Thursday, July 26, 2012
iPhones and outHouses
Why does Apple dominate the market for smartphones? Because Apple made a system first. Unlike other phone-makers, Apple had an existing system (iTunes) to distribute content.
Broadly speaking, businesses grow and succeed best when they are more like landlords than merchants ... when the customer has to keep paying something like rent at frequent intervals to stay connected to the system. With a well-organized system, a two-way loop develops. The customer is unwilling or unable to switch to another system, and the business constantly learns about problems or bugs.
Bell Telephone was probably the first big player with an all-rent system. You didn't own your phone or the wires, you just paid Bell every month for the service AND the instrument.
Edison used the same trick: he sold you the electricity, and he also sold or rented the appliances that used the electricity.
At one time grocery stores, dairies, and newspapers had a similar connection through their delivery systems. You had two-way personal communication with the grocery boy or milkman, which kept you tied to the merchant and gave the merchant feedback on the needs of his customers. These systems have nearly disappeared.
Big systems require government collaboration or assistance, which provides a two-way (often unhealthy) communication with the gov't. Railroads, telegraph, telephone, electricity: all need right-of-way or easements. Apple's system depends on the Internet, which was begun by government; more specifically it depends on microwave communication, which is explicitly licensed by FCC. Apple is able to build its system on the backs of these two gov't systems without paying rent or buying easements. It's a free rider. (In other words, "Hey, Steve Jobs! You didn't build that!")
= = = = =
This got me thinking: What was the first system? Easy answer: Water and sewer. More than 2000 years ago, the Romans, Babylonians, and Mayans had fully-formed water and sewer systems with indoor plumbing.
And what was the last system to be completed? Water and sewer, at least in American cities. By 1970, everyone had electricity and everyone who wanted a phone had a phone. Not so with water and sewer. For instance, a large section of Bowling Green was still using pumps and outhouses in 1969. Some of those outhouses still remain, used as garden sheds. The last urban outhouse known to be 'active' was also in Bowling Green, where one stubborn old lady didn't like utility connections. She had somehow acquired an official exemption. After she died in 1988, the last outhouse disappeared.
Septic tanks are less obvious but far more widespread. My house had a septic tank until 2004; the suburb of Spokane Valley (pop 70,000) was all septic until 10 years ago, and is still being sewer-ized.= = = = =Followup here. ¶ 4:02 AM
Broadly speaking, businesses grow and succeed best when they are more like landlords than merchants ... when the customer has to keep paying something like rent at frequent intervals to stay connected to the system. With a well-organized system, a two-way loop develops. The customer is unwilling or unable to switch to another system, and the business constantly learns about problems or bugs.
Bell Telephone was probably the first big player with an all-rent system. You didn't own your phone or the wires, you just paid Bell every month for the service AND the instrument.
Edison used the same trick: he sold you the electricity, and he also sold or rented the appliances that used the electricity.
At one time grocery stores, dairies, and newspapers had a similar connection through their delivery systems. You had two-way personal communication with the grocery boy or milkman, which kept you tied to the merchant and gave the merchant feedback on the needs of his customers. These systems have nearly disappeared.
Big systems require government collaboration or assistance, which provides a two-way (often unhealthy) communication with the gov't. Railroads, telegraph, telephone, electricity: all need right-of-way or easements. Apple's system depends on the Internet, which was begun by government; more specifically it depends on microwave communication, which is explicitly licensed by FCC. Apple is able to build its system on the backs of these two gov't systems without paying rent or buying easements. It's a free rider. (In other words, "Hey, Steve Jobs! You didn't build that!")
= = = = =
This got me thinking: What was the first system? Easy answer: Water and sewer. More than 2000 years ago, the Romans, Babylonians, and Mayans had fully-formed water and sewer systems with indoor plumbing.
And what was the last system to be completed? Water and sewer, at least in American cities. By 1970, everyone had electricity and everyone who wanted a phone had a phone. Not so with water and sewer. For instance, a large section of Bowling Green was still using pumps and outhouses in 1969. Some of those outhouses still remain, used as garden sheds. The last urban outhouse known to be 'active' was also in Bowling Green, where one stubborn old lady didn't like utility connections. She had somehow acquired an official exemption. After she died in 1988, the last outhouse disappeared.
Septic tanks are less obvious but far more widespread. My house had a septic tank until 2004; the suburb of Spokane Valley (pop 70,000) was all septic until 10 years ago, and is still being sewer-ized.= = = = =Followup here. ¶ 4:02 AM
