There is a great piece in the Guardian today on the new vertical rage. The editor and analysts point to the IPOD’s success as a key indicator that a vertical model will wipe out horizontal plays. They compare this stream to the old IBM approach back in the 70’s and early 80’s to make everything in a stack to deliver to the customer. As customers of the AS/400 well know, there can be a good deal of value in the simplicity of one-stop shopping.
Its a great question — Does providing a solution require the vendor to figure it all out or to provide an ecosystem in which others can contribute — ala the PC and software vendors?
It clearly is not an either or, but it does raise the question around complexity. Do the add-ins mask the complexity by providing the necessary extensions to the core technology. For ecosystems approaches to work, I think there are some critical fundamentals that must be at work. The PC board business in the 80’s is one such example, whereas the pre-Apple IPOD world was not.
- The core nervous system of the ecosystem must be open. The IBM PC system board ala Intel was open. Any hardware company to add in their boards to expand the power of the PC.
- There is a standard that dominates as the core nervous system that everyone writes to. The Intel motherboard quickly dominated the PC market and made it easy for board manufacturers to write to it.
- There is economic justification and value created by the add-in. That was clearly the case in the board business as additional disk, memory, color, etc. required the add-in hardware.
The pre MP3 business did not fit this model entirely. While the everyone had centered on the MP3 format as an open standard (Points #1 and 2), there was no economic justification for the add-ins and the content providers did not contribute to the ecosystem. The extensions in the MP3 business were all freeware and shareware. Rippers, taggers etc. were not stand alone businesses in their own right. The content providers refused to participate in the ecosystem.
If you wanted an MP3 file to play on your MP3 player legally, you had to rip it and tag it yourself. Apple eliminated this complexity by being the trusted intermediary to the public and the content providers, thereby eliminating the complexity. They became the IBM AS/400 to the music listening public. One stop shopping — problem solved.
Before we all jump on the vertical bandwagon, these and probably other points need to be taken into consideration.