Surprise! Apple will remain the most important company in consumer electronics for 2010
The holidays were filled with speculation about the upcoming Apple Tablet product. As you know, I don’t comment on rumors; there’s enough hype and nonsense floating around without more contributions of questionable value. I did, however, write last year that, IMHO, I believe that Apple is developing a tablet-like device in the (revised here to; inflation and all) $600-$900 price range and that it will be a monster in the market. The only question is whether it will follow the open-systems model and be a Mac, or the closed-systems model and be a (likely more innovative) iPod Touch or even iPhone. My feelings have shifted to the latter; that’s where the money is in consumer electronics.
And that’s why Apple is, and will remain, the most important company in consumer electronics in 2010, and perhaps beyond. Apple has in fact defined the current business model, which stretches from hot devices to control of the distribution channel to, very importantly, content, and, perhaps most importantly, to marketing, which they also do better than anyone else on the planet – I mean, just look at all of the hype around a relatively-inexpensive product that doesn’t even exist yet! We care what Apple does because it’s cool. We care, just for example, what Microsoft does because we have to.
As the distribution model for content switches from broadcast/cablecast to on-demand and download, a trend that will accelerate this year thanks to rapidly-increasing programming prices and the consequential need for disintermediation, Apple is better positioned for long-term advantage than any other company on the planet. Yes, Google is also a contender here, as are a few others. But the traditional media outlets are not. This is why Comcast is buying NBC – they know that their current distribution model is dying. Power has shifted to the content and delivery ends of the media value chain, and away from the distribution element in the middle. Of course, the cable and wireless companies will still be needed to provide that distribution link, but competition is going to hold down prices and thus profits. The real money, again, is in content and cool content-delivery vehicles.
Notice, though, that I didn’t say Apple would be the most important company in computing, mobile or otherwise. Computing is now fairly boring – we have most of what we need, from browsers to office suites to content-delivery software; innovation here is in fact hard to find today. So I’m not expecting any really big announcements in computing in 2010. There will be a lot of action, but few profits, in low-end notebooks and netbooks. Handsets will of course be hot; there’s still a lot of innovation there, and Linux will continue to make gains. Apple will continue, at least for a while, to build the best IT solutions for small and some medium-sized businesses. But Linux is the only future that makes sense in what is still, after all, a cost center in the enterprise.
As you can tell, my mind today is on consumer electronics because that show of the same name kicks off later this week in Las Vegas. I will have more for you once I’m on the ground there.
