Monday, June 13, 2005

P to C Shift

Originally uploaded by DavidAM.
Product to Consumer Shift

The computer industry is changing (again) and Steve Jobs wants to own this round -- or more importantly, own the consumer.

The view of the personal computer as a commodity, the purely product-focused and price-driven model of the last 20+ years, is in rapid decline.

True, the hardware components that make up a computer have almost completely been commoditized. However, the experience of interacting with a computer has not. Its that experience that Jobs focuses on at Apple and uses as their key differentiator. The esthetics of the Apple hardware just serve as echoes as to how people interface with Apple's products.

On to Cringely.

Cringely seems to be convinced that Intel has designs on Apple. He's wrong.

Intel buying Apple does not make sense. Even if it did, Steve Jobs would never let it happen. Jobs sees the value is moving to the x86 processor and away from total dependence on IBM - but that's it. For the past 5 years Jobs has secretly hedged his bet on the PowerPC by having an x86 build of OS X hidden somewhere deep in Cuptertino.

Steve is a no-compromise guy. Moving to x86 just makes sense. Cheaper, cooler, and potentially faster, the decision (or the ability) to switch processors has been there for most of this decade. But here's the thing - AMD is royally kicking Intel's butt right now. Why would he commit to Intel exclusively over AMD?

Steve wouldn't.

Steve did not commit to chip exclusivity with Intel because he plans on running his trademark 'i-applications' and potentially the Mac OS on other CPUs.

Which CPUs?

Think fast, think industry dominance, think 64-bit, think video games.

The Cell.

The Cell has been chosen as the heart of the PS3.

If the next battleground for OS supremacy is the connected living room - A Sony/Apple partnership makes much more sense.

Steve gets access to high definition video content for his new HD-enabled version of itunes and the legions of Playstation diehards who are looking to upgrade to the PS3 when it arrives next year. Sony gets access to the iPod and also the ability to develop licensed iPod consumer electronics. Oh ya, an Intel or Cell - based i-applications allow Hollywood to get on-chip DRM the way they like it as well. Sony envisioned a worldwide broadband content delivery system for the PS2 - that never happened. Now they are betting that the next round of the video game wars will be won by the company that currently best owns the digital consumer experience - Apple.

An Apple-Sony merger pairs the top consumer electronics companies - Sony and Apple, running a Unix derivative. That means no monies to MS. Is OS X running on the PS3 or Sony VAIO really too much to fathom? Hey, its not my idea. Ken Kutaragi, the president of Sony Computer Entertainment recently alluded to it. I'm just connecting the dots.

If this merger ever comes to fruition, Steve will have succeeded on three fronts:

  • 1 Truly owning the digital consumer with a content delivery model that bypasses the traditional media lords

  • 2 Breaking out of the personal computer niche by not competing on price and leveraging Sony's dominance in video games

  • 3 Beating his old buddy Bill while doing 1 and 2