Aug 30 2009
An “iTunes Moment?” More than whiff of desperation…
The Guardian has an interesting piece about Microsoft UK’s media chief Ashley Highfield who was apparently spreading FUD at the MediaGuardian Edinburgh International Television Festival at which he warned TV executives that within two years they will face an “iTunes moment” and “hand control” of their businesses over to Apple. Desperate much, Ahsley?
It’s classic Microsoft spin and FUD, but it’s more telling in another ways. What Microsoft is telling these execs is to be afraid of success. Let’s face it, Microsoft hasn’t exactly made a profit in the last 15 years in any of it’s Internet efforts, has it? Apple on the other hand has single-handedly invented several new internet/media businesses and made each of them the benchmark by which every other competitor is judged. So, Microsoft is doing what they’ve done for the better part of 25 years now: play to the fears of executives who don’t know the first thing about technology by trying to spin non-Microsoft innovation as something to be feared.
Sadly for every company that has adopted Microsoft’s technology “innovations,” the only money to be made following Microsoft’s advice is, well, money for Microsoft. Everyone else seems to lose: Content providers don’t move product and customers get poorly executed hardware, a horrible user-interface, DRM, lock-in and, eventually, abandoned products/services. The end result is a black eye for the execs, their brands, and really disillusioned customers who feel like they’ve been played by yet again.
With regard to iTunes specifically and Highfield’s contention that TV will “lose control” to Apple – it’s a very strange charge: Apple doesn’t set the terms for pricing with the record labels (or movie/tv studios). Apple charges some level of markup (reportedly ~30%), but the lion’s share of iTunes track fees go to the content producers. Apple provides a sleek and friction-less environment and the record labels and video content providers to make trainloads of cash. Is this what Mr. Highfield is telling TV exec to fear? A company (Apple) the makes amazing products (iPhones, iPods, iPodTouches) that people love, and creates system in which customers actually want to buy music, videos, and now applications (for the iPhone/iPodTouch) and are spending billions of dollars per year?
Yeah, content producers should be afraid. Terrified in fact. Terrified they’ll miss the boat and have to invent technologies they’ll be really bad at inventing, and trying invent/set technology standards and support them for years and years and answer questions from end-users, and work out issues of integration with computers, home media, and on and on and on… their only other choice is to cast their lot with Microsoft that, as mentioned previously, has a zero-success track record. Yeah, Ashley, I am sure all those record labels really hate the amount of money they all make from iTunes and really wish they’d stuck with Microsoft. TV producers: really, seriously, don’t to get in bed with Apple – it’d be a horror.
iTunes and Apple are not without their warts, but at the moment, to paraphrase Andy Herzfield, iTunes (and the iPhone/iPod) are the only products even “worthy of criticism.” Rather than playing the same old tired tune Microsoft should start innovating. And, by innovating I don’t mean making crappy clones of what Apple does, or re-branding their old and broken software and business models. Innovation means doing totally new things. Take an actual risk by creating something new. Unfortunately, for Microsoft — and maybe for the rest of us — it’s just not in their DNA.
One response so far
Apart from all these charges M$ also has a tendency to …. those who have jumped on their bandwagon.
I personally know of one leading Japanese PDA manufacturer who had to abandon the product line altogether. It used Win CE. The reason you might ask was simply that they laid down an ultra high minimum volume licensing fee regardless of actual units manufactured. On top of this they stopped support for the specific microprocessor used by this company. BTW this CPU company is very much in business and quite a few of the embedded systems use it to run some version of Linux.
Another company came out with a similar product with embedded Linux as its OS. M$ arm twisted this company by threatening to withdraw all discount on their main stream requirement – Windows on PC. They had to delay the launch and redesign the product to use Windows CE – Pocket PC OS.