In the 1980s, Apple took the world by storm, rolling out the Macintosh and changing personal computing forever. Steve Jobs and "The Woz" became legends (and dynastically wealthy) and a generation of consumers fell in love with Apple's products, and investors who took a risk on the Apple IPO (temporarily) laughed all the way to the bank.
A decade later, however, Apple was on its deathbed, a victim of a major strategic mistake that turned it into an also-ran.
What was that mistake?
The insistence on selling fully integrated hardware and software devices, instead of focusing on low-cost, widely distributed software.
Yes, Apple also made other mistakes--most notably, maintaining a premium price point, ditching its famous founder and spiritual leader, and developing clunker products. But the mistake that doomed its primary business, the Macintosh, to niche status was the insistence on maintaining complete control over every aspect of the product while Microsoft drove for software ubiquity.
Fast-forward 15 years to the new era of mobile computing.
Once again, Apple has seized the early lead, launching a revolutionary product that is taking the world by storm. Once again, consumers are head-over-heels in love and Apple investors are dynastically wealthy and certain of the company's future world dominance. Once again, Steve Jobs is God.
And, once again, Apple is insisting on selling a tightly controlled, fully integrated hardware and soltware device while its major competitor--Google--is spraying low-cost (free) software across dozens of hardware manufacturers, driving for platform ubiquity.
Will the movie play out the same way this time? Will Apple's insistence on maintaining end-to-end control, on trying to shoot the moon by owning every aspect of the mobile computing business, doom it to failure against a competitor hell-bent on achieving software ubiquity?
Remains to be seen.
But the movie is starting the same way. And so far, at least, Apple is showing no signs of doing anything differently.
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Big differences from 25 years ago.
Apple makes its money from selling iPhones. What possible business model would they have giving away iPhone OS X to compete on that basis with Android?
Henry says: "[Android] has captivated developers" -- sorry, no it hasn't. The main reason is those few devs who have ported their iPhone apps to Android have quickly discovered that iPhone vs. Android sales are like 100:1. The reason is simple -- Apple's customers have a long history of PAYING for software. Android customers do not. They confuse with free as in speech with free as in beer, and the moment someone tries charging they refuse.
The idea that iPhone developers will flock to Android is absurd. They won't. iPhone is where the money is. It will always be more profitable to write a new iPhone app then to port your existing iPhone app to Android. And customers will stay where the apps are -- on the iPhone. Has Verizon released Droid sales figures yet? Wonder why not?
Apple does need to get the iPhone on as many carriers as possible, both here and worldwide. That's it. They are doing everything else right. They are also hugely increasing the iPhone OS X market share with the iPod Touch, which everyone keeps trying to pretend doesn't exist.
I think that where Henry's analogy falls apart is that it forgets how much of Apple's playbook is TAKEN from Microsoft Windows; namely, build the biggest, most deeply engaged ecosystem, and start with the developers.
Then build derivative products (iPod, iPhone, iPod Touch, Tablet, Mac, Apple TV) that leverage the core feature set, distribution, etc. (iTunes, App Store, SDK, Apple Retail) so that there is a good reason to standardize or buy multiple products from the same vendor.
If anything, I think the better analogy is Microsoft v. Novell, where Novell, the one time network operating system leader was so envious of Microsoft's desktop position, that they left themselves vulnerable to the innovations around the Internet, and now no one uses Novell anymore, something that I blogged about in:
The Google Android Rollout: Is it Windows or Waterloo?
http://bit.ly/61pIqz
For Google, the obvious vulnerability is AdWords/AdSense, which represents 90%+ of their revenues.
Check out the full post, if interested.
Mark
Mark
The jaded tech press' continued ignorance of the iPod touch is rather telling as they continue to push the tired market share meme. I guess they consider the iPod ecosystem passe, even as Apple continues to sell them by the millions. The iPod touch accounts for over 40% of the iPhone OS devices currently in use, and roughly the same % of app downloads. So, in actuality the market upside for developing on the iPhone platform goes well beyond just the smartphone users.
On the flip side, Android is already a fragmented platform and this presents a serious impediment. There are four different versions of Android getting installed into CURRENT Android devices, and every Android model uses different hardware specs and UI variations. The potential for apps working on one Android device and not another already exists, and this will only get worse as the market gets flooded with multiple Android devices.
The Droid's app store is thin - however, with masses coming on board due to Verizon's marketing, it is only a matter of time until this picks up and the quality of apps is there. The apps I have found, I have been impressed with.
Also - need a sync to my mac, but that should be forthcoming as well.
I canceled my AT&T service (which was month-to-month afaik) after more than 6 years to get a droid. A few weeks later they sent me a early termination notice (after i verified online that my contract was only for that month, before going to the Verizon store) for $250. Such fucking bullshit. But, my time is worth more than that so I'm not going to call those assholes and sit on the phone to have the pleasure to yell at someone in India when it isn't even that persons fault.
I wish I could properly articulate how much I despise AT&T. I wouldn't even wipe my ass with Mr. Stephenson's face if I ate a 7lb burrito while being stuck on an island whose only indigenous plant life was poison ivy.
-mike
Interesting thought, but I think you miss the point. Apple does not refuse to "open its platform" because it thinks it is ahead. It controls the platform because it feels this provides the best end-user experience. Whether you agree with this or not, it is an arguable position.
And what is this "open its platform" mean anyway? A lot of people repeat this phrase without thinking. (It is almost like so many IT people 20 years ago endlessly repeating the MS-mantra "Mac is a toy, Mac is a toy." How silly!) The fact is: Apple HAS an open platform in the sense that it is open to developers to develop apps for it. What more do CONSUMERS want? Do they care if a developer or OEM can change the underlying OS code? I don't think so.
Plus a few HUGE differences. One, MS kept ironclad control of the OS even though they licensed it to all comers, which allowed a unified ecosystem to be formed around a single OS. Google, however, is allowing all kinds of variations of the OS and the UI to be expectorated on the market and the handset makers and telcos are furious trying to build "unique" handsets to differentiate themselves from one another. Already you have the ballyhooed Nexus one coming out with Android 2.1 while Sony is still prepping its flagship Xperia 10 which uses Android 1.6. That's no way to push a platform forwards.
Two, With the Mac, Apple only made money off the hardware, while MS and others made a killing off software and peripherals. This time Apple has learned to make money off of every aspect of the iPhone: the hardware, the software, the peripherals, the monthly subscriptions and even an extra retail cut from sale in their own Apple stores. Apple is making over $600 off of each iPhone while selling them for the same price as competing phones, profits their competitors can only fantasize about. Macs always commanded a premium price but the iPhone has remained completely competitive price wise.
Finally, with the Mac, Apple had to beg MS to create software to make the Mac useful, but this time around, Apple has already created a HUGE developer ecosystem in which Apple profits off of every software sale and tightly controls, not letting strategic software be controlled by a third party (like Office or Photoshop.)
I don't agree that the openness of Android inevitably leads to fragmentation. Too many successful open source projects have already disproved that theory. The ability to fragment is offset by the huge benefits of staying unified.
Yep, Apple is making tons of money from the iPhone. Which makes it that much harder for them to adjust to changing circumstances. Just like IBM when the PC came along. Again -- innovator's dilemma.
Name me one open source consumer hardware product that is a blockbuster success.
You missed my point, Apple is making huge profits from the iPhone while staying level with or even undercutting competitors price points and no one else is even coming close to $600 profit per phone. They're lucky to receive $60 per phone. Just look at RIM giving away Blackberrys and now if you buy a Droid you get a Droid Eris free. Apple doesn't need to do that kind of nonsense to goose it's numbers. Competitors still have to make money off their products to compete with the iPhone and Google's profits from Android are a long ways off. Meanwhile they make a lot more money off of the iPhone/iPod touch. The iPhone universe is too enormous now for Google to ignore. If Google really wants Android to thrive, they will have to exercise tight control over the OS like MS does, they will need to get into the consumer hardware business and I don't really think that's in their DNA.
People also forget that an open source Mobile OS is really nothing new, Google just has a lot of money to throw at it. But they have no experience in mobile consumer hardware and software integration, marketing, and development. Apple spent six years developing the iPod, iTunes, iTunes Music store ecosystem before launching the iPhone on top of that enormous foundation.
The consumer router market is being taken over by Linux-based units. Whether that constitutes "blockbuster success" is a matter of perspective, but the openness of the platform is unquestionably one factor in their success, as it lowers the barriers for entry. I would argue that open source mobile OSs are indeed in their infancy. Symbian was belatedly thrown over the wall; it doesn't really count.
And a decade later, they are the most profitable computer manufacturer, have 6x the value of the posterboy of the opposing strategy (Dell), and they've outlived tens of high flying computer manufacturers who aren't even remembered. And yet bloggers, reporters, and analysts still like to pretend that time stopped after 1995 because a decade, a decade and a half, is the longest view they can come up with?
More than half (probably a lot more) of Apple's market cap is attributable to the iPhone and mobile. So maintaining the lead in that platform is crucial.
Commoditizing PC hardware didn't benefit PC manufacturers; it hurt them. Apple benefited by maintaining a distinguished hardware/software integrated product. Commoditizing the OS will likewise hurt everyone going down that path eventually (increasing share but reducing profits), and Apple will resist it by preserving a distinct hardware/software advantage that is profitable. If Apple only has 10-15% of a much bigger market a decade or two from now and still has profits, do you think they (and anyone else) should consider them "losers"? I don't see that as a problem; I see that as the goal. Meanwhile, Google could have 40-70% of the market and only have very little profit derived from building out the mobile ad space and by representing 5-10% of that 60% with their own share of their own devices.
The lesson of the last decade I think is much more interesting than the lesson of the mid 80s.
Yes but it also has the lion's share of the profit.
Expanding mobile access only give them more profits in ads, but in all sorts of services that are only starting to be built out. The devices are a means to push the industry forward towards their vision of Googly goodness. Making money off of the sale of the devices is very minor.
Google commoditizing the OS is not at all like the manufacturers of PCs (Dell, Compaq). It is more like Microsoft, which made most of its money by controlling the platform, not building hardware.
Or creating new platforms (read: iSlate).
And didn't Apple just announce 3 billion App downloads?......... That's 3 billion kids. Is anyone even close to that?
Moreover, why does everyone forget about the Touch? I have 5 in my house and we love them.
9 of 10 means 90%. Would you like to make nothing on a netbook and sell a lot of them or sell fewer items and make money? MS makes $ on the netbooks, the hardware cos, not much
Verizon/ATT etc. , they will jam you up every chance they get - map their key boards so it is likely you will mistakenly initiate data downloads and charge you for it even when you stop it almost instantaneously. they all suck. Follow V's exploits on pogue
http://pogue.blogs.nytimes.com/
This will be decided on the field - I like my chances with a company that has performed like very few others in one of the worst, if not the worst, economic downturns since the depression. Strip it down, google is a search engine with revenues derived from that. They bought youtube, they did not cook it up. Good luck with your bet.
And in there - Apple's doing well.
You've also missed a big part of the history - Microsoft didn't just come out of nowhere, they already had a stranglehold on the PC industry with DOS.
Apple is the computing equivalent of BMW - and BMW's market share is only around 2-2.5% worldwide, but I don't hear "analysts" clamoring that they should increase that, or how they'll be dead if they don't.
If there is any place Apple needs to spread ubiquity when it comes to iPhone it's with cellular carriers. Being limited to one carrier has hurt the growth of the iPhone and has hurt it's product. (Try using AT&T Data in midtown manhattan)
The other part of the analogy that breaks down is that there is no single competitor out to copy and crush the iPhone, like Microsoft was out to crush the Mac. Google, Microsoft, RIM, and Palm, are all fighting Apple, and by extension each other, for the mobile market.
So while Apple needs to stay hungry and continue to develop its product offering. I don't look for the movie to play out again.
When Steve Jobs returned to Apple in 1997, few weeks before the company was facing insolvency, one of the first things he did was to shut down the Macintosh cloning partnerships AND took full control of software-hardware integration. The rest is history: your argument is based on the wrong set of "facts"
Than a customer's satisfaction?
What is SAI's market share?
What is Sony's?
What is BMW's?
What was GM's?
Who cares?
I am so bored about open software. What counts is price, usability and can developers make a profit - not openess.
If openess was the decisive factor then linux would have won the desktop.
Apple will go down in history for one the dumbest business decisions for single sourcing the IPhone to AT&T. Just as dumb as IBM not owning the DOS OS and leaving it to Microsoft.
Sacrificing long term market share for short term profit margins. Dumb, dumb, dumb.
BTW , there is no "balance" to being an open platform. You're open or you're not.
Apple had less than 5% a few short years ago. 10% market share today means that the growth potential is enormous. Do you see any other company growing as fast as Apple. Do you think Microsoft market share will grow? Last I checked, it was shrinking. No where else to go but down.
Sure they may have 10%, but 10% of the most profitable niche. It's not the market share that counts. Its the dollar share or more importantly the profit share. Look at the profit margins of Dell and HP and weep. Your pithy reply of 'but they only have 10% market share' shows that you are still stuck in the 90's way of thinking.
Additionally, it is a different decade, a different space, and more importantly a different price point.
Consumer behavior at a (perceived) $200 price point is much different than at a $1500 price point (when the PC/Mac wars were decided). At $1500-2000 a purchase, the PC/Mac war was won at the enterprise. Consumers simply went with what was assumed to be a winner in the enterprise.
The CE space is driven squarely by consumers and at a $200 price point is not subject to a lot of scrutiny in the decision making process. The CE space will be dominated more by the brand promise than the actual functionality of the device. Apple is cleverly parlaying its success with the iPod and iTunes into new classes of devices.
-S
I think a lot of people misunderstand the ATT issue. Apple made a very wise decision to go single source for the carrier. To understand this, one needs to go beyond the superficial view of this, and see what the overriding motivation was here. (In my opinion.)
Let's remember that when iPhone was released, Apple had no first-hand experience in the cell phone arena. They were releasing the most sophisticated phone ever, one that went way beyond the capabilities of any existing product. All this complexity creates a great deal of risk. As any software engineer knows, the potential for errors (bugs) is exponentially related to the complexity of the system.
To Apple, the core concern is the end user experience. This is their primary motivation - their mission. So what could they do to minimize the risk? One important aspect was to go single provider. This way they:
1- reduced complexity by having a single provider - they did not have to worry about "was Problem A because of one provider or another:
2- They were able to dictate levels of service and cooperation that they would not have been able to if they did not have the special arrangement.
Personally, I feel that this is also the reason that they released with a more limited set of functionality - reduce the complexity to assure a quality user experience. (Remember the rants about no cut-and-paste, etc etc??)
Now it is time for them to move on and expand the coverage. I am sure they will do so when their contracts with ATT are up. Both companies have benefited from the relationship, but soon it will be time to move on.
When are people going to drop this stupid, meaningless market share issue? Market share means *nothing* if the market you have large share in isn't profitable.
Secondly, the iPhone is on multiple carriers throughout the world, so that "Sacrificing" is only occurring in the U.S.
Third, the iPhone OS is on more than one device, it is also on the iPod Touch. So competitors can claw after the iPhone all they want, but the no matter what happens to the iPhone, the App Store is going to get bigger and bigger, attracting more and more developers and it's going to stay that way for the foreseeable future.. The iPhone/iPod Touch combo is the fast growing electronics product of all time. It's even bigger than the original iPod, which eventually became a monopoly based solely on this so-called "closed" platform that you speak of.
But my point does explain why they did not go with both. :)
Apple's war chest at the time as over US$2bln. Apple didn't need the money.
Given Apple's current market cap and cash in the bank, I'm not sure I'd agree that Apple "lost" at all. If they lost, who won? Apple is a computer manufacturer and I'm hard pressed to think of one more successful.
apple lost in the sense that they had tried to become the dominant OS/hardware company in the PC world and failed. Yes, i agree that they are successful but they do not dominate the pc market. Microsoft and Intel dominate the PC world.
It would appear to aptly apply in the computer business.
What you so easily miss is that Apple, as a company and all it's products is about "the user experience" pure and simple. The Mac wasn't called "The Computer for the Rest of Us" for nothing. And that continues today with the Mac as we know it.
Not all the world is about buying something, whatever it is in it's market segment, at the cheapest price.
You should know better, but don't. All you have is a large shout-box.
just compare the share price between Dell and Apple for the last 10 years. Dell has a much larger market share but look at it's market value. Which shareholders do you think are happier?
A Toyota Camry is not a luxury car -- but it's top-notch in quality. I drove them for years --
and I ain't rich; just a savvy shopper. Same goes for Macs. I used my Pismo laptop for
eight years, with only a 3rd-party CPU upgrade from 400 to 500MHz, when a cache error
started cropping up.
Sunny Guy
They are awesome machines, but having to spend a few hundreds bucks to fix it after 1 year made me mad. I gave it to my sister (which was very happy). For me, no more. It is not worth the trouble.
PC or Mac, ALWAYS buy this kind of warranty for laptops.
you're an idiot. :)
I don't see Apple trying to use financial instruments to buy IBM anytime soon.
And I take care of my machine, but can't do much if internal circuits start to fail. MBP is beautiful and awesome while it works, but it is definitely not durable.
PS: I'm not in USA. AppleCare is not worth for me as it is for you. ;)
I'm not going to buy a cheap adj. wrench in the bargin bin at he hardware store figuring it will break in a while, just when I need it vs buying a Crescent brand wrench which I own and have NEVER had one break.
All things break, no matter how good, but to lay blame to Apple making them "Luxury goods" because of your personal experience is painting with way too broad a brush. Lots of folks have had the opposite experience. Given that ALL laptops are far more fragile than desktops, I would have opted for the insurance of the Apple service contract as I did. No problems.
Wasn't AAPL the better bet there?
I only care hard facts.
Either you go for market share and compete in the "who is cheapest" category with ever diminishing margins, or you go for quality and take what comes. If you do not like that business sense, then you should not invest in Apple. Many people just do not get this idea - Apple is a company full of artists who take pride and gratification from producing beautiful products. A long time ago people did not get that. Now, more and more every day, people are getting it. (IMHO)
In fact, if you talk to 3rd parties, they make more money from Mac software than PCs, because, lo and behold, more consumers buy Macs as a percentage than PCs. Corporations buy the same boring shit like Office, but then nothing else.
your argument is that :
'apple would be a more successful company if it's computers were cheaper so more people could afford them.
in otherwords, what they lose on profit margin they would make up on sales.
Apple has become more price competitive compared to 10 years ago. I assume you would reply that they should drop their prices even further.
But who is apple targeting? It's consumers - not corporates. Corporates are more price conscious so not sure how apple could compete on price.
The consequence of this? Apple does not dominate the PC market like it dominates the ipod/iphone market.
Apple is about "The user experience" which includes the great industrial design. Too bad you don't get that.
You also forget that the cheap Wintel OEM's like Dell walk a tightrope. With their race towards the bottom of the profit margin ruler, a very small misstep can spell disaster. Witness Dell. How many other Wintel PC OEM's have fallen, victims of the race to the bottom of the profit scale? HP makes decent profits, but that''s not due to computers.
Apple is quite happy where they are with a secure, successful company.
I wouldn't want the job of running Dell either...
"Steve Jobs and "The Woz" became legends (and dynastically wealthy) and a generation of consumers fell in love"
Woz had nothing to do with the development of the Machintosh. Woz's legendary status was built entirely on the design and creation of the Apple II - the machine that IBM ripped off for the original PC before Microsoft cloned the Mac.
"But the mistake that doomed its primary business, the Macintosh, to niche status was the insistence on maintaining complete control over every aspect of the product while Microsoft drove for software ubiquity."
Nope the biggest mistake was letting the sugar water salesman's legal dept produce a contract with Microsoft which allowed Microsoft to license the elements of the user interface in the first place.
"In its short life, Google's Android operating system has captivated developers and stolen mindshare from Apple, Research in Motion, Palm, and other companies that have been in the mobile business forever."
Well firstly the advertising that has been thrown at Google phones over the Christmas period was pretty enormous. One would hope that some mindshare would at least grow from the blanket coverage on the TV. The question is did that awareness grow into sales? And, having got the Christmas period out of the way, we now have Google eating it's own children, highly reminiscent of Microsoft's "Plays for Sure" debacle.
"But the movie is starting the same way. And so far, at least, Apple is showing no signs of doing anything differently."
It maybe in this very short-term look at the situation - but we have a day of Google celebrating that they are making use of their competitors mind share building over Christmas to release a new phone which is much the same as the other devices that have the Google name attached and then the chaos of CES for the next few days which should take us through Apple's earnings for the most recent quarter and then the big announcement at the end of the month.
It is easy to say this kind of thing and it'll look great if, in years to come, this is a highly prophetic article. But I suspect that Apple, who are a very different company these days from the one that failed in the 80's, are well aware of what they are doing and don't need much help from a blog as to what to do.
I would like to know in how many of those global markets has the iPhone being successful?
http://www.networkworld.com/community/node/49421
Google: iphone france sales.
Users that like being walled into the iTunes ecosystem.
It's not a bad thing but you can bet all major mobile apps will be cross platform in 2010. Apple's issue is they will not be cross carrier, maybe they add VZW this year but that is still a big maybe. Google, RIM will be selling and growing their platforms the whole time.
So what is left as Apple's appeal? A nice MUI? It's already long in the tooth and even with 3GS is still behind in functionality. They desperately need background processing. The device can do it as it's the #1 thing people jailbreak for. Mobile devices are very personal and people want to use them how they want. It's not an iPod that does a set number of things.
The thing is (and many Apple fans speak to it) - it doesn't matter. The golden cash show stock price / Profit margin is all that matters. They are happy being "small" and hugely profitable. Nothing wrong with that but as Henry notes - the signs of the same thing occuring are right there.
You don't understand: iPhone HAS background processing - it is a Unix based system and built in functions use it. It is just that they just do not open it up to developer apps for issues of performance and security. They will open it up to full multi-tasking only when they are satisfied that they can do so without compromising these issues.
Also based on very superficial analysis, not least of which is the comment "Once again, Steve Jobs is God." I have no idea where this idea comes from. The only people I have ever heard say this are his detractors and nay-sayers. Do people ADMIRE Jobs? Well of course! He has built up one of the most successful businesses the world has ever know, and done so by NOT following the crowd, and by insisting on a quality user experience. Apple has redefined every product space into which it has moved - and to the benefit of all of us.
So why not admire the man? But that he is "God"??? Give me a break!! Sure some folks get a little carried away in their enthusiasm for the products, but think Jobs is god? This is ridiculous!
As for technical details - your analysis is one-sided and superficial - your reasoning for Windows dominance in particular. You also assume that people have not changed in the last 30 years, ignoring the last 10 years.
But what makes you think that Apple desires (like Microsoft) to dominate everything? Apple wants to create beautiful, satisfying, easy to use computers and consumer products that continually push the human-machine interface to new levels in the most elegant way. As long as they do so they will be a major player in their product areas.
Android offers an alternative to iPhone - This is true. Good! There needs to be competition, keep Apple on their toes. But your blind race to prematurely elevate them to a dragon-killer is, well, premature. Let there be several operating system! And let each individual person purchase the system he or she prefers for whatever reason!
But you blind adulation of Android is as silly as the most extreme Apple fanboy. For a really insightful analysis of Android vs Apple (though also one sided) see:
http://www.roughlydrafted.com/2009/12/17/apple-vs-google-its-all-about-who-pays/
Disclosures:
Long Apple - and longtime fan
Google - I use them, and admire their business, but have a deep-seated distrust of any company that wants to look at my private communications so that they can "better market to me."
iPhone - I own no cell phone and have little desire to become a slave to the telcoms.
Happy New Year to all.
Every single person I know who has a Droid would have purchased an iPhone, but was unable or unwilling to switch to AT&T.
Go ahead and run against Apple, let's see how you do. My bet is you would drive MSFT stock down faster than Balmer.
Go ahead Blodget apply for Microsoft CEO. Maybe since your such a visionary why not just start a tech company yourself.
We can then read in it 30 years or so to see how the movie ended.
Henry and others who share his view seem to believe that simple math would apply to Apples profits if they would just simply licence everything and gain significant market share. I disagree with their math.
So I guess my point was, that this column could have been written in 1972 when one could have argued that Toyota should just build as much cheap crap as they could in the hopes of gaining market share. Toyota by the way, did that very thing when they first came on the market, but then decided that a better approach was to build something better. 30 Years later the results are in. Hope that clears it up.
When will some of you get it...market share, in and of itself, is meaningless. Meaningless!
The idea is to make money. If you sell one million units with one dollar profit per, and I sell five units with a profit of one million per...you made a million bucks. I made 5 million bucks.
Did you "win" because you sold more units and had a bigger market share?
Only in bizarro world.
the remarkable about thing about the iphone is the type of people who have them. It's the everyday person. They are not just tech geeks or media types - but old, middle age and young. And these people don't care about open source. They want something that's easy to use, reasonably priced and, now it seems, applications.
Most people who criticise the lack of iphone's openess are either tech geeks or open source idealogues. If people can obtain the phone on 2 or more carriers then the phone is 'open' for them. They don't care about apple's apps approach. As long as there is plenty of apps to choose from then they are happy.
the remarkable about thing about the iphone is the type of people who have them. It's the everyday person. They are not just tech geeks or media types - but old, middle age and young. And these people don't care about open source. They want something that's easy to use, reasonably priced and, now it seems, applications.
Most people who criticise the lack of iphone's openess are either tech geeks or open source idealogues. If people can obtain the phone on 2 or more carriers then the phone is 'open' for them. They don't care about apple's apps approach. As long as there is plenty of apps to choose from then they are happy.
I have to say I agree with you to a degree here. Many of my personal gripes with Mac OS are do to lack of control over some areas of interface. A few of them really annoy me.
You conveniently ignore Apple's foray into the MP3 market, where Apple insisted "on selling fully integrated hardware and software devices, instead of focusing on low-cost, widely distributed software."
That didn't work out too bad, so what makes you think it's a failed model?
Really the article has no legs to stand on. Apple 2010 is not Apple 1985. The 2010 cell phone market is not the 1985 PC market. Google 2010 is not Microsoft 1985. Microsoft 2010 is not Microsoft 1985. So what's your point again? Open source doesn't mean consumers can go in and program their phones, thus it ain't democratization of the cell phone industry. Free is not free. Google's strategy is based on a fractured market of Android devices where software for one device will not necessarily work on another phone company's Android device. End of comparisons please.
I doubt you will be willing to admit to writing this piece in 3 years time.
http://live.gizmodo.com/
Weee!
2. Apples value is roughly 6 X that of Dell?
3. Application sales on the Apple App store rose 1000% during the Christmas shopping season this year alone, how many apps are there for android again?
So Dell is closing factories, hemorrhaging jobs and cash at a rate that indicates to me they will not last the decade as a company, they are a demonstrating a startling inability to make a profit. So tell me again why Apple needs to play in this low margin space? Tell me again why Apple should help the rest of the computer industry which is stalled or at best growing at a rate much smaller than Apple?
I think what you illustrate perfectly is that they do not need to worry about market share, they need to stick to what they do best, Innovate, improve the user experience, and PROFIT. You see those are marks of a great business. Who cares if you only ship 1- 3 million computers a quarter if you make more than the guy who ships 10 million? What is gained by that? Ask Michael Dell when he is gonna shut it down and give the money back to shareholders who are losing their *ssess on his low margin bargain basement junk.
How many people do you know that love their dell and gush over windows? Exactly! there is a reason every one of my friends has moved to a Mac and doesn't look back. You see I am a geek, I work in IT and now instead of spending time fixing my friends virus riddled boxes, I spend time teaching them how to do new and exciting things with their computers. All this talk about "Open" is a bunch of nonsense FUD spread by Microsoft apologists and Propeller head linux fanboys. What NORMAL people want is a computer that works, is fun and doesn't complicate their lives. Apple gets this and provides it, albeit at a premium, but didn't your parents ever teach you: YOU GET WHAT YOU PAY FOR!
Apple is doing just fine they way they are.
My father is a business owner and I once asked him why he didn't expand more when times were good. He replied that he didn't want to; he had all the business he could handle and he said expanding more would put that not only in jeopardy (by entering new and un-tested markets for his business), but it would also change the work environment and dynamics of his business.
That's a risk analysis and a conscious business decision he made not just because of profit or market share but because of how it affected his personal and business relationships. Perhaps there is more to this than meets the eye for Apple not just as a business but as a business that forms partnerships and relationships to others.
Apple has repeatedly stated in the past that they care not about making the most money or gaining market, but making great products that change the world. I would hazard a guess no matter what happens they have done just that.
Ever thought of actually taking them at their word? Would that be a new concept to someone who was kicked forcibly out of the financial industry? Hmm...seems to me if you're a crook you look at everybody else like they are too.
There is a false premise in the modern world of capitalism (or more accurately, corporatism, which is NOT the same thing).
The mantra: "GROW OR DIE"
False.
That is only one way of looking at things, and some cases, it's so short sighted it should be rewritten as "GROW, THEN DIE"
If you over-expand to fit a temporary market, you are left with legacy employees and factories during lean times, overcapacity and fire sales. You diminish your brand cache and loyalty in many cases that way. You lose quality control. You are seen as a ubiquitous commodity, not something to covet. And you can even end up competing with your own stores and products for business (see MS, with Vista competing with XP for dollars, or netbook makers competing with their own low cost laptops for dollars, etc.)
Hugely "successful" restaurants, clothiers, retail stores, etc. have all fallen into the "GROW, THEN DIE" trap in the past 25 years.
How was Apple on it's Deathbed with $4 Billion in Cash Reserves?????
Henry, there are some huge changes from what they've done before.
One, Apple now has one of the best supply chain systems. And two, they've invested long-term in key components (i.e., flash memory) and with the volume from iPod units, they have gained pricing advantages. The combination of these two gives them pricing flexibility - they can sell for much cheaper and gain market share, or they can sell at prices that the market will pay and gain profit share. Cook and Oppenheimer have mentioned Apple's determination not to allow a "pricing umbrella" repeatedly during conference calls.
Three, Apple has the best SDK for third-party app development for a smartphone. That wasn't so with the Mac, and slowed or killed Mac app releases. MS focused on all developers while Apple back then paid attention to just a few.
Four, Apple is much more synergistic across all their platforms - Mac, iPod, iPhone, AppleTV, iTunes, MobileMe, Safari/Webkit. This is forming a much larger ecosystem. No more Apple II/Mac/Lisa, or Mac/Newton disconnects. We'll only see more of this with the rumored tablet.
Five, Apple has much better "control" over standard formats. MS won largely because it controlled the "standard" Office formats, including IE and ActiveX, that everyone needed. But with media, because of Apple's fight with Quicktime, the standards are not controlled by a single company. And with the web, because of Mozilla and Apple, HTML5 is taking hold.
I don't know that all these differences will offset the broad hardware innovation and combined marketing power that one can get from having multiple companies engaged. But Apple is in a far better position today than it was back then.
1. They are remaining price competitive with their products while reaping huge profits.
2. They are fostering a huge developer community
3. They have completely cut out the dopey middlemen like Sears, CompUSA, Circuit City, etc. who completely botched selling and marketing hardware and software to the consumer.
4. They actually have some of the tightest logistics and supply chains of anyone in the industry whereas in the 80s and 90 they were legendarily bad in those areas.
5. They have an industrial class, UNIX -based, completely modern OS which scales across their entire product line-up, as opposed to Apple II OS vs. Mac OS vs. Newton OS vs. Pippin OS which were all incompatible.
6. They have a hugely profitable, strategically placed and growing network of retail stores where their products can shown off in the best light to masses of well-heeled people who would otherwise never see Apple products.
7. They are completely independent of third party software like Office or Photoshop or even Flash, thank God!
8. They make money off of every aspect of the iPhone, not just the hardware, including software, peripherals, music, movies, and TV shows. (Legend has it that MS made more off the Mac at one point than Apple by selling most of the critical software.)
9. They are selling to Joe & Jane average consumer and not IT departments who are convinced that IBM/Microsoft is their only solution
10. Finally, Apple has an entire leadership team that actually has a clue, which was never really the case while Jobs was absent.
You zeroed in on one small weed and missed the entire panorama.
Yesterday I had to buy a PC because even with Bootcamp there were certain tasks that my Mac just could not do. With the shift of the research market to India and China away from the US and Europe I as a consumer need to be aware that the software that I want to use just is not availible on OSX and Mac Platform and I would just work myself into a frenzy by trying to rig my mac to run the software, which would make me feel like I am using a PC and kind of defeat the object.
Furthermore, Apple has not changed over the the last 30 years, their business model is still nearly exactly the same.... But ONE THING that I find interesting is this APP APPROVAL process is VERY SIMILIAR to MICROSOFT SIGNED and we all know what happened to that.
Market Share.....I would much rather have the top 10% than the bottom 10%. I am sure there is a sweet spot and it looks like Apple found it. PC people ALWAYS babble about market share, I never really understood that argument. Quality vs Quantity ...personally I prefer Quality over Quantity...if it is crap to begin with having more of it doesn't make it smell any better.... ATT vs Verizon...or any carrier for that matter...who cares...doesn't it come down to who has the best coverage in THEIR area?
Apple is doing well because people picked up an iPod and said, WOW! this thing works GREAT! I wonder what else I have been missing. MS didn't push us ahead they have been holding us BACK!
I don't CARE how closed Apple is as long as it works. Do you? I mean really, who cares if the software or the entire system is CLOSED if it works? I only care when it doesn't work, and in the Apple world that is a pretty rare event.
but alas...you got some INK which I suspect was the point.
http://en.wikipedia.org/wiki/Henry_Blodget
Fraud Settlement
In 2002, then New York State Attorney General Eliot Spitzer, published Merrill Lynch e-mails in which Blodget gave assessments about stocks which conflicted with what was publicly published.[5] In 2003, he was charged with civil securities fraud by the U.S. Securities and Exchange Commission.[6] He settled without admitting or denying the allegations and was subsequently barred from the securities industry for life. He paid a $2 million fine and $2 million disgorgement.[7]
Only Google attempted the approach of releasing Android to third party OEMs. But that proved to be a disaster, because it resulted in a platform with so many myriad configurations of hardware with various capabilities that developers simply couldn't develop for it. Google has responded by producing its own Nexus One Android phone, as the reference standard for the design of Android smartphones and as the reference configuration for software developers. In short, Google, with the Nexus One, is adopting Apple's approach of integrating its Android OS with its hardware, as far as it can, given that it has open-sourced Android. With Android being open-sourced, the Nexus One reference standard is as far as Google can go in adopting Apple's approach of integrating a proprietary OS with proprietary hardware. However, it is uncertain whether Google's modified approach to unifying its open-source operating system, Android, with its reference standard smartphone, the Nexus One, will be sufficient to unify the world of Android smartphones so that software developers will have a common target for development and users will have an iPhone-like experience.
Microsoft is the only company that is the remaining pure play of making a proprietary operating system, Windows Mobile, for use by third party OEMs of smartphones, and it is being run out of the market place. First, Google, by giving away a quality mobile OS, Android, for free has destroyed the business model for licensing an operating system to third parties, so neither Apple or anyone else could adopt that obsolete business model, even if it wished to. That business model is dead, as long as Google provides Android for free, and Android remains a quality mobile OS. This fact is reflected in Windows Mobile (WiMo)rapidly declining share of the market and the almost daily instances of OEMs abandoning their WiMo licenses for the free Android.
So, that leaves two choices: (1) give away your mobile OS for free, as Google does with Android or (2) put your proprietary mobile OS on your proprietary hardware. Only Google can adopt the first approach, because Android pays for it self by being a platform for Google's search and other services that are used to generate lucrative advertising revenue. Apple et al. must adopt the second model of locking its proprietary OS to its smartphone and get revenues from selling the phone, the App Store, and, I think, in the future from subscription revenues for its products and services.
If you can’t see the foregoing Mr. Bloget, you are in the wrong job.
Chanson de Roland
5 January 2010
http://macdailynews.com/index.php/weblog/comments/23546/
Apple should stay the course and surely they aren't reading this anyway.
It is true that iPhone has a head-start in building up a eco-system. BUT, out of those thousands of applications available on iPhone, what's the percentage that are freebies versus people who are willing to pay for? What matters is the "killer application". Currently, Apple may have a lead on the "killer applications". But the developers of those killer applications would be more than happy to broaden their customer base since they have the economics to support porting.
Finally, porting from one platform to another is getting trivial compared to 10 , 15 years ago with the many new software tools widely adopted nowadays. So, I don't think it is a high hurdle for developers to switch over if they smell potential money in Android land Besides, there are all these complaints about Apple's approval process for getting included in Apps store. Remembering one important driver of the adoption of VHS, internet, ... was porn. I just cannot see Apple being too supportive of porn being broadly included in Apps store.
The "killer app" is just that ... the app store. A single marketplace, accessible by one button touch. And just all of the apps will work on any iPhone and most iPod touch devices.
Android's Achilles heel is the very attribute that you're touting -- its capacity for many different phones at many different price point. Problem is that this fragments the market and creates clusters of users around specific devices rather than a single unified platform. It's not like Windows where MS had final say over the UI and moved to phase out older versions of Windows once the newer ones come out. Android already has 4 versions getting installed into current devices, with more to come as the year rolls on.
I believe the Apple CEO once mentioned that Porsche and BMW were small players in the market and we're doing fine. Why can't Apple? I believe there is a confusion that in order to be a market leader, you have to license your OS to 100,000 companies and that's not true.
If we take that as an example of licensing your software, look at where windows mobile is today. Nowhere! After more than 10 years and billions of dollars in development and marketing they are totally irrelevant in the mobile world. Why will Google survive under this model? Because it's Google?
The handset manufacturers for many years only pumped out real bad phones with terrible interfaces dictated by the carriers. They are now at the altar with Google in the hopes that they can develop better UI experiences that can match the hardware. Unfortunately as today's move by Google proves, handset manufactures still do not get it and Google had to take the reins and build something more in line to their expectations and software capabilities.
I believe that only companies that have manufactured the whole "widget" will get the biggest share of the super smart phone market, i.e. Apple, RIM and Nokia have the best shot at it and yes it is a new movie.
Just how many Windows HARDWARE manufacturers have been successful for any lengthy period? None that I can recall. They have all come and gone, unless you count DELL as a success (we lose a dollar on every one we sell, but we make up for it in the volume).
AAPL may or may not succeed on all fronts — and GOOG may finally have a hit on its hands in a market outside of its search engine. Time will tell.
Besides, AAPL has a long history of innovation, and there is nothing to indicate that they are stopping that process.
Ciao.
Anthony
1. Apple created the personal computer industry with the Apple II
2. At the time IBM dominated the computer business and once they came out with a personal computer in 1981 large business standardized on the P.C. Other manufactures were then able to clone the computer and DOS became the OS of choice for most businesses and consumers.
3. Apple brought out the Mac in 1984. The Mac was never a market share leader or even close. As I recall, it's market share peaked at around 10% in the late 80's or very early 90s.
4. No one owns the phone business like IBM did the computer business, therefore any supposed similarities between the computer business in 1980 and the phone business currently are highly dubious.
Okay, enough with Henry's stupidity, regardless of whether it's real or simply feigned in a quest for hits, it's fundamentally flawed.
Again, look at iPod, not the Mac, if you want to see how iPhone's vertical integration bodes for its future. Google Android offers the same messy, inconsistent Windows PC "experience," but without any cost savings, real or perceived. Windows only thrived back in the mid-90s because PCs (and Macs) were so expensive and buyers were extremely tech-illiterate; the upfront sticker price roped in a lot of people. Microsoft today still coasts along on the momentum generated at the end of last century. There is no price barrier today: Apple's iPhone 3G costs just $99 and the 3GS goes for only $199 in the U.S. with a 2-year plan. I'd call Android the "Poor Man's iPhone," but you have to spend just as much, if not more, to partake in an increasingly fragmented and inferior platform. As iPhone expands onto more and more carriers, Android's only real selling point ("I'm stuck on Verizon or some other carrier that doesn't offer the iPhone") evaporates.