“When Microsoft launches its Zune to compete with Apple’s iPod, it won’t just be reversing its own strategies, but going against two decades of received wisdom. This could indicate a sea-change that will help more people get what they want. But it could also lead to users being increasingly locked into whichever systems they happen to buy – and ultimately paying higher prices,” Jack Schofield writes for The Guardian.
Schofield writes, “According to Ted Schadler, an industry analyst and vice-president of US-based Forrester Research, that’s the new trend. ‘Consumers hate complex things,’ he says. ‘They want to be handed a working solution.’ Last December, Forrester published a research note: “Sell digital experiences, not products.” It points out that consumers buy products but often don’t buy the content and accessories they need to get all the benefits. For example, half the US consumers with high-definition TV sets don’t subscribe to HDTV programming.”
“The idea’s poster boy is Apple’s iPod system, which includes the online iTunes Music Store and iTunes software on personal computers. Analysts believe that this vertical integration of online store, PC and portable player enabled Apple to deliver the ease of use that helped it overwhelm the [market],” Schofield writes.
Schofield writes, “Apple’s vertical approach to the music market matches its vertical approach to personal computers, where it maintains control of both hardware and software, its own online service and even its own shops. Microsoft’s [PlaysForSure] horizontal approach matches the one it took with its DOS and Windows operating systems: it licensed them as widely as possible. For Microsoft to try the vertical approach is out of character, and means it will be competing against itself and its own partners in PlaysForSure.”
“Vertical integration may now be making a comeback because consumers are facing the problems businesses faced before: integrating a wide array of products that they barely understand. These include PCs, printers and webcams, smartphones, portable media players, digital cameras, set-top boxes and digital video recorders, games consoles, internet phones and home networking,” Schofield writes.
There is much more in the full article here.
First off, Microsoft’s Zune is a rehashed, rebranded Toshiba Gigabeat with Microsoft software, so it’s not a true vertical solution. Microsoft can’t help having too many cooks in the kitchen, even when they know it’s counterproductive.
Apple’s Mac was once vertical-only, but now, with Mac OS X’s compatibility with Linux and Windows along with the Mac itself able to run Linux and Windows natively, the Mac platform is both vertical and horizontal. The Mac, and only the Mac, is now the universal personal computer: it runs the most software, it also runs the best software, and it’s fully compatible with everything. If Apple can get the message (Macs run Windows and Mac OS X, you get the best of both worlds!) out to the general public (and Apple has a long, long way to go with that task) then the Mac will make explosive gains on the PC hardware market. As people get Macs, even if they intend to run Windows mainly, they will be exposed to Mac OS X, iLife, and many other Mac-only applications. Over time, they will see what Mac users already know and find themselves using Windows less and less. Microsoft should be worried. PC box assemblers like Dell, HP, Gateway, Lenovo, etc. should be scared zuneless.
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