I was recently at a conference for the top European manufacturing companies. It was a small, informal gathering, and no shabby affair, held at a beautiful English country house and attended by the CEOs of Europe’s top businesses.
One of the major topics of debate was the recent move to the idea that real margin was no longer found in making something, but rather in servicing it.
This approach was made famous in manufacturing circles and by, amongst others, Rolls Royce, who rather than sell you a jet engine (time to soup up the Honda?) would instead sell you power-by-the-hour, an all-in package that included servicing and so on.
As the debate bounced back and forth, it turned out that, just as in the technology world, Apple is also a demigod amongst manufacturers.
Then a dissenting voice ventured: “Apple may be king now, but it’s only as good as its last product. Look at Nokia”.
I think this statement is very wrong, but the example serves to illustrate the difference between Apple and Nokia, and is a fascinating signpost to what is happening to the CIO’s world.
Actually, the iPhone 5 could be no better than ok and there is still no way I would switch to those sleek new Samsungs. The reason is my iTunes library, and all that goes with it.
It would just be too much hassle. Then think about all that icloud data, and so on, and it becomes clear that although the excellence of Apple’s products is stunning the change, the real power is for Apple to own our data.
They have excellent seasonal products, and use them as a tool to own a more perennial play. Once our data is owned, the cost of switching becomes so high that they effectively own us.
The other king in this own-the-consumer-data playing field is Facebook. Our photos, comments, social links, events and actions are all in one place.
Unlike Apple, not only is it difficult to move the content, but also, the second order effect is that our friends have to also elect to move.
Sticky! This stuff is superglue! Whilst fortunately for my sanity, and indeed my soul, I am not an investment banker, I do know that Facebook is worth a lot of money.
Whether that’s n billion or n+1 billion I have no idea, but that superglue is worth a lot.