Global CIO: Apple's Steve Jobs Torpedoes Another Stale Business Model
Jobs and the iPad are revolutionizing the book business while picking a big fight with Amazon. What can you learn?
Apple's business model for books, which the company has kept under tight wraps, shifts the focus away from the bargain-basement prices Amazon has made popular, according to publishers that have met directly with the company. Apple is asking publishers to set two e-book price points for hardcover best sellers: $12.99 and $14.99, with fewer titles offered at $9.99. In setting their own e-book prices, publishers would avoid the threat of heavy discounting. Apple would take a 30% cut of the book price, with publishers receiving the remaining 70%.
Apple's vision is at odds with Amazon.com, which has shaken the book industry by slashing prices of e-books on its Kindle reader and making the $9.99 e-book bestseller a fixture.
The Apple tablet aims to reshape many corners of the media industry, just as Apple's iPod revolutionized the music business when it made its debut in 2001. Apple has been in discussions with television networks, magazines and videogame publishers about featuring their wares on the device. On the eve of the launch, it wasn't clear to some people briefed on the matter whether Apple had made a final decision about wireless connectivity or the carriers involved.
In closing, two thoughts: first, for all of Jobs' brilliance and persuasiveness and the awe in which he's held, it would be unwise to underestimate Amazon, which itself knows more than a little about technology-driven upheavals, consumer-centric thinking, and revolutionary business models.
And second, it's human nature for all of us to see something like this and think, "WowI'm glad that kinda craziness will never hit my business." But it's also terribly nave and short-sighted, particularly for CIOs charged with helping establish vision and innovation and fresh thinking and forward-looking business models in our increasingly tech-driven world.
Get together with your CEO and start asking the hard questions about what an upheaval in your business might look like, where you're vulnerable, and where you're underleveraged and could create some big opportunities with some aggressive and model-busting ideas.
Because when it comes to torpedoes, it's always better to give than to receive.
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