I just completed a webinar on the ROI of in-store mobility for retail, and focused a portion of the discussion on the platform to deliver
the experience, and the devices which retailers were considering for their
in-store mobility strategies. We
performed a poll on the attendees for the event, asking which device was being
considered. Not surprising, Apple came in first with the Apple iPad, and second
with the iPhone/iPod. Android and
Windows represented a fairly small segment. So why am I asking if Apple may be
the next Sony? My response is a single
word “proprietary”.
How many of you can recall the advent of the Walkman, and
the tremendous almost life-changing impact the product had on society as a
whole? Talk about disruptive
technologies!! The Walkman was the
perfect answer to the boom-box of the generation, and not only provided the
mobility required to take your music with you, but also the ability to listen
via high fidelity without disrupting those around you. Sony captured the
hearts, minds, and wallets of a huge share of the market as a result.
How many of you recall the MiniDisc player? Oddly enough, it wasn't until 2013 that Sony
announced the demise of the MiniDisc from their suite of products, although the
company has struggled since the 1990’s to gain any momentum in the space at
all. Why? Primarily due to the
proprietary nature of the discs and the corresponding players (and also the
price, as a MiniDisc player might run you $750 back in 1992). A great technology was ultimately
marginalized.
How about the Sony Betamax?
Back in the 1970’s the Betamax was all the rage (at least for a couple
of years – in a couple of markets). Sony had developed a consumer-level analog
videocassette recorder format, but competitor JVC was worried about how they
wanted to structure the deal, and decided to develop a competing technology
known as VHS. While Sony was not trying
to be entirely proprietary in their approach, there had been a history of prior
deal relate to the U-matic format that made JVC nervous. While the VHS format
came to market later, JVC was quick to license their technology to nearly every
consumer electronics company, which then set the standard. Some have argued
that this happened even though Betamax was the better quality picture (although
in reality this may not have been entirely the case). Regardless, it ultimately
became about the shared standard, and cost of getting products to market based
on the corresponding competitive pricing. Sony once again lost out.
So how about the Sony Memory stick? Remember whenever you bought (or buy to this
day) a Sony digital camera, or some other electronic device from Sony, that you
needed their proprietary memory card? While
there were standards for storage devices such as the SD card, Sony insisted on
continuing with their proprietary format, to the frustration of many users.
Then there was the ATRAC Audio Compression technology of
1993, where Sony insisted on selling their solid-state Walkman using this
proprietary compression, rather than the rapidly growing MP3 open standard.
Is any of this sounding familiar with the Apple
products?
Not only is Apple proprietary with its iOS software, but it
is also proprietary with its hardware devices and peripherals (has Apple not
heard of mini USB or SD cards?). It is also proprietary with its delivery
mechanisms, all centered on the iTunes hub (and yes, I know about corporate
provisioning files, but focusing on the overall Apple ecosystem). While there is no doubt Apple has seen
incredible growth due in large part to their almost maniacal control over the
user experience, one which is best managed through proprietary measures, the
return on this approach has diminished significantly as competing technologies
(Android and Windows on the OS software side, and Samsung, HTC, Motorola, and
others on the hardware side) have begun introducing improvements and/or
specialized devices and capabilities for specific targeted consumers or
industries. The Samsung Galaxy, with its
oversize screen, and even new waterproof and dustproof version, provides a
great example of creativity not yet provided by Apple. While the iPad mini may be hugely successful,
the competition will be introducing even more looks and form factors to
compete.
If the Apple ecosystem had a true Network Effect, where the
value was derived in some form by the network of all others using it, then I
think the story would be different (yes, FaceTime is a step in this direction,
but there are many alternatives). For
example, Facebook provides value in and of itself by the quantity of users on
the platform. I’ve been able to connect with dozens of friends from college
whom I might never had found without Facebook. While the quantity of apps and
music provided by Apple is a motivation, even this gap has closed dramatically.
Ultimately, much of what Apple provides is in the long run simply a set of commodities.
In Q2 of 2013, Android tablet sales surpassed Apple’s iPad
for the first time ever. The Android
operating system for smartphones has been outpacing Apple now for a couple
years (although this bounces back and for a little depending on new devices
arriving into the marketplace). And this is just Android. While admittedly these are the two most
important operating systems on mobile devices today, it is likely ill advised
to count Microsoft out of the picture too quickly – especially in the retail
industry.
The reason for this is competition. I am speaking perhaps less about the
competition related to the operating system, and more about the competition
related to the hardware vendors that have traditionally played in the retail
space. Powerhouses like NCR, Motorola, HP, and even Dell have each carved out a
niche in retail over the last decades, and none of them are complacent in their
approach to competing for in-store and back-office technologies. These same manufacturers are responsible for
a very large part of the software and hardware that runs the retail
organization today, from shipping and receiving, to POS, to back-office
solutions. As many of them cannot
deliver customized versions of Apple product, they have shifted their attention
to Android and Microsoft.
I’ll be perfectly honest here – Microsoft stubbed its toe
badly; not just in the consumer market, but in Retail as well. While their
attempts to introduce more user-friendly software has been a step in the right
direction (first with Windows Mobile 7, and now with Windows 8), the existing
technologies in retail could not migrate to the new technologies; and in fact
even applications written for Windows Mobile 7, will not easily migrate to
Windows 8. So while retailers were using
Windows devices heavily only five years ago, Microsoft opened the door to other
operating systems by not providing a migration strategy for legacy software
solutions. Most can now argue, if my
software needs to be re-written anyway, why not write it for iOS, or Android?
And the vision of one common experience on the PC and tablet still hasn't materialized
in the way most would have hoped, even with Windows 8.1.
That being said, most POS solutions are still operated via a
PC, with mobile solutions still representing a small portion of devices used in
the typical retail store. I don’t see
this changing anytime soon. That is not to say I don’t see it changing in the
future, however, as I do believe it is somewhat inevitable. The ultimate question becomes when, and what
will the state of the software landscape be at that time?
In addition, those software vendors that also deliver
hardware are certainly not inclined to rewrite their software on a hardware
platform that is not their own. So while
many vendors that sell only software have quickly retooled their development to
the Apple iOS, this is not the case with the big players in the market.
In addition, POS terminals typically perform many more tasks
than simply ringing a transaction, and Manager Workstations even more than POS
terminals. While mobile capabilities for these other solutions are likely desirable
in the long-run, I am still left wondering how quickly this conversion will
take. And once it does, does it not make
sense that a common operating system still has validity? One that can run on a PC
as well as a mobile device? If not a common
OS, then certainly a common technology capable of running on both devices
(think HTML5 web applications). Under this last scenario, Apple then carries
less value, but perhaps also less risk. If solutions don’t care what platform
they run on, then Apple is as valid a choice as any, and due to the current
adoption rate perhaps a strong contender.
But this presupposes many solutions providers are writing applications
that are OS agnostic, which unfortunately has not been the case.
Retailers do have specific hardware needs as well. Today’s
POS register still needs a receipt printer, a scanner, and a card-swipe. And while there are many components available
as add-ons to the Apple products, these are not nearly as “built-in” to the
design as certain offerings soon to come out by competing vendors. And with the competitive nature of retail
technology over the years, you can bet this only gets more heated.
So do I believe Apple will fail in the retail industry? No, at least not any time in the near future.
Do I believe they will dominate retail?
Let me think about it while listening to my MiniDisc player or relaxing
to a good movie on my BetaMax while transferring my digital content to my iPad
from my Sony memory stick.
OK, I’ll admit most of these technologies would likely have
been supplanted by now anyway. But perhaps that is my exact point – why isn't
it Sony that did just that?
