qRe:_WSJ=8BApple_has_the_right_Business_Model= 2839

Josh McKee

Name? Buahahahahahahahahaha.

And Josh would type any bullpoo nonsense to avoid taking about the substance of the issue:

PERSONAL TECHNOLOGY By WALTER S. MOSSBERG

In Our Post-PC Era, Apple's Device Model Beats the PC Way May 11, 2006; Page B1

For many years, there have been two models of how to make computers and other digital devices. One is the component model, championed by Microsoft. The other is the end-to-end model, championed by Apple.

In the component model, many companies make hardware and software that run on a standard platform, creating inexpensive commodity devices that don't always work perfectly together, but get the job done. In the end-to-end model, one company designs both the hardware and software, which work smoothly together, but the products cost more and limit choice.

In the first war between these models, the war for dominance of the personal-computer market, Microsoft's approach won decisively. Aided by efficient buttemblers like Dell, and by corporate IT departments employed to integrate the components, Microsoft's component-based Windows platform crushed Apple's end-to-end Macintosh platform.

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Walt Mossberg says Apple's end-to-end business model is better than Microsoft's component platform.But in the post-PC era we're in today, where the focus is on things like music players, game consoles and cellphones, the end-to-end model is the early winner. Tightly linking hardware, software and Web services propelled Apple to a huge success with its iPod. Microsoft, meanwhile, has struggled to make its component model work on these devices and, in a telling sign, is using the Apple end-to-end model itself in its Xbox game-console business. Now, Apple is working on other projects built on the same end-to-end model as the iPod: a media-playing cellphone and a home-media hub.

The jury is still out on whether the end-to-end model will prevail in the long term. Many at Microsoft, and some outside analysts as well, believe the new devices will eventually succumb to the component model, and that Apple's success with the iPod will fade, just as its early dominance of the PC market did. Apple officials say history won't repeat itself if the company continues to make great products and avoid the business blunders committed by its past management.

I think the end-to-end model can prevail this time, both for Apple and other companies. Consumers want choice and low prices. But they also crave the kind of simplicity and integration that the end-to-end model delivers best.

Sure, you can get more variety in music players and in online music services if you opt for the Microsoft-based music instead of the iPod system. But the iPod, Apple's iTunes software, and the iTunes Music Store work so well together that users can just relax and enjoy the music. By contrast, the hodgepodge of players, software and online music stores on the Microsoft side frequently have trouble synchronizing between computers and players. Apple sells as many or more songs than the many stores that use Microsoft software.

Critics attack the iPod and iTunes as "closed" and "proprietary," because the songs Apple sells at its iTunes Music Store play only on iPods, and iPods can't play songs purchased from other music stores. But both the iPod and iTunes handle the two most common open audio formats, MP3 and WAV, and the most common open video format, MP4. They work well even if you never buy a song from Apple. And iTunes and the iPod work on Windows computers, not just Macs. So how is that closed?

Even the Mac isn't as closed as its critics charge. It's still designed to work with Apple's own operating system and software. But it can handle all the common files Windows uses, can network with Windows machines, and can use all of the common Windows printers, scanners, keyboards and mice. The Mac gives you the same access to the Internet as Windows. Heck, the newest Macs can even run Windows itself.

You do get a choice of more software with Windows. And that's great for hard-core gamers and users of corporate, or niche, software. But for mainstream users doing typical tasks, the Windows choice advantage is illusory. Mac users can choose among thousands of third-party programs, including multiple Web browsers, word processors and email programs. They can run Mac versions of popular software like Microsoft Office and the Firefox browser. How much more choice do you need?

Microsoft is hedging its bets. It has, in effect, created a little Apple inside Microsoft with the Xbox group. The Xbox team shunned Windows and wrote its own operating system and user interface, and built its own hardware. (The new Xbox was even developed using Macintosh computers.)

Some Microsoft officials dismiss this anomaly by claiming that the game-console business is a special case. But now, Microsoft has buttigned the Xbox team to create a portable music player it hopes can knock off the iPod. Why? Because the company is frustrated that the component model, which separates hardware and software, has failed in the music market. It's looking for more integration.

Still, the end-to-end model isn't a lock. If Apple can't keep churning out cool products at reasonable prices, it could crash and burn. Unlike Microsoft, it doesn't have much help from other companies to succeed. But the iPod experience has shown that the PC model may not be best for all digital devices.