Thursday, October 13, 2005
Video iPod and No Steve Don't Do It
Some points to note:
1) It opens up an entirely new revenue stream for content guys to monetize videos. Obivously. The trick is that this value chain doesn't exist; watching it emerge will be cool, there will be lots of opportunities for cool things to happen...
2) But not enough of them. Just like Nokia with the Ngage, Apple is (really) pioneering a new market here. It could define entirely, radically, new economics for it. Replicating the old ones is an error, just like it was for Nokia, because...
3) It has to keep exerting massive innovation pressure like this (all by itself), just to be able to deal with the somewhat insane music (etc) industry. Innovation pressure is extremely costly, mostly because it's so risky.
4) What could Apple do? Well, to me, here is how I would redefine industry economics: Atomize the value chains of the suppliers who are trying to exert market power over you (viz, the music/film industries). Open the platform up to everyone, not just big or even 'indie' media.
As discussed ad nauseum before.
On point #4: Apple's podcast RSS spec has always included support for video formats, and early indications suggest that they'll happily slurp video off of podcast feeds and stuff it onto the new iPod. There's no revenue there, but the barrier to entry has dropped *way* down. For example, I could trivially distribute home movies to family members via iTunes and RSS today.
If Apple's new Front Row application was available for older Macs, then I'd probably set up an RSS feed for all of the video that's laying around on my system, just to see how it works out. As it is, I don't see any real value in doing this right now, but it will get more interesting as time goes on.
Which brings up a point on #3--iTunes is open enough today to let people outside of Apple do a lot of the innovation. This is an entirely new space, and no one's really sure what is going to work; letting external developers do part of the work in searching for new applications and models lowers Apple's costs and increases their chance of success.
Agree with everything that's been said so far. The more Apple goes for a dominator strategy, the more it leaves itself vulnerable to a disruptive innovation that fundamentally changes the portable digital media market.
Put another way, they need to aim for getting 1% of a $1,000 market rather than 100% of a $1 market.