Is Steve Jobs Bill Gates 2.0?

49 Comments

Yet another masterful Emmy winning performance by Steve Jobs, which met most if not all the expectations of the Mac faithful. GigaOM readers were once again proven right, and Apple launched a movie download service, albeit a watered down version than what most had expected or imagined. (I was wrong, in betting that new widescreen video iPod, which I guess will be unveiled in the next Macworld Show in San Francisco.)

But more than the new products, what was amazing is the increasing similarity in Bill Gates 1.0 and Steve Jobs 2.0. (I speak metaphorically – Bill Gates represents his awesome money machine, Microsoft, and Steve Jobs is the new money machine.) Before the Macheads skin me alive, and Windows zealots call me biased, please let me say, it is a compliment of sorts for the two titans of computing.

So why is Steve Jobs is Bill Gates 2.0?


The anti-DRM crusaders see Steve Jobs (because of iTunes) as the antichrist, just like anti-monopolist people saw Bill “Microsoft” Gates as devil incarnate. (Okay, that’s just a warm up pitch.)

Bill Gates learned early on that controlling the platform is the key to future profits. Steve Jobs 2.0 gets that very well. The iTunes and iPod control of the digital media/convergence markets is quit akin to the Windows domination of the PC business. Microsoft knew that the profits were in selling software an applications and not the hardware, and they let everyone else duke it out in the PC market.

The digital media reality is quite the opposite.

Apple knows that after you are done giving out Hollywood/Music industry its cut, pay for infrastructure and distribution, you are left with little in terms of margins. However, you can make a lot of money on iPods, which is one of the main reasons why Jobs is keeping a tight control over the devices. Let me elaborate – when the PC revolution was in full swing, applications such as Microsoft Office and Quicken sold the hardware, and helped establish the platform, Windows.

(We Mac users remember the days when our productivity software cried for help, at a time when there was a developers’ exodus!) In the post-PC, device world, content is what sells the hardware, at least for Apple. More music, more movies, more television means iPod becomes da platform. This photo from Engadget says it best.

The iTV streaming box announcement to me was a Gatesian moment. The device is still in “beta” and is not going to be available for another few months, perhaps longer. Add to this the harsh truth that Steve could only get Disney (like they have a choice) to commit to the iTunes Movie Store; what you see is a Microsoft type strategy of chilling the market with a yet unfinished product, and get everyone scared shitless. The Barons of Redmond used to do it so well, before their empire started resembling the Roman conquests.

And if you wanted more Gates 2.0 comparisons, well the man wore a shirt, a red one on top of that. How un-black turtleneck is that?

Photos courtesy of Engadget/AOL

49 Comments

afa

I believe the reason he previewed iTV at this time is so that people wouldn’t be so disappointed that Apple only released refreshed iPods and a new movies service.
Also, as Steve said in the keynote, so that people may have an idea of where Apple is headed and to complete “the story.”

RetiredMidn

Maybe Steve is really Steve 2.0. People act like he’s never announced unreleased products. Didn’t he just demo Leopard? How about the iMac, first announced in early May ’98 and not available for purchase until mid-August?

OK, the real point is that the iTV announcement appears to be aimed at getting people to wait for iTV rather than investing in alternative technologies (like what?). This is not uniquely Gatesian.

Alasdair Allan

What I’m most surprised about is the lack of TV tuner in the iTV, surely if you’re going to plug this into your TV you would want to be able to record from it? So does the absence of this obvious feature make Steve a genius or an idiot? Track record suggests genius surely? So what does he know that the rest of us don’t, he seems to be betting the farm on video on demand, but everyone else that has tried that has failed. Odd choice…

brodie

steve actually wore a black button-down shirt. still weird, but not as weird as the article said with a red shirt! :-)

Brian

You don’t think videos will be sold? You’ve never felt like watching a movie at midnight when everything is closed?

Instant Gratification is the name of the game.

$2.00 for gas, $4.00 for rental, and an hour of time. It’s probably worth the extra $4.00 so you can watch it and get back to the blogs.

Jonathan Sidego

@”Me”

I think you’re misinterpreting was Om said.

“because he is taking a page from bill’s strategy book and applying it to a much larger market opportunity.”

That doesn’t have anything to do with market share, revenue, profits or assets.

What he’s saying is that the opportunity in this market is significantly larger than what Microsoft had in the early days of the PC revolution.

What Om said doesn’t even pit Apple and Microsoft against each other. Just saying that Apple’s strategy is similar to early Microsoft’s.

Om Malik

Me… actually in iPod the market share for Apple is as dominant as the windows on the desktop. perhaps that point did not come through in what i wrote.

on the financial metrics, it be nice to compare the two companies.

for fiscal 2006, microsoft had sales of $44 billion + and net income of $12.6 billion.

Apple in fiscal year ending sept 24, 2005, had sales of $13 billion and net profit of about $1.3 billion. In the three quarters since then, their sales are $15 billion + and net profit is is to the tune of $1.5 billion +.

So $20 billion in sales and about $2 billion for fiscal 2006 is not bad. clearly as not high as Microsoft, but then Microsoft doesn’t sell hardware.

Microsoft has about $50 billion in cash, apple has $11 billion. For a company with less than 4% market share Apple seems to be doing just fine. It is doing better in the “digital music” business, and their approach is remarkably similar to Microsoft. in fact it is a compliment to the business acumen of MSFT.

but you are right in bringing up those very valid points. thanks

Eric

Honestly, how many times have you looked at the DVD extras? I rarely do.

That being said, I am going to buy the Incredibles, plus preorder Cars. I wish that iTV was out now, but seeing as it probably uses wireless N, Apple is waiting till it gets a little closer to being standardized.

Matt

Out of curiosity, why does everyone continue to bash the resolution of the new movie download service (“a 640×480 movie for $14.99”, “half-baked lo-res”)?

Last time I checked, standard DVD (MPEG-2) resolution is 720×480, so the resolution of Apple’s download service is in fact, very comparable to a DVD.

Perhaps next to a brand new Blu-Ray or HD-DVD disc, the Apple downloads may look less appealing, but the loss of 80 horizontal pixels doesn’t bother me that much.

Me

“because he is taking a page from bill’s strategy book and applying it to a much larger market opportunity.”

Thats gotta be one of the most ignorant statements I’ve ever heard. Apple doesn’t have crap for market share on Microsoft, company wise Microsoft dominates them on profit, revenue, assets, everything. Apple fanboys are an ignorant bunch I’ll give you that.

Om Malik

Aaron,
excellent point. i think by now it is end game for the download music business. Apple has become the platform, it has recognized the shortcomings of the model and learnt how to thrive with it. the numbers (both in $ & cents and sales of actual songs and devices) just speak for themselves.

i call it a gatesian move because they basically showed their cards, and said, lets play truth or dare. i think this is going to be a very interesting and long fourth innings.

the first was launch of mp3 players, which was Rio’s game, second came hard disk players and some indie music services along with napster “take whatever you want model.” third inning was iPod and iTunes. now lets see how it shakes out in the future.

apple still makes devices that people want, though after my current macbook pro experience, i am going to wait and be smarter about how i spend my dollars with them. i still think the video ipod (the new one) is not a good enough reason for me to upgrade.

Aaron Huslage

I love your sarcasm, Om. I’m just concerned about the culture of people putting down Apple lately for whatever they do (or don’t) announce or release.

Just last week, the blogosphere was aflutter with news that the iPod was going down and that Apple was hitting its top. Oh, let’s not forget “Apple doesn’t talk enough about their plans” banter.

C’mon guys. I’m all for criticism, but this is plain silly.

Om Malik

elmomo, emmy performance for acting so well without announcing anything major… or at least making us believe that it was important. so i am in agreement with you… my sarcasm didn’t work. damn! must try harder.

Eric

Yuvamani got it right. Apple isn’t following Microsoft’s playbook, they’re following Sony’s.

And that makes sense. Apple doesn’t sell PC’s, they sell consumer electronics (that happen to do a lot of what PC’s do). But it’s a fundamentally different way of looking at it.

I have to disagree with the rest of his comment though. There’s nothing here that’s going to usurp Netflix or DVD’s. The thing about these download services is there’s still no compelling reason to use them – other ways to get movies remain far cheaper and more convenient.

Nitin Borwankar

I think all the media hype has completely obscured the real presentation which is “Steve Jobs is not sick”.

The rest of it was covering fire. And the media and everyone else seem to have bought it hook line and sinker.

It is far more valuable to Apple to squelch the perception that “maybe Steve is not well” than to present a half-baked lo-res movie download service at full DVD price. The subliminal product placement – a healthy Steve was the real thing being sold.

And they pulled it off masterfully. No one is talking about how he looked this time around, are they.

Showtime, indeed!

Yuvamani

Apple is trying a digital media dominance strategy that makes it the new age sony. Interestingly the hardware itself is made rather commoditized by samsung/HonHai etc. with apple adding and taking all the margins of the value-add.

However the media download itself while not giving margins will do so eventually. The margins in the iTunes music store are blocked by credit card transaction fees (think about fees to authorize a 1 dollar transaction). The same does not apply to a purchase of a 10 dollar movie.

The question is will steve allow other companies to allow downloads onto the ipod. Doing so is in his own interest. iTunes is still very price competitive and is under no huge threat by say unbox. iTunes also wins over other download services in sheer cool. Let the people who want choice have it.

elmomo

Emmy performance? a refreshed MP3 player, a 640×480 movie for $14.99, and a $300 wireless device next year? OMG! If that is exciting to a person then honestly I don’t know what to say.

Michael Markman

I have to agree. It’s all in the slide, isn’t it? “Apple is in your pocket.” (with a siphon!)
Remember the old Microsoft mission, “a computer on every desk.” Apple’s new zeal to conquer rooms, pockets, vehicles, armbands, and more leaves that far in the dust.

Scott

Also, don’t forget that when working with the movie and music moguls (MMM’s?), there’s only going to be so much ability to immediately get what Apple wants. It’s going to take time.

And yes, Apple is in business for profit, not for altruistic reasons. That shouldn’t surprise anyone.

Tom Mornini

Steve Jobs is actually Bill Gates 1.0, except Apple management forced him out because they thought he was wrong.

Who’s wrong now, Mr. Sculley? Did you make a good choice back then?

He was forced out long before he lost the first round to Bill Gates.

Disagree? Even with that gigantic blow, he’s back and gaining on Bill, and his mid 1980’s platform (NeXT) is the platform that is powering Apple today.

pwb

iTunes remains, by far, the tightest client (vs. Yahoo, Rhapsody, Napster and WMP/Urge).

I think Jobs really mis-played this one by going purchase-only. Movies are very different from music. Most people watch a movie once. The video quality is inferior to DVD and you don’t get any DVD extras. Apple will need to offer rentals and/or Netflix-style subscriptions for this to be a hit. However, as long as the competition remains Windows-only, they have no chance either.

The iTV announcement should not be under-estimated. Granted it’s essentially Video AirPort Express, it signals a strong move into the living/family room. If the iPhone rumors are true, 2007 is going to be another interesting product year for Apple.

Comments are closed.