If a picture is worth a thousand words, then there isn’t much else to say about the music industry. I will say that the industry had a good run. But over the last decade, they have favored lawsuits over innovation, and insisted on clinging on to a business model that forced consumers to buy a full album when they wanted a la carte songs. I’d say the industry is ripe for change and for new businesses to come in to reap the rewards.
Much has been said about the new partnership between Microsoft and Nokia. At first blush, it’s an odd pairing as both are struggling in the new mobile world order of iOS and Android. Nokia’s smartphone market share dropped from 36.6% to 27.1% in just a year, a trend that will likely continue. Meanwhile, Microsoft recently retooled its approach to mobile, and its new Windows Phone 7 product is now competitive with the likes of Android, iOS and WebOS. With just a few million WP7 devices out in the wild, it has to fight for market and mind share with its new, but successful incumbents.
Given the dominance of iOS and a crowded Android market, Nokia decided to take a different tack and partner with Microsoft to become the exclusive platform for WP7. From a strategic perspective it seems like an odd match as neither company currently has a tremendous amount of momentum in the mobile market. Most analysts thought Nokia would do better with Android, which has been on a roll as of late. So what are some strategic reasons why they decided to go with Microsoft?
PSFK does a great job stimulating the imagination with possibilities. Their newest report, the Future of Real-Time brings together trends from social, mobile, community, visualizations and more. What sets their reports apart is the lateral thinking that tease out novel business opportunities that on the surface seem common sensical, yet are usually hidden from everyday view.
Whenever you hear or read about innovation, it usually refers to some technical development that results in a product that is usually cheaper, faster or better than the incumbent. Disruptive innovation occurs when something much cheaper and usually initially lower quality, comes into the low end of the market as an alternative to more capable, but more expensive options. When MP3s first hit the market, everyone scoffed because the sound quality was inferior to CDs. But over time, the advantages in portability, distribution, size and increases in quality have turned MP3 into the new standard for music. In a similar vein, digital photography was once the poor cousin to its analog predecessors, but within a few years, digital imaging progressed to a point where it is superior in every way that matters. So it’s clear how disruptive innovation works for products. But what about services?
How valuable is an open business model, with an open API and an entrepreneurial mindset? Take a look at this Twitterverse graphic by Brian Solis. There are hundreds of companies that have built startups around Twitter, in 19 different categories spanning mobile applications to social CRM to search to geolocation. Suffice it to say, there is a significant halo around open products like Twitter and Facebook, growing the value of the service exponentially. This allows the core company to focus on platform, what it does best.
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