Hi, my name is Sid. I’m a technological Neanderthal.
I have an iPhone 4, and I’m not likely to trade it in for the latest, not even if Apple’s new Marketing wiz comes out with a new model in Burberry plaid.
I don’t have an iPad because the form factor isn’t worth the price of a good laptop when I’m more about information creation than information consumption.
And now I read that Apple has a new Microsoft Killer strategy to give away software because ‘it’s all about the hardware’. A lot of media Toadies appear eager to peddle this nonsense as the new received wisdom. After some contemplation and a reasonable period of gestation to allow appropriate fermentation in my primitive brain, my considered response is: ‘You people are on CRACK!’ But that’s just my personal opinion.
Actually, it may be the case that the real news is that Apple has finally priced a product for what it is worth in the case of iWorks: nothing. But Apple’s give-aways and their implications for Microsoft are not the real story. The more interesting one is the battle between hardware and software, and another story, the Price of ‘Free’.
The hardware vs. software story goes back to the late 70s when IBM’s dominance in Big Iron was coming under question. Two things were occurring in tandem. Mini-computers were arising from the technological primordial slime to challenge the Big Blue Boxes behind the glass walls. As these less powerful but tactically more relevant platforms made their way into the hands of mere mortals, software packages evolved that were closer to needs of end users. IBM, which was known for its less than engaging software (think of it as the Microsoft of its time), was beginning to feel the pain. But it adapted, because its dominance was eroding. IBM may have been big and clumsy, but it wasn’t dumb. It entered and survived and ultimately dominated the mini-computer field. And with time and patience and the arrival of the Web, IBM lived to see the return of what it knew and loved most: Big Iron. But gradually, IBM, being a learning organization, realized that a computer is just a dumb, expensive box. It’s only worth what it can do. And software defines what it can do more than hardware. It’s the software, Stupid!
It’s next flash of insight was to sell not just software but service, the gift that keeps on giving. Kind of like a blood transfusion in reverse. Steadies the revenue stream and keeps the i.v. line open for injection of new services and extraction of new revenues. This model has now made its way to Microsoft and Adobe who offer subscription software with automatic updates in place of ‘buy and bye’.
I thought that IBM was crazy to sell its PC business, which it was never fond of from the beginning. But it was actually smart. It foresaw the PC business becoming a commodity business, and didn’t want any part of that.
So when I see Microsoft now entering the personal information appliance hardware business in competition with Apple and Samsung and LG and whomever, I wonder if it hasn’t lost its way. Google and Amazon are peddling cheap devices to hook you into their services; similar strategies for different reasons. Google wants all your information so they can pimp your profile to the world for profit. Amazon wants to install that reverse i.v. so they can suck every possible sale out of your aspirational little soul.
Apple has similar aspirations to Amazon, but not nearly on as grand a scale. It’s all about entertaining you. Making you feel empowered and special. And the hardware does that just fine. And the software does that o.k. because Apple has trained you to not be too demanding. That wouldn’t be cool! And because it extracts a hefty price for its very sleek hardware with its modest software that makes you feel good, now it’s giving you the software free out of the goodness of its corporate heart.
So the notion that Apple’s free iWorks et al is going to be a Microsoft killer is about as dumb as the notion that tablets and smartphones are going to kill desktops and laptops. There is a place for desktops and laptops where people do work. Tablets are accessory to them in the workplace, and have more value in personal information consumption: PIMs on steroids. The current turnover in sales is more a product of marketing once again convincing us that we need the newest of something we already have because we need the newest for our self-esteem. (Logic would posit that I still have an iPhone 4 as proof that I have no self-esteem. Whatever!)
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Let us conclude with ‘free’. ‘Free’ is a pricing and marketing gimmick. Always has been. Always will be. Everything costs, and somebody has to pay. Somehow. We have been brainwashed to expect free without considering the price. In a supposedly sophisticated society we are programmed to salivate at the sight of ‘Sale’ in the Pavlovian fashion.
The demise of Penney’s campaign to replace false sales with low prices speaks to the degree of our social programing in ways that we do not seem to appreciate or want to confront. And as I write this, we are just one month away from our annual celebration of human debasement known as Black Friday. It will be interesting to see what kind of firepower manifests at the mall on November 29th, particularly in Florida where ‘stand your ground’ still lives and dies. ‘Black Friday’ may take on another meaning. (What we need are more ‘good guys with guns at the Mall’, the NRA will say).
Everything has a price, a cost and a value. Price is supposed to reflect value, and does not always suggest cost.
When the price is free, what does that say of the value?
When the price is free, who’s really bearing the cost? And what is it? Ask Google, and Facebook, and Amazon, and Apple and Yahoo. They know.
By the way, what would you pay for an Apple roadster in Burberry? How ’bout with autopilot software thrown in for ‘free’? It’s all about the hardware.