Tuesday, September 04, 2007

NBC and the horn effect

There has been a lot of talk lately about the halo effect Apple experiences as a result of the iPod. This has been magnified further by the release of the iPhone. The halo effect is one whereby Apple benefits through increased sales of Mac hardware as a result of people's experience with the iPod and iTunes. It seems to be a real effect with one in siz laptop sales in the USA going to Apple. With the back to school season playing out this is a significant effect. I would hazard a guess that in the student market the ratio might be higher than one in six. The recent slug fest between NBC Universal and Apple over TV shows is getting really ugly. NBC has basically pulled its TV shows from iTunes as it pushes for a big hike in prices for its shows. NBC has gone to Amazon and its unbox service where it was already one of the movie distribution partners. On September 5th Apple is rumored to be launching new iPods that should include a video ipod with the iPhone style glass interface. This will only serve to drive demand for the ipod as we enter the holiday buying season. At the same time Apple got news that in the first full month of sales for its iPhone it took the top spot for US sales of Smartphones and also equalled the sales of the most popular feature phone. The Amazon Unbox service is a Microsoft-centric service that effectively bars Apple Mac and iPod users from accessing video content. The only upside is that it enables downloads to a Tivo box. NBC seems driven to this decision by its desire to increase pricing and control over its content. The net of this is we, as consumers, have more controls over how we consume content and pay more for the priviledge. This makes me wonder, if there is a halo effect, is there also a devil's horn effect that will create a backlash against Amazon and others perceived to be limiting consumer choice. All I know is that the reaction from student age consumers is negative. They are annoyed (to put it very mildly) at NBC's action. Apple is not immediately affected by this because they view Apple as being the victim of NBC's actions that are not in their interests as consumers. It will be interesting to see this epic battle play out. I hope that Amazon's stance, which is anything but platform agnostic, doesn't cause it damage as a result of the horn effect.

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