Some time ago I wrote about how Apple was determined to become the Walmart of digital content:
http://sharikou180.blogspot.com/2006/09/apple-effect.html
After Google's 1.4 billion $ purchase of Youtube, I now believe Apple's biggest threat long term will be Google. Why...? It's because Google wants to ensure they own every online touch point possible to sell advertising. But not just any advertising. Google's promise is to sell effective advertising because it's targetted. In order to do this, over the long term Google will need to go significantly beyond regular search and own the digital entertainment content touch points. And not just "user generated content" or the boring television from the 70's they started out with on Google video. They will need to own what's hot and what's new. And this is what Apple wants to own too. The difference is Apple wants to sell you the content and Google wants to sell advertising on the content.
So either these guys are heading for a show-down, or they are heading to a partnership which shakes us all down by either selling us content or giving us content but selling advertising on that content. Perhaps now Otellini's presence on the Google board and his willingness to bend over backward for Steve are making a little sense. I thought it was only due to the fact that the 60,000 google shares he got are worth significantly more than his Intel holdings but perhaps I was wrong.
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5 comments:
I've kinda been under the impression that Steve was bending over a bit, while Otellini did the same. If anything, Google will probably end up being the searchable user content and non-portable content king while Apple will end up being the king of all medias portable for a while (until that market becomes more diverse).
1) Intel wants to sell hardware to support the content (servers to Google and Apple) as well as content players (iMac macbook...).
2) Apple wants to sell content as well as hardware. Apple also has the savvy to make their purchasing experience "cool."
3) Google's watch-our-advertising- for-free-content is not mutually exclusive to Apple's approach.
Based on the fact that I have "free" over the air TV that requires nothing of me other than an antenna AND that I have pay-for-content on cable does not mean I have to choose either-or.
Anonymous - what I believe Google has is a ton of cash and the very strong desire to own these touch points. Hence, they have the ability to single mindedly buy potential online media properties with a large consumer base...i.e. Youtube. With the possibility of turning these into distribution channels for other content.
Customer acquisition costs can be incredibly high so if Google owns the place where the customers already are, they have a significant advantage.
I don't see Apple's strategy as working in the long run. 99 cents per song doesn't exactly put Apple into a defensible market position.
Scientia - I agree with your comment. And I suspect so does Steve. If I re-call, at the time they launched iTunes, he wanted to price at 79 cents but the studios wouldn't let him. Once he gains sufficient mass (the Walmart effect), he will be able to dictate pricing and terms more and more.
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