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Is iPod the Razor or the Blade?
Kelly McNeill writes "Robert Cringely has another update to his 'I, Cringely' series. In this piece, Cringely analyzes the business model of the iPod and how it compares it to the age old, marketing 101 'give away the razor and make money on the blades' business model. In his editorial, he demonstrates that Apple one-upped Gillette by making money on both blades and razors. The article is structured in a back and forth dialog with one of his readers who provides a very interesting analysis of the direction that Apple will be going with its rumored movie download store and how it relates to the Mac mini. On the same note, osViews has an editorial about Apple's direction in the movie download business as well, which suggests that there is evidence to suggest that Apple will use satellite networks for its Movie download store."
It's really practical, even as a guy, to have a bag strapped over the shoulder- Unfortunately, guys never used to do that, because it's what used to be called a Man Purse which was considered pretty weird and goofy.
Then, out of nowhere, people started calling them messenger bags to link them with the cool, stylish image of a messenger courier- For no good reason, this now has enabled any guy to carry a shoulder bag while remaining "cool".
In the same way, it used to be a bit dorky to run around with a mp3-playing computer doodad in public even though it's fun and more practical than a CD player.
Apple leveraged their "coolness" to rebrand the uber-geeky mp3-computer into a fashion item, so that people can use a practical tool without feeling weird and goofy.
Apple's Mac mini, product of marketing genius? Just recently Apple launched the Mac mini, an iPod on steroids to some, a feature rich yet compact Mac to others. But is it? Read on to find out why it is much, much more than that. http://www.hardwareanalysis.com/content/article/17 76/
So if Apple are one upping Gillette, it means ... err ... wait, do I care? It is a bloody computer, if sites like Slashdot covered every new HP, Dell, Fujitsu, Asus, Shuttle PC we'd be snowed under.
That's why Apple succeeds, they're like something completely different, they're not a PC maker, they're a maker of goods that work.
Well, except the old PowerMac keyboards in the 90s, dayum, you had to have fingers like superman to use them. Yuk.
Apple is a company like any other company. They've got to make a profit (and they do!). They've obviously decided that Mac OS X and supporting applications is good enough to target computers are the mass market.
Hell, you can buy a MicroATX PegasosII system from Freescale for $650, including RAM, case, processor, board, etc. PowerPC costs seem to have gone down a lot in the past year.
Everyone talks about the iTunes/iPod bundling as being esential, but I'm sure there's lots of people like me who love the iPod, but could care less about iTunes
sorry 'bout the mess...
Sorry, properly html formatted now:
7 76/
Apple's Mac mini, product of marketing genius?
Just recently Apple launched the Mac mini, an iPod on steroids to some, a feature rich yet compact Mac to others. But is it? Read on to find out why it is much, much more than that.
http://www.hardwareanalysis.com/content/article/1
It's like the razor-and-blade thing, except the blades are useful on with any razor, and none of the razors actually need blades, and neither of them are being sold at a loss, and the replacement cycle of the blades is almost the same as the replacement cycle of the razors, and .. they aren't razors or blades.
Okay, thanks!
In case you missed the WSJ today, P&G is giving them 58 billion in stock and promising to lay off 6000 after the merger.
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Apple's strategy is very simple:
All inclusive high end computing.
Unlike most PC manufacturers, Apple did pretty much everything. Computer, Keyboard, Mouse, Printer, PDA, etc. etc.
Apple's advantage is their stuff works very well together (those legendary plug-and-play sinareo's). Not to mention it's easy to use, well designed, and very good looking.
Apple's plan with the iPod is just that: A simple to integrate, well supported music player on the Mac. Since most other mp3 players before the iPod didn't support the Mac.
Apple expanded to the PC industry simply because of the success and market.
Why sell music? Simply because it had the platform and opportunity to again, provide a way to easily and gracefully get good quality music onto your Apple product (see the simplicity theme?).
Apple had Quicktime, and you can bet DRM was in the works well before iTunes. DRM was the talk of the day around that time. Apple knew it needed a music player to rival winamp, and windows media player. Hence iTunes was born.
Digital photography became big. Unlike past trends, they used USB, and had a FAT32 filesystem, so the Mac was unoffically support on just about all. So what did they do? Created iPhoto, just to make life easy.
Apple's business plan is simple: be the high end quality product. All inclusive, all included.
Why is it that every Cringely article gets posted to the front page of slashdot? Perhaps someone should submit a story that suggests people who like his writing should turn on the appropriate slashbox.
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How long before we see OSX on pocket PC type computers? A newton on steroids? For me that would be cool. I would love to have a multimedia computer that would fit in the palm of your hand and that you could hook USB and Firewire devices to. Pocket guitar and video editing studio ;)
I love Windows and Linux, but OSX seems to be geared to Multimedia, so why has it not happened yet?
Yeah, it's really bizarre. There are non-Apple-based movie stores that work just great and plenty of non-iPod portable players to watch them on (from Archos, Creative, etc.), but it's not interesting news until Apple is rumored to be doing it. Gimme a break.
That's not a better analogy. Apple's making money off both the player (iPod) and the replaceable (songs). When's the last time Pioneer or Clarion or Sony (well, maybe Sony) took a cut of the CD's after selling the CD player?
My Mach 3 razor is really just a piece of plastic that holds a blade.
I am very skeptical that they loose any money on those razors, let alone that his has become an addage in marketing.
But I could be wrong.
Apple's actually doing something pretty amazing -- solving the Chicken Vs. Egg paradox by providing *both* elements at the same time.
-Why buy an iPod/MacMini if I can do the same thing with X?
-Why buy music/movies through iTunes/iFlix if I have nothing to use it with?
What they are doing is providing you with mutually inclusive needs, and tieing them both together with the one thing most other products lack: style.
You need an iPod -- why? To play the songs you downloaded on iTunes. But *also* to be cool!
You'll need a MiniMac -- why? To play the movies you downloaded from iFlix. But *also* to be cool!
Face it, it's not an accident. These things were designed to work independently, but they're too complimentary not to require having both.
Now Apple sells:
- music consumption tools (AirTunes, iPod)
- music creation tools (Mac, iLife, Logic)
- a music distribution service (iTunes)
Apple doesn't seem to be making much money with their distribution service. Most of the money goes to the traditional labels because they have the content people will pay for.But if iTunes can be established as a music distribution service, Apple is in a very nice position to create a "Do-It-Yourself" label service whereby dedicated hobbyists can put their works into a real distribution channel. Apple takes less money than the traditional big labels but they get more money than being dealers of the big labels copyrights.
Of course, the big labels will abandon iTunes if they get a hint that Apple is becoming a content provider. But in two years time, who knows, iTunes may be a service that a big company couldn't back out from.
There might be hints of Apple doing the same thing with other content. They already have a wonderful set of video creation and consumption tools; once badnwidth grows they might compete with the video/movie distribution channels. And then move in toward being a content distributor/provider in the same manner as they might do with the music market.
As a fellow who remembers what a Steve Jobs Apple can do with absurd pricing models (e.g. late eighties mac and laser printer markets), I do still find it very exciting about the creative possibilities this could open up in music and video. I really hope Apple kind of succeeds in their challenge. What would be even better would be for a Libertarian/Open Source/Linux company to come in and do something similar.
None of the big hyped games have done it becauese they're counting on the hype to convince consumers to kick open their wallets and send them an extra $50 a shot.
Some of the smaller companies with smaller game make their software free, and often offer a week or so free trial.
Puzzle Pirates and Second Life are two that come to mind immediately. Infact, with second life, for $10 once, you can spend an unlimited amount of time online. You only have to pay monthly if you wish to own "land" in the game, and there are even ways around that if you can make enough in game currency.
One time I threw a brick at a duck.
I agree that there is a component of hype, that cannot be ignored or really even questioned.
But I don't think I agree with this part of your staement:
If we would compare devices on usability and features alone products like Apple's iPod and the Mac mini would not be able to compete with a lot of other products from manufacturers that aren't able to excel in marketing and hyping a product like Apple does.
Yes there are other music players. But if you consider the whole environement the player lives in, no other player has as compelling a usability case as the iPod/iTunes/ITMS. So even if you take away the hype (which can't really be done) then the iPod offers a compelling enough reason to own that it enjoys a significant level of base sales - and it is the significant base of reality behind the hype that keeps driving sales and also keeps the hype fed.
If you compare the Mac mini to other mini-ITx style solutions, again you have to consider the environment as a whole. I was looking at mini-iTx boxes before and was going to get one soon... but althoguh technically the Mac mini is just on par with many of these devices it also offers things like the ability to share songs purchased from ITMS, or view iPhoto libraries shared from other computers in the house. In short it leverages other networked assests in ways no other miniTX can match.
Of course if you've stayed away from that world then those reasons mean nothing to you - but even then you have the very compact size (smaller than other boxes I was looking at) and quiet nature as well that I think make it a compelling purchase on its own merits, even without the network effect from other uses it might have that other boxes cannot match. So again there is a level of sales that is based on fundamentials and not just hype (thoguh I agree that since a lot of the inital sales are sight unseen the element of hype is more at play to start with than for other products). Ovewr time if the Mac mini does not deliver, hype alone will not sustain sales and you will see it fall. I think the Cube had a lot of hype as well but that ended up falling flat, in ways I think the Mac mini does not.
Just to show I'm not a total Apple tool, I'd like to close with the consideration that I do not think the iPod photo will be that big of a seller - there's a lot of marketing and hype behind that, but fundamentially it's just a thicker color iPod with good battery life and the photo bit is a part I don't think a lot of people will end up using much. So I think sales of that device will be flat, mostly driven by people that like the extra storage.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
If you read some forums like xlr8your mac (or whatever it is) people are expirmenting with ways to play back HD video on 1.25GHz powerbooks (roughly the same as the Mini), and have got it working for at least 720p. The Elgato software simply does not use the video card for acceleration at the moment which is why the requirements are off the chart.
Even true 720p support from movies is a step up from the 480p current non-upscaling players provide. An online movie store does not have to be 1080i, a lot of people would think 720p was pretty good.
However I agree with you that I do not think Cringley has a very good pulse on what Apple is doing. I don't even think Apple released the Mac mini with any thought to it being an HTPC as it stands right now, and tend to agree an online mvoie store would be targeted at least at a next generation Mac mini.
I just happen to think that it's capable of the task right now with a bit of persuation and there are so many people that want that to happen, that it will (not the Apple store part but the Mac mini as HTPC part).
"There is more worth loving than we have strength to love." - Brian Jay Stanley
Apple has also said that it's prepared to take a bath on the music store to expand the business. It has repeatedly warned financial analysts not to expect iTunes to be a profit center.
At which point Cringely's case falls down around his ears, and we go back to square one.