It’s no secret that Apple is cash rich, currently sitting on 40 billion in reserves and in the past few months they’ve been publicly stating that they have some desire to begin spending it.  Well I have an idea: buy Nintendo (or a large stake in the company).  Why?  Well read on. 

The race to control your TV has been going on for years, all the major players of the computer industry have some product or service designed to web enable your television.  In many ways he who controls the tv set will become the next cable provider.  Clearly a lot of money is at stake, what’s been lacking is a simple mainstream system that your grandma would understand and be able to use.  A web enabled TV would allow distributors to sell movies or other content straight off the internet to be watch somewhere other than behind your desk. 

This brings me to Apple.  A few years ago Apple released their foray into the living room with AppleTV.  A small little box that connects the web to your TV.  As with all things Apple the interface is simple, easy to use.  Users connect with iTunes and are able to rent or buy digital versions of top shows and movies.  The more units in the marketplace, the more content Apple could make money with.  But the problem?  Well they don’t sell.   People cannot be convinced to pay several hundred dollars for a device that really from a layman’s point of view an expensive indulgence that on it’s own provides little value.  Are you going to convince someone with a home computer to pay good money so they can watch YouTube on their TV?  Nope.  Apple’s little box is also limited in what content they can play.  Due to patent restrictions, desire for format control, etc. Apple really only plays Apple format material preventing you from watching your video collection that may be encoded in other file types.

The Sollution. Buy Nintendo, and package AppleTV as part of the Wii console.  The value is in the gaming device – popular with women, families and the less geeky crowd.  The AppleTV becomes an additional feature as opposed to the reason for purchase.  Or alternatively those who are seeking out an AppleTV will have an additional reason to purchase the device.

Wii ownership would allow Apple to exploit it’s built in audience base.  The new device would be backwards compatible allowing for easy upgrade.   You suddenly take a device that in the eyes of the mainstream consumer is complex, unwanted and expensive into a must have device.  Existing iPhone/iPod device users will also welcome the device and it’s easy integration with their existing products.

In addition to the Wii, Nintendo has many patents and hand held gaming devices that could further expand with reach.  Porting games over to the iPad and iPhone platform. 

Could be a smart move for Apple.  

Leapfrogging – It’s a phenomenon that I see occur time and time again, where the industry leader is blindsided by a leap in innovation – an innovation they should have owned.  Yet so many organizations still only make marginal/incremental enhancements to their products or services.   But in this globally competitive world minor tweaks and updates aren’t going to keep your company at the top of the pecking order.

In Canada there are a lot of companies that hit it big with a one-off idea.  Which they do very well with is during the growth cycle  – but once the market becomes either over saturated or is on the decline where you really start to see the “hold the fort” mentality.   Their original “winning formula” is really what  prevents the reinventing of the wheel.   Being market leader in a dying market to most would seem to be a losing proposition.  Ideally a company should position itself as leader in a growth (or stable) market.  But time and time again we see organizations that through indecision or paranoia fail to grasp the concept of radical change – until they wake up and can’t figure out why their stock is worthless.

This happened recently when Toronto based CD/DVD maker Cinram lost the contract with a major studio.   It should be no surprise to anyone that the concept of the pressed disk is dying – fast.  And this is something that was easily predictable when iTunes or Napster first launched.  But here you have a company that once was trading  5 years ago in the $30 range, now sits in the $1.20 range.  Not to pick on any one company – but what was their plan 5 years ago to deal with the change in markets – what was their leapfrog strategy?    Without one marginal changes won’t grow the company.

Another example is Palm, the makers of handheld PDA’s.  This company essentially invented the concept and the market for the smart handheld device, but a company that once was market leader has since been very quickly trounced on by Apple.  The iPhone/iTouch isn’t any Sci-fi alien technology – it’s all off the shelf, available to anyone.  What Apple did is they effectively re-thought, re-engineered the concept of of a PDA.  But because Apple lacked any attachment to previous designs, standards, ways of thinking – they were able to leapfrog Palm and come out with a better device.

Leapfrogging as a concept is not that hard to understand – but it means a company has to ditch what it knows now and embrace blue-sky thinking.  The question of organizational strength is whether or not a company is capable to get past the silo thinking and be progressive enough to go to the next level.

Leapfrogging Techniques:

- Look 5 Years into the Future, and not at what pundits or commentators are talking about – but rather what are the geo/political/social/technological developments that you see as becoming a huge trend.

- Forget everything you know – depending on if you offer a product or service – depart from your offering in brainstorming sessions.  Think more holistically about what it is your company has been put on earth to solve.  Off the top of my head: Palm = your data where ever you are.  Cinram  = Permanent content storage.

- It’s about evolving not finding one off fixes.  As much as the iPod was a major leapfrog device – the product continued to evolved incrementally, and so too with the various subsequent leapfrog devices Apple has since released.
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• Cinram stock plunges as Warner ends contract (thestar.com)
• Cinram shares dive as biggest customer ends deal (financialpost.com)
• Rumor: Apple developing second tablet device, made from unicorn tears (tuaw.com)