I read a ton, and while much of what I read captivates me in the moment, very little gets under my skin, and into my bone's by week's end. These three narratives are the ones that kept percolating to the top:
- The Integrator's Dilemma: There was an interesting article written by Horace Dediu on the topic of 'What retail is hired to do: Apple vs. IKEA.' It basically looks at IKEA's global success, its dearth of competitors, durability, and relativity to the Apple Store model. As a devotee of Strategyn's 'Jobs, Outcomes and Constraints' model, which is one of the primary inspirations for Clayton Christensen's excellent book, 'The Innovator's Solution,' I am a firm believer in the precept of hiring products and services for specific jobs. In parallel, I have have been ruminating alot on how the Internet is changing the job that retail can viably perform from an economic perspective (see 'Retail Needs a Reboot to Survive' at GigaOM), so the topic is near and dear to me. When I net it all out, I am left with a narrative that goes like this. Once upon a time, the premise was that businesses should be horizontal and focused on solving just one piece of the product or service equation, and outsource the rest. The rise of the PC and the growth of Big Box category killers (Comp USA, Best Buy, Barnes and Noble) all seemed to affirm this approach. As the Internet took hold, the idea that this model was universal became conventional wisdom, as Google was all about being open and loosely coupled; and Amazon become the biggest online retailer by (seemingly) building very little, but selling everything. But now, this wisdom is getting turned on its head, as undifferentiated retail is dying, commodity PC makers are dying, commodity mobile and tablet device makers are dying, and the winners are folks like Apple and Amazon and Nike that are the antithesis of loosely coupled. In other words, conventional wisdom is dead. Not only are these companies integrated across their value chains, but they have built into their DNA truly differentiated positions. To me, this is The Integrator's Dilemma. It's not enough to assemble a bag of components. You have to do it in a way that is truly differentiated, which often means, a hybrid of hardware, software and service, which is hard to execute. In retail, I look at someone like Gap as an example of a company that confused brand and hit-making with clear vision, agility and differentiation, and once they stumbled, they never came back. The irony here is that most individuals would get fired for not taking a holistic (integrated) approach to getting their jobs done, yet paradoxically, few companies embrace this ethos, preferring the path of comfort, entropy and obsolescence to the path of discomfort and reinvention. And we wonder why there are so few catalysts for job creation in our economy.
- iTV Disconnects: Ever since Apple analyst Gene Munster starting asserting that Apple was going to build a full-fledged TV set, I have struggled to get my head around the concept (see my analysis HERE). TVs, after all, are low margin, bulky to deal with from an inventory perspective, and infrequent buys. Plus, the actual TV viewing experience is essentially "good enough." By contrast, Apple's last three game changing devices -- iPod, iPhone and iPad -- are the kind of devices that several members of the family might buy, and those same members would likely replace and upgrade every 2-3 years. Moreover, those devices created entirely new experiences to fix fundamentally broken models or to define new ones. In the big picture, the TV set is closest to, but doesn't even look as good as, the Mac model, where you buy 1-2 Macs for the household every 4-5 years. It just doesn't fit that Apple would build a device that looks more like the relatively low unit Mac model when their universe is all about high unit sales and high device refresh frequency. And the only scenario where content is a compelling, high margin business for them as rationale for such a device, is where Apple is partnering with the cable and satellite providers for a slice of the monthly subscribers' bill. But, that's a set-top box play, more so than a TV play, in my opinion. The only other scenario I can theoretically see is where the so-called iTV is really an iWall; a widget device that is flat like an iPad, but made to perform the task of the smartest, most interactive wall frame ever. Yet, the rumors persist. (See also: 'Your iPad Could be Your TV' in MIT Technology Review.)
- Let's Go Buy a House: Felix Salmon did some interesting analysis looking at the correlation between rental rates and mortgages in America, on the premise that when you can get a mortgage (if you can qualify) for equal or less to what it would cost you to rent in the same market, housing values are, or should be, compelling. This truth is even more so when you weigh the fact that the historical market data shows that rents go up pretty predictability over time. In other words, the value of your house today, if nothing changes, should only get relatively less expensive than renting over time. You can even rent it out. So, let's go buy a house!
