve Jobs overcomes his allergy to commodity markets and allows FairPlay to be widely licensed to any device manufacturer who wants to implement it. Otherwise, in 5 years time MS's Play for Sure DRM scheme will be ubituitous. Your cell phone, your TV, your computer, your car, your wristwatch, and maybe even your toaster and refrigerator will all interoperate with each other and your Play for Sure media, while iTMS purchased media will locked into to a couple of devices.

As companies, I don't particularly like either MS or Apple, although I would generally pick Apple as the lesser evil. I also don't like DRM, but I'm not naive enough to believe that it's going to go away. If there's going to be DRM, MS's offering is far more beneficial to consumers than is Apple's. MS is content to get a small part of a lot of pies, but Apple only wants to play in markets where it gets the entire pie.

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