The Apple CEO's recent statement to the media got lost among the noise of Google phone hype, 3D televisions, and the flood of 2010 predictions coming from market commentators. Although Jobs' statement was as plain as vanilla, it was probably the most profound forecast of the year and deserves some analysis. When announcing that the App Store had surpassed 3 billion downloads, Jobs finished with his crystal ball prediction: "We see no signs of the competition catching up anytime soon."
Google nexus one phone
But Steve, what about Google's latest attempt at an iPhone killer, the Nexus One? This super phone is lighter and has a better screen than the iPhone. The Google Voice capabilities are revolutionary. Shouldn't we be worried about these features? Hasn't the competition already caught up? Unfortunately for any company that considers itself a threat to Apple, Jobs isn't talking about features. If only it was that easy.
To compete with Apple, someone is going to have to scale a gated community. No one who lives in a great neighborhood wants to move. Apple customers feel the same way. The Apple community provides benefits beyond minor features of a single product. So what would a competitor have to do to disrupt this trend?
1. Produce multiple products. Single product companies won't be able to keep up with Apple. Ditching my iMac, my MacBook, my iTunes account, my iPod and my iPhone to switch over to RIM's BlackBerry just because it has a 5-megapixel camera isn't going to happen.
2. Earn brand trust. The latest release from Google should have been called the G2, but since the G1 was such a bomb that name can never be used again. Now it's the Nexus One. Any bets that we'll see a Nexus Two? Consumers who have been burned by prior Google phones will be reluctant to come back.
3. Produce multifunction devices. The iPhone brought smartphone expectations to a new level. The gadget was no longer used just to make calls but it was now an Internet browser, iPod, gaming device, camera/video recorder, etc. This is the reason why the Apple tablet device will take out Amazon's Kindle. A sole e-reader doesn't stand a chance against a multi-function device.
4. Combine seamless software (and software updates) with the hardware. Jobs saw first hand the power of iPod plus iTunes, and now we're seeing it in a bigger way with iPhone plus App Store. If I bought a Palm Pre, I would be stuck without seamless integration to iTunes. If I bought a Motorola Droid, I would be stuck with the old version of Android while the Nexus One users get the upgrade. Mixing and matching hardware with software gets too complicated in today's world of tech.
5. Have multiple distribution channels. If you want to compete with the Apple community, you'll need a strong physical retail presence as well as a strong online presence. Consumers like to handle the product and then compare prices on the Web. Allow them to do it. Once they have the product, they need wireless distribution of additional software.
6. Turn a profit. Any business model that tries to compete with Apple must produce a profit. Rumors spread that Google wanted to offer the Nexus One for free by reaping the profits from ad revenue accrued from the various Google software offerings. Now that would have made a splash! Too bad they couldn't pull it off. You can't cheat to beat Apple, because at the end of the day, it's all about making money.
I think Jobs chooses his words carefully and he wouldn't make an unfounded statement. As you hear the media talk about tablets from Hewlett-Packard or phones from Google, remember that these six elements must accompany these products in order for them to have lasting success. As for me, I'm teaming up with Jobs. My one prediction for 2010 is this: "I see no signs of the competition catching up anytime soon."