Rob Glaser, founder and C.E.O. of RealNetworks, talked to the New York Times Magazine in November 2003 about the limitations of a closed iPod-iTunes ecosystem:

This is simply the latest instance of the company’s tendency, once again, to sacrifice commercial logic in the name of “ideology.” Not that Apple can’t maintain a business by catering to the high end and operating in a closed world. But maintaining market leadership, while easy when the field of competitors is small, will become impossible as rivals flood the market with their own innovations and an agnostic attitude about what works with what. “The history of the world,” [Glaser] says, “is that hybridization yields better results.” With Dell and others aiming a big push at the Christmas season, it’s even possible that Apple’s market share has peaked.

Nearly five years later, we know that Apple was just getting warmed up.

Now the company dominates two key parts of what used to be “the record business”: distribution (the iTunes Store) and playback (iPod and iPhone). Does this mean that “the history of the world” has been confounded by one Steve Jobs?

Not at all. In biological terms, hybridization (or crossbreeding) can indeed produce hardier creatures, but a mutt’s relative advantage is apparent only by comparison to its pure-bred cousins. The latter accumulate deleterious mutations along with the desirable characteristics that humans seek, so injecting a bit of the pedestrian every few generations can make up for an overabundance of inbreeding.

In nature, by contrast, specialization is key. Over time a species evolves to fit a specific ecological niche, and it changes as its environment changes (or else dies out). Crossbreeding tends to dilute those adaptations, resulting in an organism less likely to survive.

Steve Jobs understands nothing if not competition. In 2003, he took a look at an already crowded market for personal MP3 players and decided to change the rules. He created his own ecology that could encompass music, movies, and (soon for the iPhone) software, and he made it simple and attractive and desirable. And he won.

Innovative entrepreneurs like Jobs have no interest in letting their products vie against everyone else’s in the marketplace. Why play at that game when you can devise your own, charge admission for it, and take a cut of concessions to boot? Thomas Edison understood that, as did Walt Disney. No wonder the latter’s corporate descendants welcomed Steve into their boardroom.

Few people have the vision, the capital, and the intestinal fortitude to create their own vertically integrated industry from scratch. Steve Jobs bet big, and so far the upside has been tremendous. The question is, What’s he going to do next?

(via Daring Fireball)