If, for some reason, we make some big mistake and IBM wins, my personal feeling is that we are going to enter a computer Dark Ages for about twenty years. - Steve Jobs
May be we did enter a dark age, for almost 20 years, no iPod, iPhone or iPad came - no hardware manufacturer or electronics company launched differentiated products which people would aspire to buy, but the price of the PC dwindled over these two decades which in itself lead to a much wider proliferation of the PC. Had the PC remained the high price aspirational device which Apple wanted it to be, probably we would have had lot lesser people with computers in their homes.
How did the PC price revolution happen? Apart from the lowering absolute price of hardware components, it happened as a result of breakage of the vertical integration model (followed by Apple where it facilitates all aspects of its hardware and creates its own operating system that is pre-installed on all its computers). Today's PC market is fierce in its price war because from Dell to HP to your neighborhood computer dealer- there is no dearth of assemblers of hardware and software into a PC.
The first hole in the vertical integration market was punched by Microsoft by creating DOS / Windows operating systems which were not tied to a given hardware platform and given the proper device drivers could work across a jigsaw of hardware designed and manufactured by different manufacturers.
The second hole was punched by Intel which provided a huge range of multipurpose microprocessors which could be mixed and matched with a variety of components to 'assemble' a basic PC. What Intel did was to change the game of innovation dependent price discovery into logistics dependent price determination. Computer companies (or assemblers) did not need to invest in developing processor technology - they could simply buy it off the shelf. The final price of the PC thus dependent on how efficiently you can procure and assemble the hardware rather than how 'expensive' (or cheap) your processor development process is.
Wintel as Windows+Intel model is called opened doors for players like Dell, whose core competence was logistics and not technology, to play in the field of computing equipment. The Wintel model was of vertical disintegration - many sellers (of hardware components), many buyers (of computer equipment and OS) resulting into happy consumers.
Recently the mobile phone market has also undergone a similar revolution. Till 2007, players like Nokia, Motorola and Samsung who followed a vertical integration model were monopolies in certain markets like India. However, according this article from the Forbes (source: IBN7), MediaTek a Taiwan based startup emerged as the Intel of mobile phones:
MediaTek offers a platform for these (local) brands to create ever cheaper mobile phones crammed with features. MediaTek realised quite early that the huge difference between manufacturing costs and selling prices for well-known phone brands — like Nokia — was not sustainable. So it cobbled together an integrated design-plus-hardware offering that allowed upstart entrepreneurs to literally dream up their own phone designs by mixing and matching off-the-shelf components.
Overnight, mobile phone technology went from being a differentiator for the Nokias, BlackBerrys and Samsungs of the world to a commodity available to anyone with a ticket to Beijing and a chequeThus local mobile companies like Macromax and Maxx in India were able to change the game from 'technology edge' to logistical and marketing edge. "In fact, the pendulum swung so far that innovation began to be led by the newer players. Unrestricted by global supply chain, brand or regulatory requirements, they could create phones for customer needs that a big company like Nokia would consider too niche or transient."
The question I asked immediately is - where is the Microsoft of the mobile phone world. And as this question was running through my nerves, I read this line in the same article: "Agarwal [Ajjay Agarwal - CEO, Maxx Mobiles India], meanwhile, is introducing Google's Android-powered smart phones in September starting at a price point of Rs. 8,000."
Indeed, the Google Andriod, the open source OS for mobile devices is the equalizer for small mobile phone 'shops' to assemble their devices and take on giants of the smartphone world. Apple is to the world of mobile lifestyle devices what Nokia was to phones. And just what Microsoft did to PC's, Android is doing to phones & smartphones. So Mr. Agarwal (quoted above) is bang on, he can destroy Blackberry, iPhone, HTC etc. hegemony by playing the Android game.
And it does have to end at phones now - this phenomenon will spread over to all kinds of mobile devices which Apple and the likes of it are planning to launch in the near future. For example, the successor to iPhone - iPad. What if someone combines the hardware from the Taiwanese company and Android OS - to come up with an iPad killer? Well, here are few companies trying to do this right now!
- http://www.olivetelecom.in/laptop/olivepad/
- http://www.infibeam.com/Pi
- https://www.thewinkstore.com/ebook/index
Related post: The Future of Laptops by Shubham Choudhury
Lead photo by Flickr user curiouslee
Really nice insights.. loved reading it.. perfectly gives insight into how things changed for them and what it takes in building business may not only be product innovation but either or any part of business process even.
ReplyDeleteI really enjoy reading your article. I feel that the success of Samsung tablet PC - Galaxy tab, which has crossed one million sale in the short period in 2010, more and more manufacturers will come forward and at the same time consumer's including Indian consumer will have more option to buy a tablet pc and that too at a lower cost.
ReplyDeleteIs there any dual SIM mobile phone in Indian market which has passed the SAR certification?
ReplyDeleteThank-you
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