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The Midol Monopolist
A student writes that she became a monopolist in her freshman dorm — hoarding Midol to sell to her dorm-mates at the time each month when dorm-mate had a quite inelastic demand for this product. She also realized that at that time, there is an increasingly inelastic demand for chocolate-chip cookies, so she hoarded and sold those, too. She correctly notes that the two goods are complementary over time — more of both consumed on some days than on others. But I bet that over a short interval, they are substitutes — the satisfaction from one reduces the demand for the other. This illustrates how we need to think about the time dimension of consumer choice. I would also bet that her monopoly doesn’t last long. Anybody can bring the two products to the dorm and sell them — there are few barriers to entry. A better description is that she’s an innovating entrepreneur in what inherently will be a competitive industry.
Time and Taste
Marco Arment on Time and Taste
This bad article, nicely rebutted by John Gruber, uses a common argument against Apple: that, inevitably, other hardware manufacturers will figure out why Apple products are so popular, create their own good-enough copies, sell them for much less money, and relegate Apple to the same level of market obscurity that they held with Macs in the 1990s.
People also often apply variants of this theory when guessing how other huge players such as Microsoft, Google, and Amazon will fare when pitting similar products against Apple’s. For instance, Microsoft has effectively infinite money and overwhelming dominance in many software markets. Google has effectively infinite web traffic. Amazon is ruthlessly efficient to sell and ship products at lower prices than nearly anyone.
But all of the money, web traffic, and cheap cardboard boxes in the world can’t buy two huge factors that contribute to Apple’s modern success: time and taste.
Time
Time is twofold: nobody can time-travel to launch a product in the past, and nobody can change how they’ve allocated their time in the past.
No matter how much money Microsoft pours into Windows Phone 7, for example, they can’t travel back in time to 2007 when its limited feature-set and almost nonexistent software library could be more competitive.
And no matter how much Samsung, HTC, Amazon, or Google want to offer high-quality platform software, rich app ecosystems, and well-stocked digital media stores (except Amazon), they can’t change their unfortunate history of minimal investments in these areas over the years.
The iPhone and iPad were built on years of work, experience, relationships, and reputation. There’s a lot more software than hardware in these products. It wasn’t enough to just glue a glass screen to a battery and use an off-the-shelf OS — any hardware manufacturer could have done that. (And indeed, they since have, with some success in phones and little success in tablets.)
Taste
Most people don’t have great taste. (And they don’t care, so it doesn’t matter to them.) They usually like tasteful, well-designed products, but often don’t recognize why, or care more about other factors when making buying decisions.
People who naturally recognize tasteful, well-designed products are a small subset of the population. But people who can create them are a much smaller subset.
Taste in product creation overlaps a lot with design: doing it well requires it to be valued, rewarded, and embedded in the company’s culture and upper leadership. If it’s not, great taste can’t guide product decisions, and great designers leave.
No amount of money, and no small amount of time, can buy taste.
(Steve Ballmer.)
Improving poor taste in upper leadership is almost as difficult as treating severe paranoia: people who don’t value taste and design will rarely recognize these shortcomings or seek to improve them. With very few exceptions, companies that put out tasteless, poorly designed products will usually never change course.
Anyone who wants to compete well against Apple is going to need good taste at the top and deep-rooted design values throughout the company.
