The clash of hardware, software and content

Most software people will tell you this overtly or covertly, if you listen carefully, over sometime – hardware is a commodity and software is king. Most hardware people will tell you, without bating an eyelid, that most of the software is free and can’t find any successful innovative business model beyond ads to make money in software. However, both Intel and Microsoft continue to be one of the top 3 businesses in the world.

Put the hardware and software guys together in a room and they will convince you that content is “open sourced” and available everywhere and it really doesn’t matter that much. Yet, we know a “good” quality one vs. a “not-so-good” one, the moment we see it. It is staring in our faces and in our understanding – good content is like “art”, it might be everywhere but getting it right and at the right time is not easy.

What set me thinking is in the power of bundling – can you imagine the iPhone in any other hardware package (say, a non-Apple one) or a Wii/X-Box for that matter? The reason something has been commoditized vs. not has a lot to do with the way certain industry dynamics  played out. Hardware has gone into overcapacity mode in China, Taiwan and some other east-Asian countries, leading to cheap manufacturing that doesn’t mean people won’t pay for good design, safety or durability! So, more than ever in hardware, positioning and branding matters.

Now, lets turn our attention to software – many of us might have a very narrow view of software as just what a “regular” consumer uses at a “visible” or “conscious” level. But the truth is it is everywhere we interact with digital world in one for or the other and we pay for the system level usage, for the simplicity, for scalability and much more.

While, software and hardware define the platform, content reigns supreme on the other end. It helps people build extreme network effects, on one hand and deliver tremendous value on the other. Here, the tug of war between pre-created and user-generated is yet to be won. Although most newspapers in the developed world have given up the fight and joined the bandwagon, in India this war is far from getting heated up. And, then there is the kind of content that we get in the form of entertainment and education. Again, there is the context of IPL vs. movies/video albums, ready-made CDs vs. YouTube videos/classroom presentations and so on and so forth.

I don’t see a definitive answer to this situation. There could be a path moving towards user-generated, collaborative content-based platforms that don’t necessarily culminate in commoditization of any of the components. There could also be an alternative path, where people would like to put the components together themselves and customize it. Although, if I would rather think the former scenario would play out. Lets wait and watch. What do you think? Hardware, software or content is king?

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3 Responses to “The clash of hardware, software and content”


  1. 1 Archit May 13, 2010 at 10:14 pm

    User experience is king.
    Case in point… iPhone vs. the rest
    Facebook vs. Orkut,Hi5 and countless others.
    even Mac vs. Windows if you look at it carefully.
    (i could go on and on about this 😀 )

    agree? disagree?

    • 2 sree May 15, 2010 at 10:58 pm

      Well, user experience is just one of the features in the bucket that defines a product/service. It is important to the end user and getting it right defines the success of the product, but when I was talking about king or not, I meant about who made money and how much.
      Now that I think about it, probably ecosystem is more important than any of these separately or put together. It is large ecosystems that have led to the creation and success of large companies in the past.
      And, as for user experience of many of the examples you mentioned above. I’m sure Apple has its fan base but the main reason Microsoft is more successful is because of the kind of ecosystem that they leveraged. And of course, coming back to the point about user experience being just one thing in the mix everything else being equal – let us think about a small activity – facebook and orkut being free differentiate themselves on user experience, start charging 2x or 3x for facebook vs. orkut and give Hi5 for free – you will see the impact!

  2. 3 Ganesh Ramanan June 8, 2010 at 2:52 am

    Heheh… 🙂

    i joined oracle to stay away from this tug of war , which after aquiring SUN recently says “Hardware – Software – Complete”. 😛

    Regards
    Ganesh Ramanan


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