Umair Haque / Bubblegeneration
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Design principles for 21st century companies, markets, and economies. Foreword by Gary Hamel. Coming January 4th. Pre-order at Amazon.


 
Thursday, June 03, 2004


Microsoft vs iTunes is starting to make headlines. Ignore it.

We know that MS has already won - because Apple had a chance to fundamentally alter the industry's economics and business model, and failed to do either. iTunes is the same old obsolete model tacked onto a prettier front end - Apple's (unfortunately) squandered it's massive opportunity to build a new model around the discontinuities in consumer preferences and technology that are creating new economics for all media industries.

Because Apple didn't build a new model using isolating mechanisms to build protected resources, all bets are off. In fact, my predictions for this market have already come true: massive hypercompetition leading to intense price wars. Prices are currently being (desperately) being propped up by suppliers (major labels) - but this will change as soon as a shakeout occurs further down the value chain, and distributors can exert more intense pressure of their own because buyer power is concentrated (read: MS).

Now that all things are equal, since MS has far more valuable and scarce resources to leverage, it will necessarily gain a large advantage over Apple, barring seriously discontinuous competition - which seems unlikely.

-- umair // 10:36 PM // 0 comments


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