Why Apple Wins? (Part 1)

8/17/2012 11:26:36 AM

It could have been IBM.

Or Hewlett-Packard.

Or Dell.

Maybe even Microsoft But it wasn’t.

It was Apple that came out of the PC era as the world’s biggest computer maker.

Almost like they knew stuff that the others didn’t.

APPLE IS WINNING. The never-ending queue of customers eager to buy iPads, iPhones, iPods and, yes, even Macs has put the company in a unique position. With more money in the bank than it knows what to do with and a solid bedrock of platforms on which to build the hardware and software of the next few years, it’s unrecognisable as the shambolic company of the early 1990s. How on Earth did this happen?

Description: itunes, iPads, iPhones, iPods

itunes, iPads, iPhones, iPods

Back then, Microsoft and Intel were the unassailable leaders in software and hardware. Their splitting of the operating system and processor businesses suited them and the industry very well. PC makers bought chips from one and an OS from the other, and cobbled up the bits in between as best they could. Real innovation was scarce, so the key was to drive down prices and give users more megabytes and megahertz for their money. Apple, with its emphasis on hard-to-define benefits like usability, its non-standard system and its inflated prices, had nothing to offer that the market seemed to want. And, trapped inside its own bubble of proprietary hardware and software and dwindlingly tiny user base, it had no way of tapping into the advantages of scale that were helping the ‘doners’ to clean up.

Today, what used to be Apple’s perceived weaknesses are now its biggest strengths. By controlling both the hardware and software of its platform, it can create products that are more than just cheaper and faster. No longer dominated by corporate volume buyers, the tech market has expanded into the general population, and while consumers are still reluctant to pay extra for ease of use, they’re more than happy to shell out for a device that seems pleasurable to own and use, and discover its practical benefits later.

As corporates finally - and now at an accelerating pace - move towards ‘BYOD’ (bring your own device), the principle of enabling employees to use the devices they already own and prefer to access software and systems at work rather than providing dedicated computers, Apple’s popularity in the consumer market gives it a foothold in the business arena too - while Microsoft’s rapidly eroding dominance in enterprise is of little or no help in selling to consumers.

It would be tempting, then, to conclude that Apple hasn’t changed, but the market has. On the contrary, however, Apple is a vastly different company from the one that emerged in the 1980s from the startup that spat out Steve Jobs almost immediately after the launch of the Mac. The ethos we now associate so strongly with the company didn’t spring fully formed from the partnership that built wooden-cased micros in a Los Altos garage; it’s taken years to hone. And more than just ethos has been required to build Apple into a company richer and more powerful than Microsoft, Intel or any of the rivals it’s seen off along the way.

UNLIKE MICROSOFT, apple doesn’t have to support all the endless permutations of components that a whole independent hardware industry can dream up. In fact, Apple has been brutal since 1997 in denying support for technologies it deems either outmoded or inferior. At times this attitude seems to extend to its own products: you only have to glance down the short list of Macs that will be able to run Mountain Lion (apple, com/osx/how-to-upgrade) to see that some customers maybe left less than satisfied by OS X’s next great step forward. Mac minis, MacBook Pros and even top-end Mac Pros sold as recently as 2007 are excluded.

Description: Later versions of OS X improved speed and added major features

Later versions of OS X improved speed and added major features

But without such ruthlessness, the Mac platform wouldn’t be in the resurgent position it enjoys today. Ditching the whole code base of Mac OS 9 in 2001 to introduce a totally new operating system derived from Jobs’ Next step was hardly a popularity contest-winning move, but it was the right one at the time and allowed Apple to pull decisively ahead of Windows, which Microsoft continued to resist changing fundamentally for fear of startling the corporate IT department horses.

Switching its entire hardware platform from lBM’s RISC-based PowerPC processors to Intel’s CISC-based x86 line in 2006 made life no easier for anyone, but turned the Mac from an expensively idiosyncratic niche architecture into a superior PC, ready to run Windows or Linux if the user preferred, but more importantly a way to put the best components being developed for the whole industry to the service of Apple’s unique user experience.

When MacUser ran the provocative 1996 coverline ‘How NeXT will give your Mac its balls back’, the sentiment could hardly have been more prescient. Having the guts to force discontinuities on a sceptical market has enabled Apple to achieve what the monolithic ‘Wintel’ industry, for all its breakneck Moore’s Law progress, has proved disastrously bad at: change.

IN NOVEMBER 1997, shortly after Steve Jobs returned to Apple, the nearby Stanford University proudly announced that it had acquired ‘the museum and historical collections of Apple Computer Inc, as a gift’ (bit. ly/NEdTuA). The truth, or so the story goes, is a little more mundane.

Nosing around the Infinite Loop campus for some office space for a new project, Jobs came across a set of rooms stuffed with old Macs. Hardware and software, product manuals, plans, sketches and the like. Far from sentimentally preserving the stash, Jobs’ immediate reaction was to get rid of it - he had other plans for the space. And thus Stanford was bequeathed its legacy. It probably worked out cheaper than a skip.

It’s that sort of attitude to its past that prevents Apple falling victim to inertia or complacency. As recently as April this year, senior VP Phil Schiller reiterated it in an email response to David Greelish, a computer historian and president of the Atlanta Historical Computing Society. Responding to Greelish’s proposal that Apple should create a museum of the company’s history, Schiller wrote, according to Greelish’s account on the Cult of Mac blog (bit. Iy/M66uc2): ‘I don’t think this is a good idea for Apple. We are focused on inventing the future, not celebrating the past. Others are better at collecting, curating, and displaying historical Items. It is not who we are or who we want to be.’

It’s hard to appreciate just how fundamental this approach has been to everything Apple has achieved during its resurgence, and how great the leaps of faith it enabled. Hindsight tends to mask how difficult and dangerous were the decisions that now seem obvious.

In the mid-1990s, under CEO Gil Amelio, Apple was moving towards focusing entirely on software, and this was regarded by Wall Street analysts as a step in the right direction. After all, the big success story of the day was Microsoft, and Microsoft didn’t make hardware. So the Mac OS was licensed out to other companies who made Macs with no Apple logo. This, obviously, would take the pressure off Apple’s struggling manufacturing operation, offer users a lower cost of entry and more choice, and grow the Mac OS user base.

Description:  Apple's logo.

 Apple's logo

Except, of course, that all it actually did was give other companies a chance to take sales that Apple would otherwise have made anyway, trading on the Mac’s pedigree to filch revenue while diluting the very thing that made the Mac O S worth owning: its image as a coherent, quality brand of physical products embodying superior systems. Of course, Steve Jobs killed the Mac cloning experiment as soon as was possible after his return to the company. Attempts to revive it unilaterally, by companies such as Psystar, without a licence have been crushed by Apple lawyers. The company now understands very clearly that controlling its platform lock, stock and barrel is an advantage too enormous to ever throw away.

As we go to press, Microsoft has announced plans to manufacture its own iPad rival, Surface. Belatedly, reluctantly, it’s finally embracing the Apple model. Whether it can make it work is another matter.

Surface won’t be Microsoft’s first in-house hardware project. Its Xbox games console, like its Sony and Nintendo rivals, is a closed and proprietary platform whose hardware and operating system are made exclusively by its owner, which also licenses all third-party software titles. This model has been the norm in gaming since the earliest days and would quite possibly have dominated general-purpose computing, too, but for I BM’s decision - although ‘decision’ makes it sound more organised than it was - to open its hardware design to cloners in the 1980s. That did bring an immediate benefit to the market: rather than one company trying to figure out how to build the computer of the future, dozens could compete to do it. If you go it alone, you really need to be good at it. Microsoft must have questioned its own credibility as a hardware company in the mid-2000s, when the second iteration of its console, the Xbox 360, suffered a notoriously high failure rate. The resulting replacement programmes, lawsuits and additional development cost Microsoft at least a billion dollars, and probably considerably more, although it remains tight-lipped about the whole fiasco.

Description: the Xbox 360

the Xbox 360

Zune, a line of music players intended to compete with the iPod, never quite set the world alight, either. It was abandoned in 2011.

So Surface, the first computer product for which Microsoft has acted as hardware manufacturer (although, like Apple, it’ll outsource the actual production), will be a big test. Specific details of the product are thin on the ground, and journalists were prevented from handling the prototype devices freely at the single demo that’s been given so far - perhaps another indication that this is not an area where Microsoft is entirely confident of avoiding missteps.

One thing we do know is that there’ll be two versions of Surface. The first will run Windows RT, a touch-driven mobile version of the O S, on an ARM-based processor - the exact same strategy Apple has pioneered with iOS. But even mimicking a tried and tested formula isn’t sufficiently reassuring, apparently. There’ll also be a bulkier, more expensive edition of the tablet that runs Windows 8. It would be accurate to call this a laptop PC without a keyboard, but for the fact that it does come with a keyboard.

Microsoft has learned from Apple that it needs to move forward, but it just can’t get the hang of letting go of the past.

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