September 07, 2011
MIT prof Nicholas Negroponte once said, "Anything that can be digitized will be."
The first industry that realized this in earnest was music. The MP3 was a breakthrough for consumer convenience and continues to redefine the industry today. The USPS is going broke, because 90% or more of all 'letters' are now digitized into emails.
Apple's historic decision to sell its new operating system (Lion) via download only is a game changer for the software business. For decades, software was sold in box form (usually 4-10 times thicker than the actual disk product - to make it look expensive). Customers liked this, because they had a handy disk around if they needed to reinstall the program later. The physical product was a 'safety net.'
With the acceptance of cloud computing, the box seems silly at this point. You can re-download anything you need from any software vendor. The box just adds waiting time and shipping costs. By going 100% digital, Apple eliminates the retail function from the release and redefines an industry. (For those with awful download speeds, Apple offers a reuseable thumb drive with the software on it. Note: I wrote REUSABLE.)
This is a good thing too. Boxed media (of any kind) is environmentally and economically wasteful - an artifact from a bygone era of perceived scarcity. Lion runs under $30 downloaded, which is a far cry from needing-a-weight-belt boxed editions of Windows in bygone eras.
Even in my startup (not ready to divulge all the details), we are forgoing any physical product and focusing 100% of our efforts on eReaders. It's the same idea: The physical piece of the business is its biggest drag.
Physical products, sold through stores add layers of cost and hassle throughout a value chain. In my industry, publishing, it's the biggest problem. You need to have money to manufacture the book, ship them to storage, move them to distribution, hire sales people to convince brick-and-mortar stores to stock them, pay for their returns to your warehouse, then remainder (burn) the unsold units at some point. Silly.
I know that in Love Is The Killer App, I professed my undying love for physical books - well, I'm changing my tune. Digital products are efficient, can be highly social and will always replace their analog/physical competitors over time.
What can you digitize at work? What unecessary physicalities still exist around your business? I'll jump into your comments to stir this up. Music-books-software-movies ... what will be next?
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