Apple and the App Store: Where is David?

Enter Google Play

If we're talking about digital media for electronic devices, One name stands out above the rest. Apple has delivered an integrated collection of media and apps for its electronic devices (mobile and desktop) for years. Their presence in the market is unparalleled. But it seems, at first glance, that there are other "Play"ers as well. Google Play will be taking on the Giant at its own game.

Lets start by asking ourselves how Apple is/was able to position itself the way that it did. Where did this all start? Without being another tribute to the late and great innovation icon, we have to admit that this all started with Jobs. Steve Jobs, on his return to apple, brought with him the desire to put apple at the fingertips of everyone using an electronic device. He made mobile computing through laptops synonymous with the desktop experience and paved the way for SSD (Solid State Drive) in storage and not simply memory. He was able to boil these innovations down and developed a music storage device which would posses an uncontrollably loyal customer base. Whether for its intuitive interface (wheel), its simplistic menus, or its various skin options, the iPod revolutionized the way that music media would be SOLD.

Interestingly enough, nothing about the iPod was revolutionary. Other devices before the iPod used a round wheel like interface to scroll through menus and music, other devices pioneered color displays and video, other devices developed touch well before the iPod.

What Apple did was revolutionize how it was sold.

Even today we see superior products to the iPod on the market. Can you name one? Have you heard of the Zune? Didn't think so.

Apple makes no bones about being the leader here. They were the first to successfuly market a One-Stop-Shop to digital media. You can rent movies, buy music, apps and even music videos. Who else can you say does all of that? (Rhetorical Questions - I'm going to tell you)

Amazon? YES. The problem with amazon is that the apps are for the Kindle...

Walmart? Almost. They don't have a proprietary app platform (yet).

Google? Most Certainly.

Android is the market leader in mobile device operating systems. The platform is finally more pervasive than Apple. And until now they have been making little noticeable effort to provide like services. The Android Market lets you get your apps and books. Google Music, until 3 weeks ago, allowed users to download available songs, and Google Movie allowed users to rent and view movies and stream them on their android devices.

Last week Google made a strategic decision that we want to analyze looking at the 7S Model. They integrated these services into one new services called PLAY. Google Play is to Android what the App Store is to Apple. Or is it?

Here is one look: http://news.cnet.com/8301-31001_3-57396113-261/googles-entertainment-strategy-is-in-disarray/

Why would he say that Google's strategy in entertainment is in disarray? And if this is true, how could we have seen this coming?

7S - Google

Strategy - Ads Ads Ads

Structure - Flat

Systems - Which One? This is a nightmare at Google. In order to attract eyeballs to their ads they have developed a browser product (SaaS) for any and everything. This creates a pandora's box of information technology and systems issues. Thus enter Play. Play is an effort to begin combining many of Google media applications and systems as they have already attempted with their business applications.

Style - Very work-or-die mentality. They have engineers that arrive at 3 int he afternoon and leave at 4 in the morning. It is not uncommon to have developers work 10-14 hour days. And they wouldn't have it any other way.

Staff - Developer Heavy, Design/Xi Light

Skills - Programming

Shared Values - Work very hard and long hours at and in an environment that you love. Breed creativity and innovation through work perks and benefits.

Google Play does fit their 7s if you can consider it a weapon used to overpower users who would not otherwise see their ads, but it may also be a stretch. These applications were not developed in parity. They are experiencing the headaches of symbiosis right now. The motive of Play, however, might not fit as smoothly as we would like into Google's 7s model.

Google Play is intended to generate revenue and loyalty, much like the App store does for apple. It is a reason to buy Google products (Mobile devices, Chromebooks, Google TVs, etc). Play apps do not have ads like Gmail, or the mother ship Google search bar. So does it really fit?

I argue no.

Understand that I am one of the biggest Google fans, I would even have to admit that it does not fit their 7s model. They are advertisers, that happen to be brilliant programmers. So if they are to successfully persue this course to overthrow the App store giant, they will have to revisit their 7s model.

Strategy and Values

This week in strategy we learned all we ever need to know about Starbucks. I would be hard-pressed to find 10 companies that experienced similar growth in the time they did. Starbucks became an very prolific company, and that very attribute led to many of the struggles that they experienced after 1997.

As a class we considered the actions and activities they took and involved themselves in. We reviewed their value chain and noticed that they began to become everything to everyone. With all of the other decisions they made, I'm not sure why they didn't just partner up with McDonalds and ice this cake.

The one take away from this case and the discussion that surrounded it is:

Make strategic decisions that fit your competency or are directly in line with your vision, mission, and strategy.

I wanted, in this case, to find an example of a similar situation. Possibly one that hasn't completely evolved. I found just that while watching the Grammys.

http://youtu.be/-rvZyvpSt0s

If you clicked on the link you should have just watched the acceptance of this year's Best New Artist Gramaphone (Grammy) Award. If you have ever witnessed one of these awards ceremonies you should have also noticed that this wasn't a typical acceptance speech. I want to give you a little background to this scenario:

http://www.washingtonpost.com/lifestyle/style/bon-iver-uncomfortable-with-grammy-best-new-artist-win-confuses-viewers/2012/02/13/gIQAhLxnBR_story.html?tid=pm_lifestyle_pop

By now you should now know a little bit more about the man who accepted this award. If you're anything like 90% of Tweeters you also asked "Who is Bon Iver?"

As far as it applies to this case lets go over some information:

Band: Bon Iver

Accolades: 2 Grammy awards

Is there anything else we need to know? We've read his bio we know who he is, why he makes music, where he is when he makes it, and we know that he's a whole lot more famous now than on February 11th.

But really, who is he?

Bon Iver is a revenue channel for a record label (Jagjaguwar)

So the question now is, Where do we go from here? Lets talk history (a very important strategic model).

Best New Artist (Winners):

1963 - Robert Goulet

1965 - The Beatles

1966 - Tom Jones

1970 - Crosby, Stills & Nash

1971 - The Carpenters

1974 - Bette Midler

And Recently

1996 - Hootie & the Blowfish

2000 - Christina Aquilera

2002 - Alicia Keys

2003 - Norah Jones

2004 - Evanescence

2005 - Maroon 5

2007 - Carrie Underwood

2009 - Adele

2010 - Zac Brown Band

So We ask ourselves. Where should he go from here? If we've learned anything from history we can say that Bon Iver should be very successful. But how? We learned a nifty trick in strategy that I would like to apply here.

	New Market	Existing Market
New Product	Different music w/ other labels/studios.	New styles w/ Jagjaguwar
Existing Product	Similar style with compilations or new labels/studios.	More of the Same. New albums in the same style w/ Jagjaguwar

What we've seen Bon Iver do up to now is a lot of an existing product in new and existing markets. Justin Vernon has performed solo and with his band bon iver, also with Mount Vernon, The Shouting Matches, Megafaun, Volcano Choir, GAYNGS, James Blake, and even Kanye West.

NOW! With all of that out of the way. What should he do? To answer that question we really need to understand the values and mission of Bon Iver including Justin Vernon, Sean Carey, and the Jagjaguwar label. The answer seems to be "More of the Same". The most recent news on Bon Iver will bring up a 25 min production by the label Jagjaguwar featuring Justin Vernon and Sean Carey on pianos. The sound is more raw and less produced. It has a feel like the leaked Taylor Swift & The Civil Wars compilation from the upcoming Hunger Games movie soundtrack.

http://youtu.be/A9Tp5fl18Ho

But is this what he should do? Absolutely. If Justin is as passionate about the music as he has emphatically stated during and even after these awards, he cannot compromise his artistic integrity and tailor his sound to a growing fan base. He plays for Jagjaguwar because they wont impose opinion on him regarding lyrics, direction, and markets. They just let him play. And play he will.

Redbox Streams, "Thanks Verizon"

http://www.usatoday.com/tech/news/story/2012-02-06/verizon-redbox-coinstar-streaming-video/52986864/1

This is such an interesting partnership. When Blockbuster and Hollywood Videos started charging rediculous amounts of money to rent a move for 3-5 days when you really only wanted it that night, who was there to fill the void? Redbox. When you had a late night craving for McDonalds and a chickflick, who was there to hold the tissue box? Redbox. When Netflix decided to separate their streaming and dvd businesses and charge a different price for each, who was there to cushion your fall? Redbox.

And now, when you want to watch the latest rental release but 7/11 on the corner is just 8 too many steps away, who is there to bring the movie to you? That right, Redbox.

From the people that brought you the machine that counts your change for a small fee (Coinstar) comes a partnership that will have us all reveling in digital media fantasy. Verizon is using its cable network and partnering with the digital media licensing of Redbox to bring streaming one night rentals to you. This product offering solves a number of pain points. Let me elaborate.

1) Netflix charges $8 to stream movies and tv shows directly to your favorite devices. This means that in a month if you watch one movie per week (just over the average family in america), you are paying $2 per movie. Redbox, on the other had, would allow you better media selection at a cheaper price $1.27 per movie.

2) What's the problem with Redbox today? You rent a movie for Saturday night, and when you get back from your busy Sunday you realize you forgot to return it. You've now paid for 2 days. Streaming digitally would allow users to control the return dates for their favorite films.

3) Selection. Everyone knows that Redbox offers much better selection than Netflix. This is why as Netflix users we also rent a Redbox at least once a month.

These are the obvious reasons to believe that this partnership is a good strategy for both companies. But lets take another look at the offerings of the major players in the industry.

If we analyse the major players in this industry by this Strategy Canvas (Value Curve) we can see where Redbox can plan to beat the other major players. The 4 most important are recency (current movie selection), relevancy (best movie selection), price, and possibly the most undervalued attribute in this value curve, commercials.

So as this deal moves forward, lets hope that Verizon and Coinstar (Redbox for all we care) are taking a good look at this value curve to understand their niche and strengths competing against the giants in this space.

I've said it once, I'll say it again

Netflix has a brilliant strategy.

http://www.marketwatch.com/story/netflix-shares-mount-comeback-on-results-2012-01-26

Is anyone really surprised with Netflix earning results? We can all add right? They only lost 1M members and with the other +20M members they doubled their revenue from many of them. In the end it's about the bottom line. The idea to charge more for the same service was a fantastic idea! I'm always happy to see companies jump on board.

Take one Bay Area company that did it before netflix. Odwalla.

What was a 15.2 fl oz bottle of nutritious sugar filled deliciousness is now a 12 fl oz bottle of the same great tasting nectar. Oh, but with 78.9% of the fl oz offering, we should only be paying 78.9% of what was a handsome $3.39 price tag, right? Wrong. Odwalla's price has stayed the same, even continuing to increase with inflation like normal.

So you're asking yourself "What ever came of Odwalla? They must have been run out of town.They have to have floundered into the health beverage abyss." Chances are you're not asking that because you just saw or purchased one in the last 3 weeks. Odwalla is thriving, and in most cases continues to be the market leader in their industry.

Competition is fierce, the biggest of which comes from Naked fruit juices. This size change should surely be the opportunity they've been looking for to top the Odwalla "Superfood" giant. Wrong again, Naked has also reduced their juice size offering to 12 fl oz. Oh ya, and they also maintain the same price tag.

So the next time you find yourself paying the same for less of the same, don't say you've been Netflixed, because the truth is this has been going on far longer than we want to admit.

Google Shmoogle - Who cares about fun!

In the last few days the interwebernet has been ablaze with comments regarding the recent results of workplace polls. Turns out that Google is a really great place to work. Really?

Who has ever said, I want to spend 9 hours a day sitting in a small room with 3 walls with nothing but radiation and buzzing fan noises coursing through your pale atrophied body. I know I have! Is it any shock that people enjoy working at Google? I notice these same news stories citing some of the bigger perks as possible reasons for this ASTONISHING revelation. They list things like:

• Electric Cars to run errands in during lunch
• Bikes to get you from place to place
• Bowling Alleys
• Rock Walls
• Swimming Pools
• Weekly "All-Hands" meetings with the CEO

This is great and all but I thought after spending a summer @ the Mountain View "Googleplex" I hope to shine some light on some of the other perks that you may not be aware of.

• Do you know who attends those weekly meetings? You might say that the CEO and other notable members of the executive team, and you would almost be right. Earlier in the year Lady Gaga made a surprise appearance performing for just the employees @ the Googleplex.
• Every bathroom has a toilet/bidet with heated set and fan to dry you off so you don't need paper.
• Froyo out your ears.
• Food courts with mountains of local and national favorites (they are pretty light on the unhealthy stuff like candy bars but make it up to you in fresh delicious California fruit).
• Parking is never a problem.
• And the restaurants. I've paid $30 in Kansas City for worse food then they give away at the swipe of a card.
• Automotive services.
• Heath checkups.
• I even stumbled upon a group learning Yoga from a fellow Googler during lunch.
• Did I mention the FOOD!!!

What does this all mean. Larry Page hit the nail on the head when he said "We're not about perks, we're about people." This is the Google strategy. I have never worked around a group of people with more passion for their profession than at the Googleplex. Even contractors catch the Google Wave (pun intended). Google has decided that its investment will be in its people. Give them a place they will love to work and innovate in. Promote creativity and happiness so that you can extract every good and positive bit of value from them.

Google is approaching customers through its people, and unlike those in grey drab offices with lifeless drones walking about ruing the day they became an accountant, Googlers love it.

Consider Porter's HBR article "What is Strategy". He talks at length about mapping and developing activity systems. In order to understand your strategy and approach (Objective, Scope, and Advantage) you have to first know what you are not.

What Google is not:

What Google is telling us is that they are not a "cool" place to work. They are not creating healthier employees. Google is not fun.

What are they doing?:

Starting with the customer they decide what activities they will employ to provide a profitable service that customers NEED. In order to do this Google creates a simple activity system. Many may say "SIMPLE? these guys are doing everything!". To think that means that you have inaccurately understood the companies strategy. Their strategy is to motivate their employees to innovate and invent new and useful tools that provide additional platforms for advertising (The money maker!). All Google employees understand that this approach requires trade offs. They don't invest heavily in providing a single application with all of these features, even though it would be much easier for the consumer. They have to force consumers to be exposed to as many ads as possible by dissecting all of the products across the board.

So in the end, what we may see as a thousand product offerings, perks for employees, and entered industries is actually one neat and tidy network of efficient activities aimed at generating wealth. Or in other words, a really great strategy.