Wednesday, 19 December 2007
From Adam L. Penenberg’s December cover story for Fast Company, “All Eyes on Apple: Will the gray light of January cool the world’s hottest company?”:
Yet this is also a dangerous moment for Apple. In a way the
company has never seen, the barbarians are massing at the gates.
“Never” is a long time ago, but I’m sure that’s exactly the case and isn’t in the least bit an exaggeration just to frame the entire piece in epic terms.
From hardware to software to services, major competitors with
serious R&D and marketing budgets are laying siege to the House of
Calling Apple the “House of Jobs”, or some such, is like using verbs other than “said” when writing dialogue. Just use “said”, and just call Apple “Apple”. A good rule of thumb, by the way, is that the more a writer attributes the actions of Apple, an enormous corporation with thousands of talented employees, to Steve Jobs, who is just one man and neither an engineer nor a designer, the more likely the writer is an idiot, a hack, or both.
As Apple moves into new markets, it has made powerful new enemies,
some working in concert. Nokia, for example, is banding with
telecom companies to offer its own touch-screen hardware in an
effort to sway subscribers from the iPhone and Apple’s exclusive
(a) AT&T is only Apple’s iPhone partner in the U.S.; and (b) Nokia has been “banding with telecom companies” forever, because, uh, Nokia’s core business is “banding with telecom companies to sell new phones”, right?
MP3 players from the likes of iRiver, Microsoft, SanDisk, and
Toshiba are getting slicker all the time, targeting the iPod at a
fraction of the cost.
iRiver?; Microsoft’s Zune players costs exactly the same as corresponding iPods; SanDisk’s second-place success is not new and doesn’t seem to be hurting the iPod at all, but rather seems to be coming at the expense of all the various “other” player manufacturers; and, as for Toshiba, their top-selling MP3 player clocks in at #97 — ninety-fucking-seven — on Amazon’s current bestseller list. (Even Sony has better-selling players than Toshiba.)
Empirical evidence indicates that Apple’s iPod franchise is doing better than ever. iPod sales growth can’t continue unabated — eventually, at this rate, they’ll run out of people who don’t already have one. That seems to me the biggest threat to the iPod — or at least to the iPod’s effect on Apple’s stock value — on the horizon: that Apple will saturate the entire potential market for handheld media players and growth will slow, even if profits remain strong. That’s a problem Apple is willing to accept, I’d say.
It’s weeks before Christmas, and all through the house, there’s an
iPhone, a touch screen, and no need for a mouse. But Jobs, the
“brilliant,” “visionary” “genius” with a knack for creating
“insanely great” consumer products, may well be wondering whether
next year will be different. Merry Christmas, Steve. Enjoy it
while it lasts.
Those unattributed quotes lead me to suspect Penenberg is an “untalented” “hack” and that Fast Company’s “copy editing” amounts to little more than right-clicking the green squiggly grammar-checker underlines in Microsoft Word. Seriously, what’s up with the quotes?
But none of that will stop a growing number of adversaries from
doing all they can to pare Apple down. Nor does it diminish the
fact that at $185 a share, its stock is far more vulnerable to a
stall or even a fall than it was when it was $50 cheaper.
That Apple’s stock price goes through seemingly irrational swings, both up and down, and is outside the control of the company’s executives, is just how the market works. It’s also a far cry from this article’s premise, which seems to be that Apple’s products are set to suffer in 2008. It’s entirely possible that 2008 could be a better year for Apple’s sales and profits than 2007 and but that its stock price could fall; say, if the growth isn’t as fantastic as some investors anticipated, or if the entire economy goes into recession and investors panic.
Jobs declined to speak with us for this story, but on the eve of
the iPhone’s debut, he deployed a simple metaphor to chart Apple’s
future: “We’ve got two strong legs on our chair today,” he told
USA Today. “We have the Mac business, which is a $10 billion
business, and music — our iPod and iTunes business — which is $10
billion. We hope the iPhone is the third leg on our chair, and
maybe one day, Apple TV will be the fourth leg.”
In essence, Jobs was describing a hermetically sealed system, the
central premise of Apple’s business model: If a customer buys one
Apple device, she’ll buy two, three, even four more — at a premium
price — rather than dilute the experience with other brands.
This isn’t what Jobs described at all. It doesn’t follow from the plain meaning of the words attributed to Jobs in the quote, and doesn’t make any economic sense. The entire key to the iPod’s success is that Apple has sold them by the boatload to Windows users who don’t own any other Apple products. And, for those customers who do purchase multiple Apple products — say, an iPhone, an Apple TV, and a Mac — it’s probably more because they work well together than “brand dilution”.
In an age increasingly defined by interoperability and technical
collaboration, Jobs still refuses to license Apple’s operating
Because there are so many companies making so much money “licensing their operating system”, other than Microsoft. Worked out great for Apple the last time they tried it a decade ago, and it’s worked out great for Palm now, right?
(Note also that all these decisions are, again, solely attributed to Jobs’s personal whim, rather than to Apple as a company.)
He won’t allow music and videos downloaded from iTunes to be
played on other MP3 players.
Except for all those iTunes Plus tracks that have no DRM, and which Jobs has stated explicitly, in a widely-publicized open letter, he’d like to see the entire iTunes Store switch to, if the music labels would allow it.
He won’t permit music downloaded from
competing stores to play on the iPod.
Except for all the music from any store that sells DRM-free music, like Amazon’s or eMusic’s. Otherwise what’s being argued here is that Apple should support Microsoft’s DRM platform, formerly known as PlaysForSure, recently renamed to “Certified for Windows Vista”, which Microsoft itself doesn’t support in its own Zune players. There’s a lot of stupid packed into the above 13-word sentence.
And in enforcing his exclusive deal with AT&T for the iPhone, he
went so far as to disable or “brick” the device of anyone who
dared “jailbreak” it for use with another carrier, or who
downloaded third-party applications for features Apple hadn’t
(a) Again with the “Jobs did it”; (b) only iPhones that were SIM-unlocked wound up bricked by the 1.1.1 update, not iPhones that were “jailbroken” to run third-party apps; and (c) there’s no proof that Apple deliberately bricked unlocked iPhones.
Apple has thus far ridden this exclusionary strategy to riches,
power, and glory. But what does Steve Jobs know that Albert
Einstein didn’t? Einstein posited that a closed system would
become stagnant over time.
Well, if Einstein predicted Apple’s business is doomed, it must be so, because we can all agree Einstein was one smart dude. (Perhaps Nostradamus foresaw this as well?)
As McCourt, the Morgan Keegan analyst, points out, “Each SanDisk
generation of MP3 players is getting closer to iPods; the handset
manufacturers are arguably making more impressive music-enabled
handsets than the iPhone; and try out a new HP laptop with
imbedded Altec Lansing speakers — it’s half the price of a MacBook,
with a far better audio experience.”
Wow, better speakers in an HP notebook? No wonder MacBook sales are tanking. Sell your Apple shares now.
Samsung already sells a touch-screen phone. So does Motorola.
Chevy already sells a sedan with a V8 engine. So does Ford.
Sprint has a touch-screen phone that runs “thousands” of
And they’re all great.
And the king of search [Google] has banded together with Apple
foes such as Dell, HP, Microsoft, and Samsung to form the White
Space Coalition to push the Federal Communications Commission to
open up part of the broadcast spectrum. If successful, Americans
would be able to use any Wi-Fi-enabled device to access the Web
anytime, anywhere, and at zippy speeds — a direct threat to AT&T
and Apple, which have a five-year exclusive contract.
Because Apple doesn’t sell any other portable devices than the iPhone. There’s nothing like, say, an iPod that’s just like the iPhone but without the phone, and which would be a perfectly positioned product for some sort of ubiquitous wireless networking that comes from a provider other than the existing phone carriers.
Apple is at a moment of choice: If it can stay hot and produce
breakout couture hardware indefinitely, it can hold onto its
closed model, elite pricing, and huge margins. In many ways, the
world would be a prettier place if it did.
But in an age of convergence and simplification, customers are
ever more insistent that computers, phones, TV, and music systems
So (a) customers are “ever more insistent that computers, phones, TV, and music systems work together”, and (b) Apple’s entire product strategy in a nutshell is to produce computers, phones, TV, and music players that work really well together, and the conclusion Penenberg draws from this is that Apple is in trouble. Jiminy.
Jobs may have to accept that Apple’s next wave of growth — or
energy, as Einstein might have put it — depends on syncing up his
products and platforms with those of his competitors.
Sure would be swell if iTunes ran on Windows, and if iPods and iPhones could work with PCs, and if Macs could dual-boot into other PC operating systems now that they’re using Intel processors. Again, though, perhaps I’m overlooking something, given that Penenberg’s argument is backed up by a reference to Einstein.
Yet there are risks, too, in tearing down this wall. If the
company’s success has flowed from the trendy, gleaming exclusivity
of its machines, then diluting that quality could erode the very
foundation of the franchise.
Unless, instead, Apple’s success has flowed from the fact that its products are simply better designed, easier to understand, and provide better experiences — i.e. that Apple products are popular because they’re good, rather than popular because they’re “trendy” — in which case the only serious problem the company faces is that it needs to keep making new products that people want to buy, and their success isn’t really precarious at all.
Or, as Albert Einstein actually did put it, “Two things are infinite: the universe and human stupidity; and I’m not sure about the universe.”