MustWinForSure

2008.11.30   prev     next

About four years ago it was very popular to think that Microsoft was going to take over Apple’s iPod and iTunes Store businesses the same (supposed) way that it took the GUI OS away from Apple twenty years prior: by licensing its system to many different companies, and thus isolating Apple into a niche status.

Typical of this thinking was Russell Beattie’s early-2005 piece, “Microsoft’s Consumer Electronics Endgame,” which detailed Microsoft’s impending victory over iPod so convincingly that if you didn’t spot the flaw, you probably traded in your iPod for a PlaysForSure device that very day. Beattie described how the vicious-virtuous cycle was bound once again viciously to drive Apple out of the market, and virtuously to lock-in Microsoft as the dominant player. The importance of getting people to think this way wasn’t lost on Microsoft — they named their system “PlaysForSure” in an attempt to make people think of players that use Microsoft’s sytems as a large set of mutually interactive, cooperative units, and anything else as a shaky, proprietary gamble. Beattie ends his article with advice for Apple: Start licencing your DRM and store technologies to lots of other companies, now.

So here we are with four-year hindsight and we know that Beattie and others like him were completely wrong. Why did their argument seem so good at the time? What was the “flaw” I mentioned in the previous paragraph? Simple: The virtuous-vicious cycle is very real and very powerful, but it doesn’t care how many companies are using each system — it cares how many consumers are. As early as 2005, Apple had dominant consumer share in this market, and so the virtuous-vicious cycle was working strongly for Apple and against Microsoft.

Of course, not everybody bought into the Beattie line of thinking. I know I didn’t. Pro-Apple blogger John Gruber famously didn’t. So why did Beattie, and many others, predict this path? The answer, I suspect, is that they wanted Apple to lose. Pretending that virtuous-vicious cycles work by number-of-companies, not number-of-consumers, was a convenient way to sell the story of Microsoft’s certain victory to the public, and in so doing, hopefully convince that public to switch to PlaysForSure products.

Choice quotes from Beattie’s piece:

Yes, it did matter. A lot.

No, it was important whether Microsoft’s alternative to Apple had any way to upset Apple’s dominant position in the market.

No.

It was when you decided to buy a MuVo, when most people were buying iPods, that you realized how badly you wanted to avoid Apple.

Whenever I see someone saying “grok” as if it’s a normal part of English speech, I know I’m dealing with a certain type of person. The type I talked about here. The type that wishes Apple would just go away.

Hindsight is indeed 20/20, so I guess I can’t blame you for not knowing how that list of sites would stand in late 2008. But again, why does the number of sites matter? Websites aren’t like retail stores where proximity to your house is important. You can visit Apple’s site just as easily as any other. If number-of-sites really mattered, why didn’t Apple make twenty different websites all selling its product under twenty different names? That would have been trivially easy to do.

When Apple has 60-70% of the market, how does it make sense to call their system an “alternative” spec? Some people have just trained themselves to think of Microsoft as the automatic standard and everything else as a strange alternative.

And how does Microsoft just “blanket the Earth” with PlaysForSure devices? How does any company just decide to blanket the Earth with its product? What does that mean, anyway? All any company can do is make its product, then try to get the consumers to buy it. When Apple does that, and achieves market-dominating share doing it, it’s called “messing around?” And when Microsoft does it, without much success, it’s called “blanketing the Earth?!”

Yeah, consumers who aren’t into nerd-terms like “grok” probably are too technically unsophisticated to know that the majority of iPods are owned by Windows users. Even if somebody told them. Or even if they themselves comprised most of those iPod-plus-Windows users.

Ever-smaller? Was iPod’s market share small in 2005? Smaller than what?

Imagine this: In 2008 when Apple has its own very popular multimedia phone, and licenses everyone on the planet to write apps for it if they’ll cough up a one-time fee of $99 — you’ll be complaining that most third-party apps are crud.

Update 2009.03.03 — Here’s Microsoft’s CEO Steve Ballmer trying to promote Beattie’s 2005 logic today:

In other words, it isn’t how many consumers are buying the product, but rather how many companies are signing up to sell it. Having “consumer market mojo” (i.e. the best-selling system) isn’t real market momentum — that’s to be found only in having a product that’s licensed by fifty companies, irrespective of how weak their combined sales.

It didn’t make sense in 2005, and it doesn’t make sense today.

Update 2009.09.20 — Just found out: It’s not a $99 one-time fee to develop for the iPhone and iPod Touch. It’s $99 per year. Sigh.

Update 2009.10.31 — Resurrected! Joe Wilcox makes essentially the same argument as Beattie, but doesn’t seem to be aware of how the iPod-vs-PlaysForSure battle came out.