Being Right

One of Steve Jobs’ most devastating talents is in knowing when he is right. By he I mean he and his team of talented designers, engineers, supply chain wranglers, and technologists. Standing pat when the alternative is worse is a difficult move to make, but one Apple under Jobs has made a trademark.

Take the iPhone 4 and its famous dropped calls crisis. Jobs responded by delivering a software patch, comparing the problem to other competitor’s offerings, providing a free case to those who’d already bought the phone, and making a deal with Verizon to fix the real problem: AT&T. You could see the resolve in the strategy. This is what we’ve discovered, this is what we will do, we bet you’ll stick with us. He was right.

Same tune with the record companies. Did they want to continue to hemorrhage revenue and destroy the rationale for building support for emerging talent? Or did they want to accept a strategy that would give them some help in transitioning to a digital future at the cost of a powerful partner that sometimes seemed like a gatekeeper. Underlying the calculation was the realization that no one else in the technology business stood a chance of routing around the cartel and going direct to the audience.

Over the years since he returned to Apple, and even before with the NeXT machine, Jobs laid down markers from which he would not retreat. Floppy disks were an easy call, as audio and video files overwhelmed the format. CDs were next, followed quickly by DVDs, as TV and film media blew out the physical storage model. But as with WiFi on the iPhone, the introduction of networked storage as the default medium drove the buildout of those technologies.

It took some heavy lifting to get AT&T to let WiFi into the base platform. The carrier correctly concluded that it would put pressure on its cash cow SMS, and exacted limits on 3G bandwidth usage for downloading music, video, and apps in return. Even so, email and web surfing blew through expectations, forcing the company to build out its network as fast as it could. Antennagate was in reality more about the transformation of the phone to a mobile computer.

Once Android phones showed the same usage patterns, Jobs kept the pressure on with the iPad, rebooting the PC as a network-centric device sans DVD drive and even an addressable hard drive for all intents and purposes. Again the exclusion of Flash was a stubborn event at first, but soon it became clear that Apple was redefining the laptop OS around a new platform, the app, which wrappered around the browser and not the other way around. By excluding plug-ins and at the same time opening HTML 5 as the downlevel dev environment, Jobs took advantage of the Android competition to raise the bandwidth stakes yet again.

Much is made of the AppStore requirements for taking 30% of subscriptions, but By preserving the HTML 5 alternative Jobs in effect markets the app model by comparison. iCloud weakens the Android open argument by untethering downloading from the desktop machine, while simultaneously destabilizing the whole concept of desktop and eventually laptops as well. Floppy, disk, 3G, OS, file system, records, downloading — each lynchpin is deprecated in favor of a cloud-hosted advanced rich client platform. Most impressively, Jobs stuck to a premium pricing model until the rest of the market was forced to overtake and lose to Apple’s clout with volume suppliers.

Recent events have underlined the strength of the innovate, release, stand pat model. HP’s surrender on hardware is as much about cloud computing as it is about the iPad, but Google’s Motorola acquisition is a clear signal that audiences will not abandon apps. The collapse of the television networks was already underway as the studios sought to avoid the record companies’ fate, but the iPad sent it over the edge.

This week alone, you could watch the Libya coverage over Al Jazeera, CNN via authentication to one of the satellite or cable services, and the rest over Slingbox — all on the iPad and iPhone. Spotify delivers the music business, HBO Go its premium content, and the rest over Netflix, Hulu Plus, and Slingbox. AirPlay even pushes it back up to the big screen, putting pressure on Sony and the other TV manufactures to align with Apple or risk missing the last stage out of Dodge.

Underpinning all of these pivots is the separation of technology from strategy. Google has shown it can produce fantastic synergies with the accumulation and application of big data. But what it has so far shown no aptitude for is aligning the creative industries with the network effects of realtime. Google TV remains a question mark because it’s clear the networks will have none of it. By contrast, Apple TV continues to build a head of steam because it disappears into the woodwork of the content and workflow strategy of the iOS platform.

More than anything, Apple TV is a WiFi hub for iCloud. You don’t need to be convinced about Apple TV because you already have it. Jobs is in the middle of the TV takedown, not at the beginning. Today I have to make a conscious decision about switching from HDMI 2 to 3 to get into the Apple TV world. But if the news networks flip to the iPad, if Slingbox turns cable into an iPad switcher, if AirPlay works across all those apps, if iOS 5 delivers push notification routing, oh wait a minute, it really is Apple TV. Jobs was right, all along.