From Stratechery:
...Apple’s Sweet Spot
Steve Jobs’, in his last keynote, framed that slide as a new direction for Apple after the company’s brilliant digital hub strategy, introduced ten years prior:
In fact, though, Apple was building Digital Hub 2.0, with the iPhone at the center:
Sure, iCloud kept files in sync (usually), but the iPhone was the
juggernaut it was because it hit the perfect sweet spot of company,
market, and value chain:
Company: Apple from the very beginning has been
premised on the idea of integrating hardware and software, and the
iPhone was the ultimate expression of that premise.
Market: The smartphone market was the best market
technology has ever seen: not only did everyone need a phone, but in
developed countries carriers subsidized top-end models because they
drove higher average revenue per subscriber. Moreover, because a phone
was something you took with you everywhere, there was far more value
placed on non-technical attributes like fit-and-finish and brand.
Value Chain: Apple’s integration delivered
sustainable differentiation in the smartphone value chain, forcing every
other element, from suppliers to network providers to app makers to
modularize themselves around Apple’s integration.
The result was the most successful product ever.
Google Search’s Sweet Spot
Given that Google is the second most valuable company in the world
(after Apple), it is quite clear the company has found a sweet spot of
its own. Indeed, Google Search ticks the same boxes as the iPhone:
Company: Google is built around the idea that
superior technology is all that matters; that was certainly the case
with search, which brilliantly leveraged the connectivity inherent to
the web to make itself better; unlike its competitors, the bigger the
web became, the better Google itself became.
Market: The truth is that the best technology does
not always win; what made Google search the dominant force that it was
and remains was the openness of the web. The less friction there was in
the traversal of information the more that sheer technological prowess
matters.
Value Chain: Google is the king of aggregators
because, when information shifted from scarcity to abundance, discovery
became the point of leverage, and Google was better at discovery than
anyone. That allowed the company to integrate end users and discovery,
making search the single best place to advertise for all kinds of
industries.
Building truly transformative products requires all three: a company
that is the best at serving a market at the point in the value chain
where integration can drive sustainable profits.
Google’s Differentiator
Last year, after the company’s first ‘Made By Google’ event, I framed
the company’s hardware efforts in the context of the search business
model. Specifically:
A business, though, is about more than technology, and Google has two
significant shortcomings when it comes to assistants in particular.
First, as I explained after this year’s Google I/O, the company has a
go-to-market gap: assistants are only useful if they are available,
which in the case of hundreds of millions of iOS users means downloading
and using a separate app (or building the sort of experience that, like
Facebook, users will willingly spend extensive amounts of time in).
Secondly, though, Google has a business-model problem: the “I’m Feeling
Lucky Button” guaranteed that the search in question would not make
Google any money. After all, if a user doesn’t have to choose from
search results, said user also doesn’t have the opportunity to click an
ad, thus choosing the winner of the competition Google created between
its advertisers for user attention. Google Assistant has the exact same
problem: where do the ads go? ...
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