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Changing the tune of the purchasing culture
[Edward Tsang, Senior Strategist, Utility Computing 2003/5/15]

In what can only be rated as a spectacular first two week, Apple’s new iTunes Online Music Store has generated around $2 million in revenue. In doing so, this B2C service has not only hit it’s ambitious 1 month target in just 7 days – it has also made a significant contribution to the changing B2B purchasing culture. The ramifications for pay-per-use outsourcing are not so unlikely as you might think.

Whilst the most obvious impact of Apple’s music-on-demand service is seen in it’s direct impact on the recording industry and it’s see-saw fight with the Napster-clones, the biggest lesson to learn from the service’s success is that customers will respond well to a product that is both priced at a value-for-money level and which offers customers the opportunity to pay only for what they want.

In this issue of the newsletter we talk with Platform Computing’s VP of Services, Craig Sands. On the surface, Platform’s grid computing software solutions are a long way from the sexier world of Steve Jobs and his designer-piece iPod – but dig a little deeper and you will find the same recognition that traditional outsourcing just does not offer the customer value-for-money and continues to charge them for things they do not need.

In just one week, Apple have converted thousands of their customers to content-on-demand consumers who have cherry-picked the music tracks they like and have happily ignored the competition. When you remember that much of that competition offers their product for free, this is about as healthy an endorsement as it’s possible to get. The time when global ERP software providers, system integrators and technology companies all face a similar demand is not far away. As Apple’s recognition of the true strategic opportunity has shown – the chance will be theirs to take or to miss.

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