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  • How the Disney/Pixar Merger Might Affect Apple

    January 28th, 2006

    No doubt loose lips spoiled the big surprise about the $7.4 billion merger between Steve Jobs' "other" company and Disney. Regardless, if the counterculture atmosphere at Pixar can remain intact, it augers well for the company's future. But I'm not writing this column to deliver still another analysis on whether this high-profile marriage will succeed, or whether Steve Jobs will somehow find a way to wrest the CEO's chair from its present occupant, Robert Iger. In fact, I have a different idea.

    Instead, I'm wondering whether any of this has anything to do with people who use Apple's products, whether iPod or Mac-related. That, my friends, may present the biggest question of all.

    On the practical side, I don't see Disney acquiring Apple or even that such a merger would somehow be appropriate, although some have suggested it from time to time. It may seem logical, of course, that more Disney content will show up at the iTunes Music Store, and that's already beginning to happen. Up until now, however, Apple has managed to persuade other entertainment companies, such as NBC/Universal, to provide content as well. But there are potential pitfalls, particularly in light of Steve Jobs' upcoming position as a non-independent member of Disney, of which he will become the largest shareholder.

    First of all, Disney has content agreements with other companies too, and that is not going to change, because it would raise serious antitrust considerations. Imagine Jobs having to sit by in silence as Disney continues to make deals with Microsoft and other companies. Of course that isn't going to affect Disney's content in iTunes, so it's only a matter Disney need to concerned about.

    On the other hand, what will happen if Steve Jobs or someone else at Apple rings up, say, CBS, and asks whether episodes of its most popular show, CSI, will become available at the music/video store? Consider this request is coming from someone who is involved with the company that present's CSI's biggest rival on the small screen, Desperate Housewives. From a practical point of view, CBS stands to make a big profit from downloads of its most popular shows. But consider the comfort level of the executives on all sides brokering such a content deal.

    In the end, it might give Apple's rivals a chance to take advantage of the situation. They will continue to remind those other entertainment companies who provides most of Jobs' net worth. This doesn't, of course, mean that iTunes will be shut out, because it is still one huge enterprise with a large customer base, and the profit motive may override such concerns. Add to that the expected assurances that Jobs isn't going to allow his new status at Disney to interfere with Apple's independence.

    Now as to iPods and Macs, I can see where Apple might just exploit the Disney brand with specialty products. Just as there was a U2 edition of the iPod, you can see where Disney characters might be featured on a special line of low-cost music players earmarked strictly for the kids. A Mickey Mouse iPod? Sure, why not? And what about Apple's computers? These days, the very young begin to master personal computers as quickly as they learn to read and write. There would well be a Disney version of a low-end Mac that automatically boots with a family safe configuration of Mac OS X. Of course, this is something you can already do with the Tiger's Parental Controls feature, but add a few kid safe games to the mix, and you can see the potential of these products.

    Yes, sign up children as beginning Mac users and they may stick with the platform well into adulthood.

    As to my "different" idea: Let's not forget that Steve Jobs only spent a small amount of his workday at Pixar. He never micromanaged Pixar in the same way as he does Apple. Instead, the day-to-day operations were handled by company President Ed Catmull and Pixar's creative genius, Executive Vice President John Lasseter, both of whom will gain wide authority at Disney when the merger is finalized this summer.

    While it's very possible Jobs will take a big role at Disney, it may also be true that he'll just want to make sure that Pixar's new owners are treating the company with the appropriate level of respect for its creative independence. Once the merger's success is assured, Jobs might just cash in his chips, move on and devote all of his attention to Apple. He'd still have tremendous influence in the halls of power in Hollywood, but his potential departure from Disney would eliminate even the appearance of a conflict of interest.

    This may seem the opposite of what many expect, but it makes a lot of sense. Of course, it's anyone's guess where he might take Apple in the years to come.



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