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The Death of Consumer Electronics

There is an ad showing on British TV at the moment that talks to why Motorola’s mobile phone business is on a roll. The company has obviously internalized (and can now externalize through marketing) a critical insight about how the world is changing. That is–we are not consumers any more; the digital revolution is turning us all into content producers, sharers and annotators. The very idea of consumer electronics is increasingly a non-sequitur–any company selling to “consumers” needs to understand what’s happening. Motorola is riding a wave of change, heralding what I will call The Death of “Consumer Electronics”.

The advertising copy line in question—”this is my Moto movie”. That is right – my Moto movie. Not someone else’s movie. Mine.

People don’t necessarily want to download Disney movies to their phones, but they definitely want to take pictures and videos of cool things they have seen, and share them with friends. Sharing is fundamental to the human experience. Music sounds better when we listen to it with friends, which is something the global music industry has forgotten.

Sony, unlike Motorola, apparently just doesn’t get it. News coming out of the Japanese giant clearly illustrates the company has badly lost its way. This is a shame because I happen to really like Sony products- but the company apparently thinks content and control is more interesting that its core competence; building great kit. If Sony tried to sell TVs that only played Sony TV shows it would be laughed out of the market. So why on earth is it trying to build that kind of business proposition?

The first piece of content news I want to point out is the possible plan by Sony to acquire BMG music. Sony just isn’t any good at being a media company. Getting bigger is not the key to getting better. It should stick to what it knows best – building devices to play, record and manipulate content. The gaming division gets it, so why not the rest of the firm?

Even scarier is the absurd position Sony is taking with respect to MP3s on its new media player, which is supposedly competition for Apple’s iPod. Rather than working with existing standards for media content though it is trying to get people to use a new proprietary system, called ATRAC3.

This is a really dumb idea for a number of reasons – not least because sound quality will be lost when people take existing MP3s and repurpose them to ATRAC. Digital content doesn’t mean perfect reproduction.

To ratchet up the stupid aspects lets look back a few years. Doesn’t everyone remember that Betamax lost to VHS? Evidently Sony has forgotten. Tying content to its player is just a bad idea. The wikipedia entry for betamax points out the Sony keeps making the same mistake.

So who gets it? Who understand that the people buying electronics don’t want to be consumers any more? They are peers on a network…

Its not clear HP does. This is unsurprising – when you make that much money from printer ink it’s natural to think in terms of consumers and consumables. My primary concern with HP in this space is Carleton Fiorina’s apparent willingness to adopt Big Media’s agenda–by speaking on the critical importance of DRM, for example. This is kind of strange when you consider that HP sells hardware. The best hardware, PC or media player will play any content, not just that from Disney or Viacom or whatever. The notion of a Create – Intermediary – Consume model for content is falling apart. It is no accident that the most interesting and important trend in content distribution over the last 20 years or so is peer to peer computing, which is avowedly not a top down phenomenona.

Microsoft apparently understands that owning the content is not the way forward, but the company is still kind of two-faced in this regard, because of an obsession about “protecting intellectual property”. It is hard to see how DRM allows your average Joe PC user to fulfill their potential though.

Gateway, Intel and Sun all get high marks for lobbying against absurd laws–particularly the Digital Millennium Copyright Act (DMCA)—which give way too much power to a set of companies found guilty of collusion and price fixing.

Sun’s President and COO demonstrated something really cool at JavaOne last week – a ringtone mixer. You can mix the tune before downloading it to your phone. Why is that so cool? Because it involves interaction, not static consumption. That is the new model – that is where value lies and network affects take off. It’s about the architecture of participation.

Blogs and web publishing show how the world is changing. People don’t just want to read news that someone else wrote, they want to write their own, to participate in the community, to reach out and touch others. Socialists always used to talk about “taking over the means of production” – well in digital media that has happened. We won that war—or rather late stage capitalism created a new set of conditions. Cheap video cameras, cameras in cell phones, synthesizers and so on mean we can all create content. Big Media is therefore fighting a losing battle to control the means of distribution using DRM technology. They will fail though–you can’t control the Internet and the internet is the means of distribution.

Sony needs to get a clue. Motorola just needs to keep on keeping on, pushing the notion that My Moto allows me to create content, not just consume it.

I recently stood on my color, polyphonic Nokia 6610 and reverted to my old 6310i. Maybe I will buy a Motorola phone with a camera in it with my insurance money. It would be nice to send my wife a movie when I am traveling… one that I made.

The Death of The Consumer—it’s about time. Somebody is going to make a ton of money riding this change. Its not clear who yet. We’ll be keeping an eye on it.

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One Response

  1. Nice article. I especially like the comment about HP and printer cartridges. I had wondered how a company that large survived on their PC sales.

    But seriously, I think this is a good point. Another (print) article I read make the quite correct comment that virtually all art is impossible under the DMCA; creation is almost never ex nihilo, it’s almost always based on the many things that came before. Even something as silly as “Louie Louie” is based on a badly remember song that was based on another badly remembered Latin American song, which itself was probably a badly remembered rendition of something else.
    (According to the author, the reason nobody can understand the famously unintelligible words is that he couldn’t remember what they really were, and didn’t want to admit it, so he mumbled.)

    Really, what’s hurt music more than anything else is that people have become passive consumers. And that’s changing. Companies like Apple clearly have a clue–even if GarageBand is only about 2/3 of what you need to do real music production (and it’s probably not even that), they’re enabling people to start producing. And getting them hooked, so they’ll buy the more expensive follow-on tools. Whether that will lead to a musical renaissance is another issue, but that’s not the point.

    AnonymousAugust 19, 2004 @ 12:50 pmReply



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