Attention, device makers: Hardware alone isn't going to cut it anymore. In the last week, I've heard this from Steve David, a senior advisor at Boston Consulting Group. I read it from Gartner's John Barber in this EE Times news story, Gartner: SoC Makers Must Include Software. And I've seen it first-hand in the iPod nano I recently received as a birthday present.
Gartner's Barber, speaking at a Gartner Dataquest semiconductor industry briefing in San Jose, warned system-on-chip makers that "hardware will become more and more of a commodity," and added: "The key differentiation is in the software."
David of Boston Consulting was speaking at a half-day CXO summit in New York last week entitled Mastering the Real-Time Web. As part of his presentation, David mentioned design firm IDEO, whose output includes the first Macintosh mouse, Palm V, and Humalin insulin pen. IDEO, David said, takes goods and services, then "wraps them around" a product. As an example, he compared two music players: Rio and iPod. Rio sells a perfectly good MP3 player. But what Apple really sells, according to David, is information and content.
As I mentioned, I've been fortunate enough to snag a hard-to-get iPod nano. I've found that the nano, like all Apple products, is more than just a product; it's also the key to a community that, seemingly, has been waiting for my arrival. Now I not only have a nano, but also an iTunes account...e-mails from Apple suggesting new content I might like to download...an ecosystem of add-on products to choose from (protective skins, chargers, headphone-cord winders, etc. etc.)...even a special floor just for Apple products in J&R Computer, my preferred local retailer here in New York. The iPod nano is not just a product; it's an experience.
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