Is music a zero sum game?

Consider the following:  Clearchannel has stumbled badly, along with most of the radio sector. Their "Hamburger helper" strategy has clearly backfired. The attempt to paint an inability to sell out ad times as a customer friendly move didn’t fool anyone. That’s before we talk about satellite radio, which hasn’t even begun to hit its stride.

The big labels are floundering; They never knew what to make of digital. Their inability to get ahead of the digital distribution curve, their horrific handling of P2P, and their self inflicted PR wounds will likely dog them for years to come.

And Microsoft, well, their attempt to be all things to all people — a function of their enormity — has yet to really pay off. The most interesting thing about the Redmond behemoth is that they cannot seem to make a profit in any arena where they are not leveraged to a monopoly. (you should know my disclosures on MSFT by now).

Lets look at an entirely different approach to music and technology: Apple.

They make really cool products. Beautifully designed, innovative in the way the address consumer needs, technologically transparent and elegant. They truly have become an idea factory. And its paid off in spades for them (see chart below).

Only a handful of companies have been able to establish themselves, reinvent and reinvent again what they actually are — while remaining true to a core set of beliefs. For Apple, that’s user friendly, well-designed interface, products that delight.

How many other companies have done that? I can think of a few besides Apple: Harley Davidson, G.E.,  3M, The Gap (i.e, Banana Republic and Old Navy),and to some degree, American Express. IBM certainly has successfully reinvented itself. If you consider all the divisions Sears created,than you have to include them also: Dean Witter, Allstate, Discover, H&R Block and Coldwell Banker.

In the technology sphere, however, how often does that actually happen?  Dell is the low-cost, direct-to-consumer PC builder. Will they succeed at becoming a consumer electronics company — or will they at most be a PC maker that happens to also sell inexpensive Plasma TVs?

That’s what makes Apple so interesting as a  company . . .

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An iPod a Day
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Apple’s shares have soared to new heights since the company introduced its popular music player:

1. Sept. 29, 2000: Apple’s stock tumbles after warning of earnings shortfall amid weak sales of its G4 Cube computer.
2. Oct. 23, 2001: Apple introduces its iPod digital music player.
3. Jan. 7, 2002: Redesigned iMac computer with a flat screen is released.
4. April 28, 2003: iTunes Music store opens and sells one million downloads in its first week.
5. Jan, 6, 2004: The smaller iPod Mini is introduced. Apple says it has sold two million iPods to date.
6. July 12, 2004: iTunes downloads top 100 million.
7. Jan. 12, 2005: Apple says it sold 4.6 million iPods in December quarter and more than 10 million to date.
8. Feb. 11, 2005: Apple announces 2-for-1 stock split.

Source: WSJ

Category: Investing, Music, Web/Tech

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

6 Responses to “The idea factory”

  1. Bryan G says:

    There was a great DailyKos diary on Apple today from a former employer – http://www.dailykos.com/story/2005/2/15/162223/276

    it eventually strays into politics but the focus is on Apple

  2. dsquared says:

    hrrrrrmph!

    Taking the longer view, if you look at that list, what stands out to me is the number of companies that have been outright, slap bang *disasters* over periods of more than a decade, and where the “reinvention” that you’re talking about is like number eight or nine in a series of similar attempts, and happens to be the one that worked.

    I’d put Apple, Harley-Davidson and Sears on this list for sure and would make a case that IBM and 3M belong on it as well. (I’d also note that, a couple of years ago, you’d probably have had Nintendo on your list). I agree that style and reinvention can deliver the goods in the right context, but quiet competence in execution is the way to bet for a man with an eye on the percentages.

    best,
    dd

  3. David Bennett says:

    Here’s a speculated combo that could really power Apple:

    http://www.appleinsider.com/article.php?id=879

    Here’s some first steps in next gen radio:

    http://www.wired.com/news/digiwood/0,1412,66597,00.html?tw=rss.TOP

  4. The idea factory

    Link: The Big Picture: The idea factory.

  5. The idea factory

    Link: The Big Picture: The idea factory.

  6. The idea factory

    Link: The Big Picture: The idea factory.