A long time ago, a small Cupertino company discovered that the more elements of the computer (and later the consumer electronics) experience they controlled, the more people would be willing to pay for the fruits of their labor. They developed their own computer, smartphone, media player and TV set-top box operating systems, designed the boxes they came in, strongly controlled the components that made them up, and dominated their purchasing experience. The company enjoyed decades of nosebleed-margins, accolades from followers, envy from producers of lesser goods, best-in-class reviews and were the darlings of customer satisfaction surveys across the land. Their products were held up as examples of what technology could be.
One day, the company decided to get into the television manufacturing market, a low-margin commodity good that had dozens of major brand competitors that had been in the market for decades. The Cupertino company already made a modestly-successful and arguably best-in-class TV set-top box that allowed viewers to rent, purchase or stream media. Some of their would-be competitors were already working with another major tech company on an operating system that provided similar, but inferior capabilities. Others manufacturers had their own deployment of integrated “apps” from providers of video and music streaming services – both paid and free. Despite all this, the logic of “we have a buttload of cash from doing all things that aren’t this successfully – what else are we going to spend it on?” proved too compelling for their normally shrewd and trend-leading CEO, so they plowed headlong into one of the most established markets in consumer electronics, second only to radio.
One of the paragraphs in this story make sense. One of them is the analyst’s equivalent of petroleum jelly and a JCPenny catalogue lingerie section.