iPhone for positioning?
Is Steve Jobs playing the options game? In our book 'The Entrepreneurial Mindset' we argued that uncertain ventures could be treated as the real asset equivalent of financial options, building on a lot of great work done in finance. One type of option, which we call a 'positioning option' is most appropriate when the primary uncertainties are technical, or outside your control. Examples include when some new breakthrough is needed to develop a market, or when you are waiting for a standard to emerge.So what do you think of this description of Apple's move into music phones, printed in this week's Business Week? "...it looks like Jobs is making a careful gamble. He doesn't want the music-phone market to soar, at least not right away. That could cut into his iPod franchise, the source of almost all his revenue and profit growth. At the same time, he knows the mobile-phone market could be tremendously important for digital music in the future. So he's positioning Apple to be readcy for a sales boom without leading the charge himself...Jobs, in other words, seems to be trying to define the music phone to his advantage."
Well, will it work? Apple has gotten into trouble before with proprietary standards, and if I were Zander of Motorola, this might be of some concern. On the other hand, wouldn't it be cool to have a mobile phone with the intuitive and straightforward interface of an iPod?
- Posted: Monday, September 12, 2005
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I know that Gates is anticipating this transition as being the one that will bring Microsoft’s solution to the forefront. He went on record with CNet here:
http://news.com.com/Gates+sees+big+dollars+in+little+devices/2008-1016_3-5701477.html?tag=nl
The problem with Jobs’ strategy is the fact that both Apple and Motorola profit from h/w, so the incentive to cooperate will always be shallower than that between handset mfrs and Microsoft, whose business model is well-understood and generally ceded by both handset mfrs and carriers.
I believe the real question is not how Zander feels, but how the carriers feel. Rumors suggest that carriers have been the key reason for the slow evolution of iPod on the phone since they believe iTunes is a threat to their ringtone sales and data network subscriptions. Though I did just see an ad this evening from Cingular advertising the Rokr, so perhaps they’ve come around or Apple’s cut them a deal…
