The macro headline for Apple of that time would be “Great Product, lack of licensing and eco-system cedes market to Microsoft” So what’s different this time and what is the same?
The differences are that Apple, under Jobs is an innovation engine that is inventing new product classes – iPod, iTouch, iPhone, iPad, etc. The new products are launched and live in a ecosystem under a benevolent dictatorship (or is it?). One architecture, One way of getting apps, ads or “tunes” through their closed garden eco-system. Everyone pays a tax to Apple to play. This works as long as there are not viable alternatives to the Apple product.
In the case of the iPod, Apple’s eco-system became so powerful that it all but squeezed out all comers. Does anyone own a Zune? The iPhone, however, will likely be a different story.
The iPhone was the techno-product equivalent of a genetic mutation, the first of a new species. It leveraged the eco-system of the IPod , then enhanced it with a vibrant app store. So what’s the problem? Apple’s problem is that Google is not the Microsoft.
The Android Platform will mutate and evolve dozens of times a year. The Apple Iphone is on pace for one major release a year. Add to this mix Nokia’s Symbian platform, Palm, Blackberry , and yes even Microsoft – and the challenge to Apple’s smartphone bonanza is formidable. The challengers permit innovation from many hardware vendors ( HTC, Samsung, Motorola and LG to just name a few). The innovation of smartphone products with a common eco-system(s) (Android, Symbian, Nokia, etc) will be more than Apple can bare. Their share will become a significant but much smaller niche. This will happen unless the iPhone OS is permitted to evolve outside of Apple. Since the history of Apple is to control their value chain, this is not likely.
But have no fear you Apple devotees. Apple’s respond is to morph new species, not new versions of an old one.
Thus enter the iPad – Not a netbook, not a laptop, not an iTouch…. It’s something new- and yes it leverages the vibrant iPhone eco-system, Another key aspect of the iPad strategy is cloud computing. The more your “stuff” is stored online , the less you need mass local storage. Ironically a leader in this space is Google with their Google docs. I recently purchased a Netbook for around $250. Rather than double that investment with a version of Microsoft Office, I use Google Docs. For most use cases it works great and all the docs are backed up – check that – live on the net. If the iPad is going to squeeze in between netbooks and laptops, it has to have cloud computing for email storage, simple “office-like” apps and document storage.
Is there room in this Darwinian e-volution tree for this hybrid being? Apple is betting yes – and if successful it will provide them another 5 year run before competitors really catch up. In the mean time, they invent a new product category, while the previous product hits start to get caught and even surpassed from a market share and innovation standpoint. Apple cannot afford to compete in every e-category of consumer products with 100% of the innovation – no company can compete with the entire industry.
The secret to this strategy is not to suffer from innovators dilemma. Apple seems very content to re-invent products categories, even if they diminish the position they have in a previous market. It is hard to come up with many examples that rival such a strategic culture. Rather than invest in two more iPhone iterations or faster innovation on an Ipod – they re-invent them all. This is the truly amazing aspect of Apple and can only come directly from Steve Jobs. They bet the company on continued hit products. The strategy works as long as the hits keep coming and Jobs remains at the helm. Apple would not have been able to sustain a “Vista-like” disaster and have a flagship product be a complete bomb for years.
So – now its off the Apple store to buy my iPad. Why? I don’t know – but I’m sure I’ll like it when I figure it out.