In a New Yorker profile of chef Mario Batali (left) there's a wonderful scene of Mario rooting around a waste pail, looking for what the author-turned-prep chef has tossed away.
Our job is to sell food for more than we paid for it, Mario lectures him. You're throwing money away.
Apple Computer is the greatest exponent today of what I call Batali's Clue. Your job, as the maker of products, is to get more for your creation than the cost of the electronic "food" that goes into it.
It's a vital Clue because components in the Moore's Law age spoil like dead fish on a wharf.
Here's an example plucked from today's headlines. (Well, the ad pages.)
It's a Western Digital hard disk with 200 Gigabytes of storage, priced by TigerDirect at $90. (I originally saw a similar price quoted in a Fry's ad, in my local newspaper, but I found the TigerDirect page first.)
I became accustomed, last year, to seeing memory priced at roughly $1 per gigabyte. When Fry's opened its Atlanta outlet last summer that was the price I found. And I was amazed. Now you can get it for half that.
Meanwhile, I went to Costco over the weekend and found Apple-HP iPods on the shelf at $330. The device features a 20 Gigabyte hard drive.
It's cute, it's small, there's software in there, but bottom line you're paying $18 for a Gigabyte you could buy at retail for 45 cents.
How does the Apple of Steve Jobs do this? The same way Mario does, actually. Through marketing.
Mario's marketing, much of it done on Food Network, assures that when you go to, say, Babbo, you are going to pay a ton more than the food cost for your meal.
And that's how you stay ahead of Moore's Law. The theme ingredient is always the same, components, mainly silicon. And Steve Jobs (a Business Week cover is worth as much to him as a Food Network appearance is to Mr. Batali) is Iron Chef Silicon.
Dana Blankenhorn has been a business journalist for over 25 years and has covered the online world professionally since 1985. He founded the "Interactive Age Daily" for CMP Media, and has written for the Chicago Tribune, Advertising Age, and dozens of other publications over the years.
1. Brad Hutchings on February 14, 2005 03:45 PM writes...
Point well taken, but compare Apple's to Oranges. The Western Digital drive is a full-size drive, while the iPod uses a sub-notebook sized drive, which are in short supply and will remain so because of demand caused by the iPod. After-market battery replacementfor an iPod is still about $50. Jobs may be the Iron Chef of Silicon now, but it's not quite a 36:1 ratio. I am a long time Apple fan, but I think things aren't quite as good as they seem. The so-called iPod halo effect probably barely keeps market share stable, as unit shipments continue to grow. The Mac OS is the #3 OS now, and will probably slide behind the iPod OS this year! If Apple didn't have a strong historical niche cemented, you'd be talking about it being a roll-up like MCI in two years. Check back in 2007 and see if I was right ;-).
Permalink to Comment2. Jesse Kopelman on February 14, 2005 04:58 PM writes...
Meanwhile, if Apple is a restaraunt like Babbo then Microsoft is Olive Garden. You know there are many people who consider Olive Garden the height of dining out. It's good enough, the price is ok, they know how to get there, and they know what's going to be on the menu. For them, it's too risky to try a non-chain restaurant. What if they don't like it? Personally, If I were going to open my own restaurant I'd rather it be like Babbo, but if I were giving someone money to open a restaurant I'd rather it be an Olive Garden franchise.
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