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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One could have fairly said much the same thing about Windows 95, or NT for that matter, eh? The technical kinks will be worked out (mostly) over time, and de facto standards of rights management policies will eventually coalesce around proven business models.

In any case, the determinant factor at play here isn't going to be technological; it'll be economic.

The Microsoft model for online distribution of audio and video would situate them in roughly the same role that Phillips occupies in the CD market. Microsoft seeks to extract a licensing fee from a commoditized standard, which is already the status quo in the consumer electronics market.

The Apple model, on the other hand, would result in a Cupertino based monopoly controlling the entire retail distribution chain as well a crucial component in the the consumer electronics market. Of course, that's the nightmare version. But no need to worry...I think it's pretty safe to say that the idea of Apple assuming the role of every record store and replacing every manufacturer of CD players to be exceedingly unlikely.

As of right now, the market could be said to consist of Apple and The Rest. But the greater Apple's successes in the early phases of the game, the greater the collateral pressure for The Rest to coordinate their efforts around commoditized standards.

Also, don't forget that the small handful of major content cartels will have a pretty decisive say in how things will turn out. Do you think it's likely that the interests represented by the MPAA will choose negotiating retail distribution contracts with a single monopoly player rather than with a broad array of independent interests?

Or maybe Jobs will end up making the smart play and open up the FairPlay licensing for other hardware manufacturers and retailers. In that case, all bets are off.

Edited 2006-05-31 06:43

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