Contrasting Business models and Why Apple will never subsidize hardware for content
John Gruber Commenting on a Business Week Article:
Ben Kunz, writing for Businessweek, wants Apple to make some sort of “petite glass” small TV screens that aren’t computers:
Second, Apple’s real play will be content sales, not TV hardware profits. As I noted last September, the typical U.S. consumer still watches 5 hours and 9 minutes of television a day, but only about 18 cable channels out of the 130 received by the average home. There is huge bloat in what we subscribe to, and we pay cable companies about $74 billion annually for this privilege. Add the $70 billion in TV ad spending, and Apple could grab a slice of a $144 billion video market if it could convince us there’s a better way to stream moving images.
This betrays a complete lack of understanding of how Apple functions financially. They make almost all their money, both revenue and profit, from hardware. Media content — movies, TV shows, music, apps — is icing on the hardware cake. Compare Apple’s financials to, say, Amazon’s. And Amazon’s model is pretty much exactly what Kunz is espousing here — lower-cost low-margin hardware that exists not as a profit center unto itself but rather as a platform for media content sales.
Amazon’s most recent quarter: $192 million in profit. Apple’s: $11.6 billion. The quarter was 90 days long. That means Apple made $128 million in profit, on average, per day. Let that sink in: Amazon made $192 million in 90 days. Apple made $128 million per day. Methinks Apple will stick with its focus on hardware profits.
I completely agree with John Gruber. Apple has never put out low-margin hardware in the past and i don’t see why they need to do so in the future. Apple didn’t see a need to make a netbook, a cheap feature phone and a cheap, crummy tablet to get to where they’re today.
New Year’s Resolutions for 2012
I had a good chuckle while reading this piece.
If Amazon Made a Phone.
This one made me chuckle. :-)
Forbes yesterday published its annual list of most powerful people in the world. The list includes 70 people. United States President Barack Obama tops the list.
Tech People on the list:
Microsoft Founder Bill Gates is at No. 5, Facebook’s Mark Zuckerberg is at No. 9, Jeffrey Inmelt of GE is at No. 28, Google twins Larry Page and Sergey Brin are at 30, Jeff Bezos of Amazon is at 40, Robin Li of Baidu is at 42 and Apple CEO Tim Cook makes the list for the 1st time at No. 58. I’m sure Tim Cook will be ranked a lot higher next year.
Gallery - The World’s Most Powerful People
How Amazon Got Fire
“Amazon will use Android to Flog Google." - Horace Dediu (a.k.a Asymco on Twitter and he is author of the site asymco.com)
I’m an Apple Fanboy so i’m posting the story behind Apple’s name here and it goes like this:
Apple’s company name is said to have been chosen for co-founder Steve Jobs’ favourite fruit, and the logo is a play on the world byte. In the book, Apple 2.0 Steve Wozniak is quoted as saying:
“He [Jobs] said ‘I’ve got a great name: Apple Computer.’ Maybe he worked in apple trees. I didn’t even ask. Maybe it had some other meaning to him. Maybe the idea just occurred based upon Apple Records. He had been a musical person, like many technical people are. It might have sounded good partly because of that connotation. I thought instantly, ‘We’re going to have a lot of copyright problems.’
Both Wozniak and Jobs tried other alternate names such as Executex and Matrix Electronics, but they didn’t like it as much as Apple Computers. And the name was born.
They also wanted an approachable name. Like Amiga, Apple wanted to shy away from the cold, corporate names of other computer companies at the time. Apple also went on to influence other company name decisions, including the UK based company, Apricot Computers.
Click here to read about the stories behind names like Google, Amazon, Facebook, Twitter, Sony etc.