Michael Urlocker
Other
Inventors tackle big hairy problems. Successful innovators somehow keep it simple. Management consultant Michael Urlocker shows how Apple’s co-founder and CEO Steve Jobs keeps the balance.
Dozens of Web, telecom and broadcast companies have their eyes on the TV market. There is a sense of opportunity among Web startups and a feeling of escalating concern among broadcasters that something is about to change.
We can see the signs:
– YouTube, a Web startup that lets consumers load their favorite video clips onto the Net, is attracting more than 100 million free downloads daily;
– NBC Universal said it would make all its new Fall shows available free on the Net;
– Telephone companies including Telus are dabbling in new TV distribution systems as an alternative to cable-TV at a cost of hundreds of millions of dollars in new infrastructure;
– Cell-phone companies, including BlackBerry and Mobi-TV are offering short video clips in partnership with content suppliers.
It is not clear how the broadcast business will evolve or which, if any, of these initiatives will be sufficiently profitable to sustain itself.
But last week, Apple Computer Inc. showed a sneak preview of a new living-room device that, like many of Apple’s big hits, is surprisingly simple and may be the big winner. Apple’s iTV is a small box that sits beside and plugs directly into a TV, like a DVD player.
It allows consumers to watch on their large screen TV any video that they buy from Apple’s new iTunes movie service or hundreds of amateur video podcasts. No direct connection to a PC is required; that link can be wireless to a computer in another room. The $300-iTV is operated with a small remote control.
The iTV is not the first device to allow TVs to be wirelessly connected to a PC: Microsoft Corp., Cisco Systems Inc. and others have made so-called media extenders in recent years. Apple’s device has its limitations: iTV movies will be near-DVD quality, which may not be good enough for large-screen TVs.
Microsoft’s efforts in television are interesting because its two biggest projects have been duds: One was WebTV (Imagine watching 24, then clicking on screen to buy Jack Bauer’s suede jacket … Apparently only Microsoft engineers imagine such things) the other was the all-singing, all-dancing Media Center PC (introduce all the hassles of Windows into your living room).
What Apple does, and does well, is to streamline technical issues, making it painless for non-technical people to use technologies.
A lot of engineers and managers involved in new products want to emulate Apple for its “cool-factor” or its ability to wow consumers.
The idea that new services and products must be easy for consumers to use is well understood, but getting there is very difficult. In many cases engineers and executives get caught up larding-on multiple features or functions without accepting that each one pushes the goal of simplicity further away.
If we look at Apple’s new iTV device and the company’s earlier disruptive innovations, the iPod and the Macintosh computer, the following can be observed:
– Limited-functionality: not the swiss-army-knife approach;
– Apple integrated standard hardware and controlled the software;
– Apple innovated on the most important parts of the experience that were not good enough for users. In the case of iPod, it was simplifying and legitimizing what had been until then largely an illegal process of downloading. In the case of the Mac, Apple focused on simplifying the PC command system using a mouse and menus. For iTV, Apple is shielding consumers from all the hassles of PC (operating system, software, configuration, etc.) to allow them to do one thing: watch movies.
Is Apple’s iTV the right approach? We probably won’t know for two years, but we can observe that it fits the pattern of how people watch TV: People plug their DVD players in and they click the play button. More importantly, iTV fits with how people are using iPods and what they pay for: Apple has sold more than 1.5 billion downloaded songs and 60 million iPods. In less than a year, Apple has sold 45 million TV episodes.
Since co-founding Apple 30 years ago, Steven Jobs has shown himself to be a serial-disruptor. Apple, the company, has not fared as well, suffering severe volatility in its fortunes and a few near-death experiences. Not many companies can depend on a genius CEO to save them the way Apple has. But companies can follow Mr. Job’s strategy of:
– Focusing on what users actually do and pay for rather than what engineers think they might do;
– Zeroing in on only the part of the user experience that needs to be improved.
Radio stations are starting to blame a decline in audience and some station closings to the proliferation of iPods. Satellite radio broadcasters XM Satellite Radio Holdings Inc. and Sirius Satellite Radio Inc. are reporting slower growth and steep losses as consumers weigh the iPod as an alternative to radio in their cars, causing share prices for the two companies to crash more than 40% in the past year.
Apple boasted last week that 70% of U.S. 2007 car models will allow easy iPod connectivity, which will likely accelerate the harsh trend for radio broadcasters.
An important question arises for TV broadcasters and cable companies: How will they prepare for the iPod’s impact on TV?
Michael Urlocker is a chartered financial analyst and chief executive of Toronto-based OnDisruption, a management consulting firm. Innovators, check your Disruption Score at www.OnDisruption.com
© National Post 2006