Thursday, January 12, 2006
Competition at the Edge vs the Core
A quick note on how competing at the edge can dominate competing at the core - note that many of you will fundamentally disagree with my premises...
Apple is switching to Intel largely because Viiv builds "media" (read: lockdown style DRM) into the chip. Without, Apple's long-term strategy - to be the Media 2.0 monopsonist - is defused; new sources of market power enter the game. Hollywood and other content guys will defect to DRM heavy platforms.
So rather than change the rules, Apple is playing the game - leveraging it's core competencies in cool hardware to new markets (Media 2.0).
Contrast with Google. Google is taking the opposite approach: betting that the best way to be a media monopsonist isn't to worry about the core; but rather to build markets for everything at the edge. If Google's right, DRM won't matter so much - the market will simply set a price for goods with it, and goods without it.
That is, Google's leveraging new modes of coordination to change the game; if it's right, it won't just dominate an old value chain: it will have created an entirely new one, with the huge returns that doing so generally entails.
Absolutely. I have created what is basically an edge-competency new-style of television channel based on Google Video. And I have received a c&d email from someone who doesn't understand that everything is just links to content on Google's servers. Allowing core-oriented companies to sell videos through Google Video is a way to for Google to make money off of the dinosaurs as they die.
> that's interesting. I read your reply - did you get a response?
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