Originally Posted by williamlondon
Originally Posted by Dick Applebaum See how that works?Happy, now?
No, actually you did nothing to sway my opinion, I'm familiar with those arguments, people have been making them for years, they've never been true before and there's no reason to believe that's going to change.
It stems from a basic misunderstanding of the purpose of iTunes as it relates to Apple, why it exists and what it means to the company. iTunes is an anomaly, it's like a "loss leader" but it makes money (quite a lot), and for some reason people assume that makes it a business that Apple will/does/should treat as a separate going concern regardless what happens to Apple's hardware business. What I mean is that people think that iTunes would remain around long after Apple stopped making hardware, which couldn't be further from the truth.
Yes, iTunes (the entire system) is a benefit to Apple customers, yes it's a reason people are willing to pay *more* for Apple products, yes it adds value to Apple's products, but no, it isn't the main reason Apple exists, and no it wouldn't continue as a business if there were no hardware for it to support, which is what it is, a support division that ends up making them money.
The business model of Apple's is exactly the opposite to that of Amazon's, which sells hardware (cheaply) through which it can sell its services (same with Google) which is where it makes all its money. Putting $3B into an ancillary service offering seems to me to be exactly backwards to Apple's business model, where it would make sense to do it if you were Amazon or Google, but not Apple, which is why people here (in this thread and elsewhere) believe there's more to this acquisition than an overpriced upgrade to what they already possess in their portfolio of offerings (ignoring the Beats headphones business).
Do I think it might attract more people to buy Apple products, yes, I think that's a safe assumption. Do I think it's possible to realise enough of those additional sales to warrant and justify this $3B investment? Absolutely not.
Rather than respond point by point -- I'll try to convince you on what Apple's goal is, IMO.
Within the next 5 years, a whole new breed of customers will enter the marketplace -- and the marketplace will be different than it is today:
- instant gratification - buy what you want, how you want, where you want, when you want
- automatic comparison shop for for the best value *
- cashless/cardless transactions
- continuous connectivity facilitated by ubiquitous, fast, inexpensive data connections
- secure, opt-in tracking of location, preferences, purchases, etc.
- increasing gain in the importance of services
* The key word here is value
I expect that the differences in hardware
will be less important than what you can do with
that hardware -- that means services
Now, Apple has a growing iTunes iCloud services offering. I expect that they will continue to add stuff to those services -- maybe:
- a generic subscription service -- where you can subscribe/unsubscribe to, say, Photoshop on an as-need basis
- allow those 400-800 Million iTunes credit cards to buy things other than digital data -- a car, a meal ...
- provide curated purchasing services, traveling services, marketing services ...
I can remember the days when there was no Internet, no cell phones, no personal computers without floppy disks -- no personal computers ...
Today we have devices with us at all times that are [mostly] capable of connecting us to the world at large -- on demand and at our option! The hardware is pretty-much already there; the software is getting there; the services are lagging ...
For example: Today's iPad, iOS and Apps are capable of delivering on-demand TV, music and movies to everyone -- at home, at play -- wherever, whenever ...
But what Steve hasn't, yet, cracked is a way to provide the connection and delivery of those services to tha customer -- at a price that provides value
for the service.
Apple could leverage the existing carriers, cablecos, content providers ...
Or, Tim (chosen by Steve) could just say screw that -- we're not only going to sell you the hardware, but the connections and services that deliver the value
at a good price **
I think the Best acquisition is the next big step to make that happen -- and it will further demonstrate that Apple is willing to pay to get what it wants.
at a good price
is the definition of a bargain!
Who better than Apple to make this happen?