I was talking to a contact in North Asia, and we winded up talking about a report that we just published on how connected devices, and digital services and content change business dynamics. He asked me if I could write an industry comment on it, so that at least a few key points are made available to non-clients.
The best way of understanding the changing business dynamics for the players in the market for connected devices, and digital services and content, is by examining two industry giants; Apple & Sony.
Sony represents the very traditional way of consumer electronics. Very hardware focused, with emphasis on screen sizes, storage capacity, resolution and so on. These products have been narrowly targeted at different markets, and each market has been addressed with multiple stock keeping units. Consequently, there has been little need to cooperate across the business units since they operate with a great deal of autonomy.
Apple is the complete opposite. It was not until the launch of the Ipod that Apple really entered the world of consumer electronics. All its products and services targeting consumers are highly integrated. This integration can be traced back to its CEO, Steve Jobs. He is a driving force at Apple, and sets the direction for the company. He has a stern and steering hand on what type of products to develop, which services Apple should offer, and where to take the software platform. One of the reasons why Apple has won out is because devices more and more connect with each other, or can access or depend on a service. This makes manageability of your devices and digital assets a key market differentiator. This is the topic for my next report.
Now lets look at the differences between being loyal to Sony products versus being loyal to Apple.
If you have a Sony PSP, Sony digital camera, Sony Ericsson phone, and a Walkman mp3 player, they all depend on different, non-interoperable device managers. So if you buy these four products, you need to install on your PC four different applications to manage these devices. These applications have different menu structures and layouts and the user needs to learn to use and configure each and every application.
Lets look at Apple. Ipods, Iphones, and Apple TV all depend on Itunes. Once you have configured Itunes you can buy any Apple product and it will seamlessly work with Itunes. You do not need to install anything else, or learn how to use a new application just to use the product you have bought.
In the race for connected products, and digital service and content, manageability has become the new remote control, and consumers do not want many remote controls. Apple understands this well, and has chosen to fence in its eco-system, but has focused on making the Apple eco-system very simple to use. Other vendors, like Sony, need to develop a strategy for how their products fit in with the greater eco-system of products and services on the market, and how the eco-system can interoperate and be easily managed by the end user.
