(Roughly) Daily

Many ventures seek profit by repackaging existing goods and services as revenue streams they can control, with technology frequently serving as the mechanism. The tech industry’s mythology about itself as a “disruptor” of the status quo revolves around this concept: Inefficient bundles (newspapers, cable TV, shopping malls) are disaggregated by companies that serve consumers better by letting them choose the features they want as stand-alone products, unencumbered of their former baggage. Why pay for a package of thousands of unwatched cable television channels, when you can pay for only the ones you watch? Who wants to subsidize journalism when all you care about is sports scores?

Media has been the most obvious target of digital unbundling because of the internet’s ability to subsume other forms and modularize their content. But almost anything can be understood as a bundle of some kind — a messy entanglement of variously useful functions embedded in a set of objects, places, institutions, and jobs that is rarely optimized for serving a single purpose. And accordingly, we hear promises to unbundle more and more entities. Transportation systems are being unbundled by various ridesharing and other mobility-as-a-service startups, causing driving, parking, navigation, and vehicle maintenance to decouple from their traditional locus in the privately owned automobile. Higher education, which has historically embedded classroom learning in an expensive bundle that often includes residence on campus and extracurricular activities, is undergoing a similar change via tools for remote learning…

Things that have been unbundled rarely remain unbundled for very long. Whether digital or physical, people actually like bundles, because they supply a legible social structure and simplify the complexity presented by a paralyzing array of consumer choices. The Silicon Valley disruption narrative implies that bundles are suboptimal and thus bad, but as it turns out, it is only someone else’s bundles that are bad: The tech industry’s unbundling has actually paved the way for invidious forms of rebundling. The apps and services that replaced the newspaper are now bundled on iPhone home screens or within social media platforms, where they are combined with new things that no consumer asked for: advertising, data mining, and manipulative interfaces. Facebook, for instance, unbundled a variety of long-established social practices from their existing analog context — photo sharing, wishing a friend happy birthday, or inviting someone to a party — and recombined them into its new bundle, accompanied by ad targeting and algorithmic filtering. In such cases, a bundle becomes less a bargain than a form of coercion, locking users into arrangements that are harder to escape than what they replaced. Ironically, digital bundles like Facebook also introduce novel ambiguities and adjacencies in place of those they sought to eliminate, such as anger about the political leanings of distant acquaintances or awareness of social gatherings that happened without you (side effects that are likely to motivate future unbundling efforts in turn)…

In a consideration of one of the most fundamental dynamics afoot in our economy today, and of its consequences, Drew Austin observes that no goods or services are stand-alone: “Bundling and Unbundling.”

* Jim Barksdale (in 1995, when he was the CEO of Netscape)

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As we contemplate connection, we might recall that it was on this date in 1980 that IBM and Microsoft signed the agreement that made Microsoft the supplier of the operating system for the soon-to-be-released IBM PC.  IBM had hoped to do a deal with Digital Research (the creators of CP/M), but DR would not sign an NDA.

On Nov. 6, 1980, the contract that would change the future of computing was signed: IBM would pay Microsoft $430,000 for what would be called MS-DOS. But the key provision in that agreement was the one that allowed Microsoft to license the operating system to other computer manufacturers besides IBM — a nonexclusive arrangement that IBM agreed to in part because it was caught up in decades of antitrust investigations and litigation. IBM’s legal caution, however, would prove to be Microsoft’s business windfall, opening the door for the company to become the dominant tech company of the era.

Hundreds of thousands of IBM computers were sold with MS-DOS, but more than that, Microsoft became the maker of the crucial connection that was needed between the software and hardware used to operate computers. Company revenue skyrocketed from $16 million in 1981 to $140 million in 1985 as other computer-makers like Tandy and Commodore also chose to partner with them.

And as Microsoft’s fortunes rose, IBM’s declined. The company known as Big Blue, which had once been the largest in America, and 3,000 times the size of Microsoft, lost control of the PC platform it had helped build as software became more important than hardware.  [source]

Paul Allen and Bill Gates in those early years

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