Convergence Kills (Redux)
Been sifting through a ton of mail regarding the last post... learned a valuable lesson. People really take their iPods really, really seriously. Fair enough, but since a lot of the feedback seemed to fall into similar categories, I figured I'd paraphrase some of the questions and answer as best I know how...
What made the iPod great is its simple interface. People don't want convergence, they want something that does one thing well, not something that does 5 things in a serviceable way.
What's going to make the next convergence device great is its simple interface. I'm not making convergence up, nor pushing for it; it's a natural thing, almost biological. Devices or features converging are similar to tiny drops of mercury... when the drops get close enough together, they have a habit of sucking each other in.
Some of you hitting my inbox were really vehement about this, and I think some of that has to do with the fact that I was talking about macro-convergence where most people are used to micro-convergence. Not sure if those terms actually exist; if not, they do now.
There was a time when you actually had a CPU for integer math in desktop computers, and you had to buy a separate CPU for floating point math, but then they converged into one chip you buy. There are actually cases where it would be beneficial to have a separate CPU for integer and a separate co-processor for floating point and a separate DSP for vector stuff, just in terms of bandwidth or not making you buy things you might have little use for.
But that's not the way it works, it's actually the reverse, and goes in stages: the motherboard takes features that were in separate cards and includes them in the chipset, and eventually the CPU itself does... until you end up with 'System-on-a-Chip'.
Again, this is not something I am advocating as though I want it to happen, it's going to happen whether or not one wants it to happen. It doesn't mean you won't be able to buy a separate device, but it'll be a niche. There was a time when cameras didn't have built-in light meters. Cameras that come with built-in light meters don't mean that some won't want an external light meter. It just drastically lessens the market for them, and means that just because camera sales are doubling it does not mean light meter sales will double... but film might.
Either way, I'm going to chock the prior post up as a grievous failure on my part. Way, way too many people are focusing on what was supposed to just be a lead-in to support a larger idea.
There is no way Apple can make much money off of selling songs.
There are more mobile phones sold worldwide per year than all computers, TVs, DVD players and other devices combined. I'm not really sure how else to explain the potential windfalls here; they're on the back end, the front end, and even ends you might not normally want to see. Even just the royalties on devices licensed to playback forms of FairPlay-protected media...
Everyone else, including some business oriented magazines which I won't mention by name, are saying apple has doomed the iPod by not opening it up. What do you know smarty pants?
That I'm probably wrong, or thinking about things in a very different way than most others. Time will tell I suppose, I'm sure there's a reason why they write columns for BusinessWeek and not I (besides the fact that drunkenbatman or the Drunken One would look really silly in a byline).
You say there won't be an iPhone. Then how do you explain iphone.org pointing to Apple?
Again, I could be wrong and yes, Apple has designed and built their own phone. Or, and here's just food for thought; before the iPod was released, everyone was sure it was going to be a hand-held computer of some sort. Seemed logical, the iPod doesn't exactly conjure up images of music.
It could be a web interface for accessing the iTunes Store through your mobile phone. It could involve iChat in some way... any number of things that will make perfect sense once it's unveiled. But Occam's Razor says that I'm probably just off. It happens; I thought buying stock in Martha Stewart Omnimedia would be a safe investment.
You act like its a good thing Apple is aiming to have an uber-lock on DRM. WTF?
I'm not a big fan of DRM, but I do try to keep in mind that digital rights management technology is just a tool that can be used negatively or positively. If I had to pick between having the negatives or having no DRM at all, I'd pick the later. But legal digitally-distributed content is coming, and with it DRM, and I'd say it might be in everyone's best interest to focus on protecting fair use rights rather than vilifying it as a whole.
There's a nasty problem here, in that most reasonable people seek out compromise in some form. If you shift all DRM into the far end of the evil pool, anything that isn't the nightmare scenario you are giving as a scare tactic starts to look reasonable.
Why don't you condemn Apple threatening the use of the DMCA?
I said it was uncool. That's a pretty big condemnation from me, and figured most would read between the lines about why it may not have been in their best interest to go there.
You're acting like Real is the good guy here compared to Apple.
I take pot-shots at RealNetworks wherever I can, including the 2nd to last post, but it's worth noting that it looks as though they are in the clear here. They did what companies are supposed to do; reverse engineer if possible, come up with some clever variation to usurp your competitors business model and compete... I know, it's confusing to me too. Didn't think they had it in them.
It should be noted that they've cleaned up their act some since they've reoriented their business model around their server-side and content-creation tools instead of selling clients. But just that, noted; not in any way forgiven. What they are doing with Harmony from a technical and ethical POV isn't something you can fault them for, but you can fault them for just being RealNetworks.
They were such a bad computing citizen, and the mindshare was so poisonous against them in every way that the fact that they've been able to spin this situation as they have should be a wake up call to Apple as to just how bad they've mishandled the Harmony situation.
Posted by drunkenbatmanAugust 05, 2004, at 10:48 AM
Comments (15)
Posted by: Jill Neniette at August 5, 2004 12:08 PM
It was brilliant. Consider me subscribed. :)
Posted by: Andre at August 5, 2004 12:42 PM
It's the length. Someone said it in the first post I read on your site, "The Neal Stephenson of Blogging". People see it linked and read halfway then post. No patience. The most comment I see most is LONG. Even the interviews. If you have the patience there is a payoff, like a good movie or book. But most do not have the patience.
Speaking personally, I love it.
Posted by: lego boy at August 5, 2004 01:06 PM
Real is still EVIL. I've never forgiven them for their G2 player which basically ruined my old computer. No, I'd rather not be bothered every 5 seconds with some notification from my *streaming media player*, thanks.
Posted by: lightningrod at August 5, 2004 01:56 PM
oh, man....
Can't believe you brought up G2! The pain! The pain... ohh....
RealNetworks is always in the wrong! The fact that they would dare to charge people a monthly subscription for stuff they can get elsewhere, and make a really buggy player to use it on shows that they haven't really cleaned up their act!
Now they're trying to corrupt the iPod with their horrible crappy software and formats! Apple should take every single laywer they have, and make sure that Real is knocked off the face of the earth, along with its arrogant CEOs who continue to believe that Real is even a halfway decent format. Even wma is better than Real! *shudder*
Posted by: Eco at August 5, 2004 05:46 PM
What the fuck are those cow heads on the index page?!? They make no sense
Posted by: Duncan at August 6, 2004 03:36 AM
Hey DBM,
I got here from always-on... saw it earlier and didn't read but then it popped up in my RSS reader again so I gave it a shot and got hooked. Ridiculously smart. Others have good things to say too:
http://www.alwayson-network.com/comments.php?id=5205_0_5_0_C
Posted by: at August 6, 2004 07:28 AM
Disagree on Neil Stephenson. Dennis Miller of blogging. I don't get half of Dennis Miller jokes but cant help but laugh.
Posted by: Damian at August 6, 2004 10:46 AM
>>There is no way Apple can make much money off
>>of selling songs.
>There are more mobile phones sold worldwide per
>year than all computers, TVs, DVD players and
>other devices combined. I'm not really sure how
>else to explain the potential windfalls here;
>they're on the back end, the front end, and
>even ends you might not normally want to see.
>Even just the royalties on devices licensed to
>playback forms of FairPlay-protected media...
A few points on this:
1. You're talking revenue - I'm talking profit. The revenue from the sales of songs to mobile devices will be large, but the primary benefactors of that will be the content owners who take 40-60% of that revenue off the back. Then Apple, in addition to losing that margin, has to pay for marketing, infrastructure, software development, bandwidth (which is a large factor), and transaction costs (credit cards, etc.). All of these make the margin very slim indeed.
This is why Apple themselves have said they don't see it as a major money-maker. Volume will certainly help - but it isn't going to make for the loss of sales from the Macintosh line, and is going to be seriously hurt assuming, at some point, someone puts together a decent iPod competitor.
If Apple really wants to make money in this space, they have to start capturing that margin by starting their own record label. Problem with that is that it may alienate the other record labels.
2. Fairplay as a platform: I don't see a ton of companies running out to license this - Motorola is the first real company. It will be interesting to see how the wireless companies react to this - as they are really looking to own that as well and may or may not like Apple's involvement in it. Apple also showed it's teeth this week in terms of acting against Real and showing that they will protect the iPod sales. Bottom line on the licensing - even if it is a big thing, the revenue from licensing Fairplay to Motorola devices won't come close to the margin they make on iPods. Margins on phones are thin already - so Motorola isn't going to be looking to pay Apple a lot on a per phone basis. Again, this is a "we'll see" kind of thing - maybe it works for Apple or maybe it doesn't.
So, in summary: I remember a Saturday Night Live parody of Citibank commercials where they had the bank that made change (like turning $10 into a 5 dollar bill, 4 ones, 2 quarters, 4 dimes and 2 nickles - sometimes even the same day), and it ends with the company saying "People ask us how do we make money doing this? The answer is simple: volume."
Apple being dependent on iTunes for revenue is a bit like that.....
Posted by: M at August 6, 2004 11:51 AM
I really liked the previous post (Convergence Kills).
There are as you say, different kinds of convergence.
Aside from different levels, micro versus macro, among others there's stupid like video iPod; there's likely to turn out very awkward iPod-as-cellphone; and there's things that make more sense than you might think at first.
Posted by: Paula Listmant at August 7, 2004 11:53 AM
You mention memes several times, so I would like to point out it looks like you may have started your own. More than one editorial has changed their tune since Convergence Kills.
This guy even mentions your site in his:
http://maccentral.macworld.com/news/2004/08/07/review/
Just to pick, if I were your editor I would have called it "Convergence Kills and Creates". Readers would not just make snap judgements about the topic.
Great job!
Paula
Posted by: Murphy at August 7, 2004 02:53 PM
It's a credit to the macworld author that he cited what changed his mind.
Posted by: uv at August 9, 2004 02:58 AM
With all this convergence talk, here are my two guidelines:
1. Two products will converge if one is a matching feature to the other (i.e. your camera example)
2. The simple/cheap product will go into the more complicated/pricy product (this is what happens most of the time)
Just take a look at the (short) history of mobile devices: I can only think of clocks, radios, claculators, and maybe address book/calendars as examples of convergence. Mind you that these are all extremely cheap, and where converged on whim... As for teh cellular+camera, that fits to category 2, so unless HDDs will be dirt-cheap as CCDs, I don't see this cellular-iPod convergence happening.
As for the Moto-Apple hype, here are two short-term explenations:
a. These cellphones play MP3s already, and there's no reason why the shouldn't play DRMed music as well. In fact, people will start getting angry if the music they buy can't be played everywhere...
b. Why not _sell_ music through the phone (like they're selling ringtones now) with some sort of cellular iTunes (even though it will probably be carrier-specific).
Posted by: at August 10, 2004 05:03 PM
Things are getting more interesting
http://www.theregister.co.uk/2004/08/09/nokia_loudeye/
"Nokia has chosen to partner with digital music distributor Loudeye to develop a music download platform for mobile phones"
"Loudeye's deal with Nokia appears to be the same thing, but focusing on that second stage. Since Loudeye is a distributor of digital music rather than a retailer, it will focus on building a platform that other companies can use to sell music, just as its recent UK acquisition, On Demand Distribution (OD2), has done in the PC download arena.
Loudeye will allow mobile networks to offer own-brand music download services without having to build one themselves."
Posted by: Jon H at August 15, 2004 12:16 AM
"What's going to make the next convergence device great is its simple interface. I'm not making convergence up, nor pushing for it; it's a natural thing, almost biological."
But biology often goes down blind alleys, and convergence is not inevitable.
It may be *attempted*, but it may not succeed in the market.
If convergence was destiny, calculators today would only be available in wristwatches. In fact, calculators on wristwatches never really took off, despite the seeming intuitive desirability of always having a calculator handy, because it's in your watch.
The convergence of iPod and cellphone may well be attempted, but there's no guarantee it will become anything but a secondary or tertiary mode of MP3 use.
Keep your head up DB, some of us saw the end game.