For the past few years, conventional wisdom has been that the one company the CE industry needed to fear most was Microsoft. Bill Gates and his team have been eying the consumer electronics market for 15 years, and if you study their overall CE strategy, you see that it is to have some type of Windows environment on any and every digital device a consumer will use in the future. They have made major deals with cable companies, telecom vendors and even cell phone hand set makers like Motorola and HTC and are becoming even more aggressive in trying to make Windows based operating systems and user interfaces a key element of CE based products throughout the entire CE eco-system.
Indeed, all of their “consumer” based products are aimed at bringing more and more people into the overall “Windows World” and use that as a starting point for Microsoft to sell new CE based products and services in the future.
While I do believe the CE folks need to have a healthy fear of Microsoft in order for them to compete on a somewhat even ground, the company they actually need to fear most is Apple Computer.
I am convinced that Apple’s long term strategy is to eventually shift the market towards Mac based products the same way Microsoft wants Windows to be at the center of the CE world. While Apple publicly keeps focusing on the Mac as a hub in the home and makes the iPod an important part of the Mac consumer experience, their recent move to create their own consumer user interface called Front Row, which allows customers an easy way to manage their content via a remote control, shows that Apple has more of a Media Center play in the works as well.
But there is a very distinct difference in the way Microsoft and Apple are approaching the CE market. Microsoft’s way is to create a radical new platform, such as they did with the Media Center, and push it out to the market in a bold fashion in order to get people focused on the concept and then let the early adopters help them validate the platform. In the meantime, they keep working on evolving the actual Media Center platform and in typical Microsoft fashion, eventually get it right by the time they have version 4.0 or 5.0 on the market.
On the other hand, Apples approach is very subtle and in a sense, delivers new features that help move consumers towards the Mac and related products in a more controlled and measured way, but with better results.
The way Apple approached the “Mac-as-a-hub” platform is a good example. In January of 2001, Jobs introduced the concept of the Mac as a hub of the digital lifestyle and started out with some important applications that helped define the role of the Mac as a productivity platform through things like iPhoto and iMovie. But over the next four years, he enhanced this platform with things like iDVD, iTunes, GarrageBand, and now Front Row, and with each new addition to this “hub” platform, he inched the Mac market closer to a new platform that can be extended well into broader consumers segments as well.
When I first saw Front Row, and viewed it on a 20 inch iMac to control a movie, my first reaction was that I now want to see this on a 42 inch plasma screen. Interestingly, within the past three days, some hackers have gotten a copy of Front Row and put it on a Mac Mini and connected it to a Wide Screen digital TV set and turned their Mac Mini into their own version of a Media adaptor. But I believe it is only a matter of time before Apple does something like this officially and starts extending Front Row and the overall Mac experience to the living room as well. But, unlike Microsoft who developed the Media Center platform and thrust it on the market as a new concept that needed to be evangelized in order to get it accepted, Apple uses a more controlled approach by adding new features somewhat sporadically and gently brings the market along with them and before you know it, Apple has become a CE powerhouse in their own right.
Apple has another major advantage that will help them make this transition from a strictly PC based company to CE one in the future. They have an environment in which they control the hardware, software and to some degree, how it is distributed and sold.
Of course, it is way too early to tell if Apple will eventually emerge as a major CE player given their current market share. However, by using this more subtle approach and gently moving the market towards a Mac world where everything is easy to use and works together seamlessly, Apple could become one of the most important, if not the most powerful CE company someday. And while Microsoft should still be feared by the CE folks, Apple could be the one company that gives them the most problems in the future.