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Re: Apple to ditch Intel?

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Tim Wilson
Re: Apple to ditch Intel?
on Apr 4, 2018 at 9:48:34 am

[Scott Thomas] "It took Spotify around 7 years to amass that many subs. Will Apple continue that trend?"

I've seen that chart before, and it's completely misleading. It took Spotify 7 years, because that's how many years they'd been doing it when the chart was made. 😂 The first few years were pushing uphill against the idea that renting music was a good idea at all, while Apple and Amazon were pushing as hard as they could to discredit that notion, and kept jamming on paid download ownership. Steve Jobs was banging on this point at pretty much every public presentation for the last years of his life. Renting music: bad. Owning music: good. Spotify had their fight cut out for them, and they did it.

Spotify was also fighting the labels who wanted to keep them out of the US. So they were locked out of not just the world's #1 music market, but pretty much all of the top 5 markets in the beginning. Heck, it started as a Sweden-only enterprise, because that's all they could secure the rights for. They did it one country at a time, over a period of years, self-funding the whole way.

Apple on the other hand did what they so often do, show up late when the concept has been proven, and the demand is high. They're the richest company in the history of humankind, poured billions into a fast start on a global scale, and kind of achieved it, but honestly, really kind of didn't.

More granular charts note that the gap between Spotify and Apple has been increasing over time, not decreasing. That's both the number of subscribers, and the rate of acquiring new ones. Part of the reason for that is the many millions of Mac users who'd already invested in Spotify, where playlists rule. In fact, there are individual Spotify playlists that have more subscribers than the entirety of Apple Music! There's really just not much of a race there right now on a feature level, or on user attachment. This has always been where Apple shone most brightly, but they whiffed this time.

Apple knew that they blew it, which is why they spent billions on Beats, a company created with just one strategy: prove themselves to Apple as quickly as possible and get bought out. It worked!

But it was still too late to truly close the distance beyond the core "if ain't Apple, I ain't buyin' it" crowd. Millions of Apple customers around the world had already said, "This is stupid. Apple has said they're not gonna do this, that buying music is the way to go, but I think they're wrong. I got tired of waiting for Apple to do the right thing with streaming video, so I stopped using iTunes and went to Netflix. Time for me to do the same with Spotify and music. Spotify works great on Mac, works great with all my Apple devices, so I'm in."

Apple hasn't made a compelling offer to switch any meaningful number of those folks back. They tried to jumpstart this with music, it didn't succeed all that well, so they're trying to do it more organically with video, by spending Netflix-level dollars, to create a fraction of the content that Netflix is, taking much longer to to do it. Barriers are low to adding new services. If Apple does something worthwhile, some Netflix folks will add Apple to the mix, too, the same way that they also do Hulu and HBO or whatever....but Apple's not going to CONVERT hardly ANY of those folks. Netflix is going to keep widening that lead. Same with Spotify.

That's why the one thing that might change the game for Apple even a little is Home Pod.

Amazon is of course an also-ran in this race in some ways, but Prime is much more than a subscription music service, or a movie service, or a delivery service. It's a platform that compresses the distance between impulse, expression of desire, and fulfillment to the shortest possible interval. Maybe it's seconds, maybe it's a couple of days, but THAT's Amazon's game. Impulse fulfillment in just a few words. Dim the lights. Ship me some olives. Play my Rainy Day playlist. Tell me the weather forecast.

Google's got the search part of that nailed, but not the impulse fulfillment.

Which is how Echo has been the driver to Amazon doubling Prime year on year. It's inconceivable to me that most people will see this in action and say, "Nah, I'll wait for Apple to do it", because Apple's is still going to be limited. It won't include nearly as much video for years, it won't include ANY meaningful shopping, and has a long way to go just to catch up to the basics. (Siri is not the same, sorry.)

The most Apple can hope for is that Home Pod serves as a compelling-enough front end for Spotify and Prime to capture the hardware money from those folks, at which point Apple can try converting them back to Apple software...although lotsa luck with that. Apple hasn't made much of a dent AT ALL in Spotify's loyalty among Mac customers, any more than they will with Netflix folks when they make that move.

But it's a shot that they don't have just yet. They will, though, and I bet they'll have it before Spotify does. It won't be enough to change their standing with Spotify, though, not ultimately.

In the context of my previous post, this area of inquiry is only interesting to me because of Home Pod as a place that Apple needs to put a ton of extremely sophisticated chips, loaded with Apple-specific programming, and they need it yesterday. Intel will take too long, and the solution will be incomplete, so this is one of the things that Apple is going to do with the chips that will keep that that first graph that Greg posted growing in the same direction -- yes, Macs growing, but the rest of Apple growing much faster. Places that the puck has not yet been.

I can honestly say that I spend as much time researching this angle of consumer behavior as I do almost anything in my life. You won't meet many people more versed in this than I am...although I'm happy to point you to sources for all this, to folks who know even more than I do....

...but to me, it still pales next to what Apple is going to do with using AR and AI as the front end for transforming the human-machine-world interface with cars, and how abandoning Intel is at the absolute heart of that. As I mentioned in my previous post, when Patently Apple calls this the "patent of the decade", I think they're wildly underselling it. I think it's the Patent of the Century.

No matter how big music, computers, and devices seems to you for Apple's chip story, I'm tellin' ya, this AI/AR automobile stuff is much, much bigger. Please read those articles I linked previously, and prepare to be dumbfounded.

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