This is not news to anyone who reads my blog but here it is directly from Steve Jobs. Hardware is a commodity. It is software which is the differentiator. Software is what separated the iPod from the rest of the pack. No one in Asia, certainly not Japan, which is the home of consumer electronics manufacturing, has the software skills to compete with the likes of Apple. I don't know how Asia (as a whole) would be able to make up the difference in software development vs. the West.
Kara: How do you look at Microsoft from an Apple perspective? I mean, you compete in computers and…Walt: I mean, you can say you don’t compete, you know, the era of destructive whatever, whatever you said in 1997, but you think–you’re consciously aware of what they’re doing with Windows, you followed Vista closely, I think.
Steve: You know, what’s really interesting is–and we talked about this earlier today–if you look at the reason that the iPod exists and the Apple’s in that marketplace, it’s because these really great Japanese consumer electronics companies who kind of own the portable music market, invented it and owned it, couldn’t do the appropriate software, couldn’t conceive of and implement the appropriate software. Because an iPod’s really just software. It’s software in the iPod itself, it’s software on the PC or the Mac, and it’s software in the cloud for the store. And it’s in a beautiful box, but it’s software. If you look at what a Mac is, it’s OS X, right? It’s in a beautiful box, but it’s OS X. And if you look at what an iPhone will hopefully be, it’s software.
And so the big secret about Apple, of course–not-so-big secret maybe–is that Apple views itself as a software company and there aren’t very many software companies left, and Microsoft is a software company. And so, you know, we look at what they do and we think some of it’s really great, and we think a little bit of it’s competitive and most of it’s not. You know, we don’t have a belief that the Mac is going to take over 80% of the PC market. You know, we’re really happy when our market share goes up a point and we love that and we work real hard at it, but Apple’s fundamentally a software company and there’s not a lot of us left and Microsoft’s one of them.
So what happened to Sony? Aren't they supposed to be the ones who understand the "software power" (PS2 games, Sony pictures, etc)?
Chang, I would say that there is a very big difference between software like iTunes, software like PS2/game console software, and content software like movies. Sony has done an amazing job with game software (at least for PS1 and PS2) but they have yet to make any successful consumer software for the PC.