From what the bloggers and the critics seem to be saying, this year has a good chance for being the year Microsoft makes good in the mobile arena. The launch of the new Nokia Lumina phone, featuring Windows 8 complete with the vaunted Metro interface, is getting a lot of good press. Even if the launch goes well, while that will be great news for Microsoft, it might be scary news for a lot of others, because the next thing MS is going to do will be to seemlessly connect Windows mobile devices with their Xbox platform.
See, the next war in consumer electronics is not about one product, like phones, media devices or readers, it’s all about platform and lock-in. Apple had a nice bit of lock-in with iTunes and iPods. If people wanted to buy from the great selection on iTunes, they almost had to do so only with an Apple product. Today, the scenery has changed and the lock-in platform has gotten larger. There are mow three peices to the platform lock-in puzzle: online delivery of media, mobile devices and home entertainment. Right now there are a few players who own perhaps 1.5 of the three pieces. The first to get all three will be the winner, of course. Perhaps if you can get two and just a taste of the third, that might just be good enough, too.
Right now, microsoft has the home entertainment portion locked down. The Xbox platform is manuvering itself as the first and last bit of electronics one needs for the living room. It streams movies and TV via Hulu and Netflix, browses the web and I hear it even plays video games. While Microsoft has toyed with media players and media delivery, the partnership with Nokia my prove to be where the real key to the second peice will come from. Creating a seemless link and interoperabilty between them will be an irresistable sell point for a lot of people. Strong enough to ditch the iPhone? You bet.
If this happens, where does it leave Apple? In the next year, things will get a bit more difficult for them, to be sure. The notion of owning music is waning in comparison to renting everything you ever wanted and more from services like Spotify, has diminish the hold iTunes had not to mention other services muscling in on the video aspects. iPhone, while still being the superior device, will continue to see its share eaten away by the diasporia of Android devices nipping at its technological heels and more importantly, undercutting it’s pricing. Finally, Apple’s home enterainment play, Mac TV, still seems to be a product looking for a market.
The upside for Apple is that they’re sitting on an abusrd amount of cash. They could easily buy themselves out of it. But what to buy?
My speculation is that the play would be into the games market. The companies competing within are most ripe for a takeover, compared to other pieces of the puzzle. The choices then would be either Nintendo or Sony. While Nintendo with their Wii platform would be a good play, I think they’d get a lot more from Sony. I would bet that Mr. Cook is far more shrewd of a businessman than an ‘innovator’ and could easily see that there are actually two prizes won with the purchase of Sony. There’s the obvious: Playstation.
The less obvious is the huge inroads into the television market. Apple has been toying and teasing that market for an awefully long time. With the experience and the equity Sony can bring to the table, they could leverage themselves into home entertainment quite easily and locking-in the Apple experience in three areas. Would this mean the Sony brand would go away? I’m not sure, but it should be interesting to watch.