I’ve spent a lot of time talking about Apple and vertical integration and why it’s the model for what we do in terms of our industry (backup, archiving, and disaster recovery).  I thought given the terrible news of Steve Jobs’ passing that I’d actually take a passage from a really great book about Jobs called “Inside Steve’s Brain, Expanded Edition” by Leander Kahney.  The full chapter from which this material was taken may be found elsewhere on the web, specifically here.

The Return of Vertical Integration

Apple’s competitors are starting to wise up to the virtues of vertical integration, or this “whole-systems” approach. In August 2006, Nokia acquired Loudeye, a music licensing company that had built several “white label” music stores for other companies. Nokia bought Loudeye to kick-start its own iTunes service for its multimedia phones and handsets.

In 2006, RealNetworks teamed up with SanDisk, the number two player manufacturer in the United States behind Apple, to pair their hardware and software offerings à la the iPod. Cutting out the middleman—Microsoft’s PlaysForSure—the companies instead opted for Real’s Helix digital rights management, which promised tighter integration.

Sony, which has decades of hardware expertise but little or none in software, has set up a software group in California to coordinate development across the giant’s disparate [CE4] product groups.

The group is run by Tim Schaaff, a former Apple executive, who has been anointed Sony’s “software czar.” Schaaff has been charged with developing a consistent, distinctive software platform for Sony’s many products. He will also try to foster collaboration between various product groups, each of which works in its own “silo.” At Sony, there’s historically been little cross-pollination between isolated product groups. There is also a lot of repeated effort but little interoperability.

Sir Howard Stringer, Sony’s first non-Japanese CEO, reorganized the company and empowered Schaaff’s software development group to address these problems. “There’s no question that the iPod was a wake-up call for Sony,” Sir Howard told CBS’s 60 Minutes. “And the answer is that Steve Jobs [is] smarter at software than we are.”

Most significantly, Microsoft abandoned its own PlaysForSure system in favor of the Zune, a combination player, digital jukebox, and online store.

Although Microsoft pledged to continue to support PlaysForSure, its decision to go with its new vertically integrated Zune music system was a clear message that its horizontal approach had failed.