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The Economist on Apple, the iPhone, and Innovation

portscan writes "This week's Economist has a special report on Apple, Inc. and innovation. 'The fourth lesson from Apple is to "fail wisely". The Macintosh was born from the wreckage of the Lisa, an earlier product that flopped; the iPhone is a response to the failure of Apple's original music phone, produced in conjunction with Motorola. Both times, Apple learned from its mistakes and tried again. Its recent computers have been based on technology developed at NeXT, a company Mr Jobs set up in the 1980s that appeared to have failed and was then acquired by Apple. The wider lesson is not to stigmatize failure but to tolerate it and learn from it: Europe's inability to create a rival to Silicon Valley owes much to its tougher bankruptcy laws.' There is also an article on the business of the iPhone and the future of the company. "

45 of 171 comments (clear)

  1. Apples the king at failing by Richard+McBeef · · Score: 5, Funny

    I mean, hell, they've been a doomed company for what 10 years now? 12?

    1. Re:Apples the king at failing by thermopile · · Score: 2, Insightful
      In addition to being the king at failing, this 'beleaguered' company has also been very good at trying. (We zealots prefer beleaguered to 'doomed.')

      Witness, for example, KidSafe. QuicktimeTV. iCards. OpenDoc (for you old folks out there). All innovations that, for one reason or another, didn't take off.

      TFA talks about network innovation -- and Apple certainly does its fair share of that. But they're also willing to try and are willing to accept a few failures here and there. Because of that risk-taking, they're able to quickly capitalize on things like the iPod, the iMac, and the iHateThisMeme. Kudos to them for having the cojones to do that; it seems like many other organizations are too risk-averse.

      --

      "Diplomacy is something you do until you find a rock." --Richard Pound

    2. Re:Apples the king at failing by Anonymous Coward · · Score: 2, Funny

      Yeah, they're failing to the tune of billions dollars of year in profits. What on Earth if wrong with this doomed company?

      Exactly. They can't even fail as a company without screwing it up by making a profit.

      The fact that they are continuously failing at failing is proof that the aforementioned pattern doesn't always hold. Obviously, this means that the article is wrong and that the iPhone will be a failure and could result in the company finally managing to fail which would in turn actually validate the article which would mean the iPhone WON'T be a failure and instead will cause the article itself to dissapear in a puff of logic.

      Of course, this whole argument might just be a load of dingo's kidneys. But that's never stopped people from speculating on Apple rumors.

    3. Re:Apples the king at failing by NDPTAL85 · · Score: 4, Interesting

      Of course Microsoft and Apple are both trying to make as much money as they can.

      The difference between the two is that with Apple the exchange of money for product represents a transaction that benefits both parties. A happy company and a satisfied customer. With Microsoft all you get is a happy Microsoft and an angry/sad customer.

      So Microsoft customers get the raw end of the deal. They pays their money and get nothing in return.

      --
      Mac OS X and Windows XP working side by side to fight back the night.
    4. Re:Apples the king at failing by Pojut · · Score: 2, Insightful

      That is why Microsoft is smarter than Apple. They can piss off their customers and STILL be installed on ~90% of the PC's in the world. I see plenty of programs floating around that allow you to run Windows software on OSX. Don't really see too much in terms of using OSX programs on Windows... Just saying.... Personally I wish I was badass enough to write my own OS...as it stands, I'm a PC Gamer and as such I use windows. Frankly, I would likely use windows anyways. I mean, it IS awefully easy to pirate...

    5. Re:Apples the king at failing by falconwolf · · Score: 2, Informative

      I have to disagree with that statement, I would definately think Chrysler would get that honor. How many time have they filed bankruptcy? and they are still in business.

      Ah, but there's a big difference between Apple and Chrysler, Apple had recovered on it's own whereas Chrysler had the government bail them out. I'm kind of hoping a private-equity firm or hedge fund buys out Chrysler and turns them around.

      Falcon
  2. Another pre-emptive iPhone Hype Artcile by chipotlehero · · Score: 2, Insightful

    The last thing that enjoyed this much hype was Snakes on A Plane. Remember how good that was when it actually came out? I predict iPhone will share the same fate, and shares of Apple will plummet!

    1. Re:Another pre-emptive iPhone Hype Artcile by DECS · · Score: 2, Insightful

      >>The last thing that enjoyed this much hype was Snakes on A Plane. Remember how good that was when it actually came out? I predict iPhone will share the same fate, and shares of Apple will plummet!

      I already used that joke on about the Zune!

      In both cases = lots of fake astroturfed excitement, no real excitement from users. The media celebrated the Zune until it was obvious that it had bombed.

      With the iPhone, there is real excitement from users, but lots of criticism from the media, particularly trolls hoping to FUD it out of existence.

      If you haven't noticed, the market does not agree with you.

      iPod vs Zune: Microsoft's Slippery Astroturf
      Zune vs. iPhone: Five Phases of Media Coverage

  3. Not to stigmatize failure but to tolerate it by Anonymous Coward · · Score: 5, Funny

    I keep telling that to my father.

  4. Not mentioned in the article: Marketing by powerpants · · Score: 4, Insightful

    Apple has cultivated its brand through sleek products and sexy advertising. The first major MP3 player (ignoring the obscure MPMan) was the Diamond Rio, which looked alright... until the iPod came out. Don't underestimate the importance of style when it comes to selling consumer electronics.

    1. Re:Not mentioned in the article: Marketing by Stormwatch · · Score: 2, Insightful

      It's not just the looks... the first iPod came in '01 with a 5GB drive, and that is still acceptable now. The Rio PMP300 had 32MB capacity, and a later model had 64MB. Sure, that was back in '98, you could say it was a pioneer, whatever, but that was pretty much worthless even back then!

  5. Re:Bleh by Applekid · · Score: 4, Funny

    It's pretty much on-target within the Apple Product Cycle.

    --
    More Twoson than Cupertino
  6. Obligatory link to The Onion by angle_slam · · Score: 3, Funny
  7. Fail wisely, OK by Junior+J.+Junior+III · · Score: 4, Insightful

    But let's not call iPhone a success yet. It had an exciting demo that got a lot of buzz. It hasn't sold a single unit yet. Expectations are sky high already, so if this one doesn't do as well for some reason -- or even if it just has a slow start for whatever reason -- the perception could be that it's a disappointment, under-performer, or outright failure. It's hard to imagine it being a complete failure, but at the price tag that they're commanding, it's not like you can guarantee its success.

    --
    You see? You see? Your stupid minds! Stupid! Stupid!
    1. Re:Fail wisely, OK by timeOday · · Score: 5, Insightful
      Not only that, but I don't believe the iPhone is a response to the failure of the Rokkr (as claimed by the summary). I doubt Apple invested much in the Rokkr (since there was nothing special about it), rather Apple simply licenced some trademarks to Motorolla - i.e. Apple using Motorolla as an ATM.

      On the other hand, the Newton was a pretty innovative failure, from which lessons were doubtless learned.

  8. Same with Microsoft by rlp · · Score: 4, Funny

    Apple learned from its mistakes and tried again

    Same with Microsoft, except it usually takes them three tries.

    --
    [Insert pithy quote here]
    1. Re:Same with Microsoft by Fnord666 · · Score: 4, Funny

      Same with Microsoft, except it usually takes them three tries.
      I thought it was three tries before they gave up and just bought some company that already knew what it was doing.
      --
      'The tyrant will always find pretext for his tyranny.' - Aesop's Fables
    2. Re:Same with Microsoft by drinkypoo · · Score: 3, Funny

      I thought it was three tries before they gave up and just bought some company that already knew what it was doing.

      Close. They have to buy three companies before they get a product worth putting their name on.

      Of course, that doesn't stop them from marketing the two other products as well. Sometimes concurrently.

      --
      "You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
  9. Bias by GWLlosa · · Score: 3, Insightful

    So when Apple bombs, its "Learning from Mistakes" and when they get the next version right, its "Insightful Market Understanding", but when Microsoft bombs, its "Rushing it out the door to crush competitors" and when they get the next version right, its "Stealing technology from their competitors". Everyone in business learns from their mistakes and improves their subsequent product, or fails to remain in business. Just look at the stability of the latest IIS vs the earlier ones, for example.

    1. Re:Bias by Applekid · · Score: 4, Funny

      "Just look at the stability of the latest IIS vs the earlier ones, for example."

      Clearly that was stolen from Apache. ;)

      Look at it this way, when my sister walks into the women's locker room, she's greeted and smiles and can go about her business. When I walk into the women's locker room, it's screams and thrown soap and a visit from the police. Talk about unfair!

      --
      More Twoson than Cupertino
    2. Re:Bias by GWLlosa · · Score: 2, Informative

      *XP/Vista are significantly more stable than the 9x series ever was. *Visual Studio 2005 is much nicer than anything Eclipse puts out *There's the one I cited in the very document you're replying to (IIS). *Exchange Servers. *SQL 2005 Servers. etc. The fact that people get 'used to' a version like Win2k or Office97 does not mean that their successors suck; adding new functionality (which they do) while not breaking anything (which they don't do often) is, by most reasonable criteria, a better product. The fact that the upgrade may be slight (95->98, Office 97->2k, XP->Vista (when the drivers are available)) just means that you're not going to rush out and buy the upgrade; no reason for someone who may not have the product not to buy the newest one.

    3. Re:Bias by AKAImBatman · · Score: 2, Informative

      *XP/Vista are significantly more stable than the 9x series ever was.

      XP/Vista are part of the Windows 2000 (from NT) line. Or did you miss that part?

      * Visual Studio 2005
      * IIS
      * Exchange Server
      * SQL Server

      None of the above have ever been all that good. Visual Studio always had stiff competition, but managed to play the "OS Maker" card to get in the lead. (Anyone remember when the only C/C++ compiler that supported the "new" Windows 95 was Microsoft's?) Exchange Server has always sucked. It just sucked less than Notes. SQL Server is okay, but has always had a long list of failings that have kept it from being the best solution on the market. It just happens to get heavily discounted when your shop goes all Microsoft.

      Sooo... whatever point you were trying to make? You didn't.
  10. Like we say in software development... by ringfinger · · Score: 2, Insightful

    ..."Plan to through your first efforts away... because you will"

    But really, there's wisdom there. You never really know what will be successful until you've gotten something out and developed. If only business people understood that, they could likely leverage it to do exactly what this article recommends -- "fail wisely".

    1. Re:Like we say in software development... by Timesprout · · Score: 4, Insightful

      You never really know what will be successful until you've gotten something out and developed. If only business people understood that
      Business people underatand this perfectly well. They also understand the costs associcated with getting to this stage and believe it or not they are clued up enough to understand that if they commit to this cost to just 'get something out there' and it fails then its probably game over for the business.

      This is not something Apple are just chucking out into the market place, large amounts of reseach, market analysis and product developement will have been done before the iPhone got green lighted. There is still an element of risk the iPhone will tank but Apple will have done as much as they can to reduce it.
      --
      Do not try to read the dupe, thats impossible. Instead, only try to realize the truth
      What truth?
      There is no dupe
  11. Tough bankruptcy laws? by C10H14N2 · · Score: 4, Interesting

    What sort of political shilling is that?

    Perhaps the author should look towards Central Europe ca. 1991-2001 to see what economic wonders occur when you have /loose/ bankruptcy laws. It was GREAT for the "entrepreneurs" and loan officers working on "commission" when you could write a loan to finance your business, liquidate it, write off the loan having effectively pocketed the cash, then walk straight back to the bank to pull a new one for a new business, rinse, repeat and retire to the Caymans having produced absolutely nothing.

  12. Mac wasn't born from the Lisa blunder by Anonymous Coward · · Score: 4, Informative

    The Macintosh was born from the wreckage of the Lisa, an earlier product that flopped

    Not quite, they were developed at the same time. The Lisa project began in 1978 and released in 1983. The Macintosh, 1979, released 1984.
  13. Makes sense! by Shky · · Score: 5, Funny

    I tried telling my parents when I was in high school that those were *wise* failures they were seeing on the report cards. If only this article had been around back then...

    --
    CC Licensed Serialized Story and Podcast: Ingenioustries
  14. Not sure why they brought the ROKR into this by raitchison · · Score: 5, Informative

    The Motorla ROKR was designed to fail with the arbitrary 100 song capacity limit.

    The last thing apple wanted was a successful ROKR that might have cannibalized sales from the iPOD and the Apple branded music phone that everybody knew would come out eventually.

    If the ROKR were an Apple product, you could make a case that Apple "failed", in this case Apple succeeded, they held off the market until they could debut their own device that makes them money.

  15. Motorola Phone Failure Was Intentional by Bones3D_mac · · Score: 3, Insightful

    The iTunes-compatible motorola phones were always intended to fail from day one. They were severely crippled compared to most low-end MP3 players at the time. The only purpose these phones served was to see if there was a market for phones with iPod-like integration, but only with features so excessively limited that Apple could crush it at any time by entering the phone manufacturing business themselves.

    Comparing the Motorola phones to the Lisa probably has every Lisa in the world rolling over in their mass-grave.

    --


    8==8 Bones 8==8
  16. Buy Palm? by bill_mcgonigle · · Score: 4, Insightful

    I wonder what their response will be to the failure that will be hitching their reigns to Cingular for 5 years.

    Did anybody notice ex-Apple VP of iPod Jon Rubenstein is now Chief XYZ at Palm? Does the investment firm that took the Palm stake have any other Apple ties?

    I mean, if Apple acquired Palm, and Palm already has deals in place with Verizon, Sprint, NexTel, et. al., well, Apple couldn't very well not honor those commitments. And Palm just happens to be re-tooling their XScale phone to run on a small Unix OS (Linux). So, it wouldn't very well make sense to develop two completely different yet entirely similar products, would it?

    But, hey, I've been known to claim the 3GHz promise was just a strawman to excuse sacking IBM. Steve learned from his NeXTMachine failure that a software company is better off using cheap commodity hardware.

    --
    My God, it's Full of Source!
    OUTSIDE_IP=$(dig +short my.ip @outsideip.net)
    1. Re:Buy Palm? by voisine · · Score: 2, Interesting

      You know, I actually see this as a reason to invest in AT&T wireless. Remember when Apple announced they were switching to Intel and everyone was like, Intel?!? They're a sinking ship. Why the hell didn't they go with AMD? AMD's eating Intel's lunch!

      Right now Verizon is the carrier to have for high speed wireless data with EVDO, but the thing about AT&T is that they're building out HSDPA which is several times faster than EVDO and the planned upgrade path for the majority of cell networks globally. AT&T might suck, but as far as I can tell they suck less than the competition. What carrier should they have picked instead? (I'm actually curious, that wasn't a rhetorical question) I've been using AT&T solely because they seem to be the most premissive about unlocked phones. It's all about the phone. The cell coverage seems to suck about equally no matter what carrier you go with.

  17. Speaking of failures... by Anonymous Coward · · Score: 2, Interesting

    One definition of an expert is someone who has triewd every conceivable way of doing something wrong.

  18. Re:Could the iPhone demos & Apple ads be simul by nine-times · · Score: 2, Interesting

    There are rumors from people who have (supposedly) seem/operated the iPhone who say it operates about how you would expect. Regarding the slow network connection, it may be slow when using the Cell network (what can Apple do about that?), but it should at least be decent when within range of WiFi.

  19. The Other Obligatory Link To The Onion by justinbach · · Score: 2, Funny

    Don't forget about the new product-unveiling product!

    --
    I left my wallet in El Sigundo!
  20. Re:elite by seebs · · Score: 3, Funny

    You seem to be totally unaware that some things are actually better than other things, and some things are purely about status.

    Not all status symbols are actually good. Most decent restaurants are actually better than fast food, but what exactly does a Rolex do that a regular watch doesn't?

    A good segment of the population are, to put it bluntly, fucking morons who will believe anything they see on TV. That does not exactly bolster your case.

    --
    My blog: http://www.seebs.net/log/ --- My iPhone/iPad app: http://www.seebs.net/seebsfrac/
  21. And then have none? by SuperKendall · · Score: 2, Interesting

    Wait, I know this one ... oh yes, put a 3G radio in it.

    And then have zero to sell at launch?

    They need to be able to get them here to sell them.

    --
    "There is more worth loving than we have strength to love." - Brian Jay Stanley
  22. Re:Appeared to have failed? by Weedlekin · · Score: 5, Funny

    "The only NeXT technology that appears in Apple computers is BSD."

    Well, there's Interface Builder. They got that from NeXT. But apart from Interface Builder and BSD, there are no NeXT technologies whatsoever in current Apple computers. Except of course for Cocoa, which is heavily based on NextStep/OpenStep, hence the fact that it has all those classes with names prefixed by "NS". But with the exception of BSD, Interface Builder, and Cocoa, there are no NeXT technologies in Apple computers at all. Unless of course you count Objective-C as a "technology", which NeXt licensed for programming in NeXTStep and OpenStep while Macs were being programmed in Pascal and C++. But I agree that apart from BSD, Interface Builder, Cocoa, and Objective-C, Apple computers are completely devoid of NeXT technologies. OK, I'll admit that Portable Distributed Objects also came from NeXT. I'll give way on that one. But if you discount BSD, Interface Builder, Cocoa, Objective-C, and PDO, current Apple computers are totally and completely free from NeXT technologies. Utterly without _anything_ from NeXT. Honestly. I mean, WebObjects, which is admittedly a NeXT technology, isn't even installed on most Macs, so _the majority_ of Macs are free from it. Well, they are. Really. So I can, without any pangs of conscience, categorically state that, with the exception of...

    --
    I'm not going to change your sheets again, Mr. Hastings.
  23. why do businesses exist? by falconwolf · · Score: 2, Insightful

    Most buisnesses exist and function soley so that they can take as much of your money as possible;

    I disagree. Most businesses are started because the founder(s) have a vision of what's possible, as with technology. The WOZ didn't design and build the Apple I to make money, he wanted a computer he could use at home. Much like Bill Hewlett and Dave Packard he did the work in a garage. It's only later, usually after incorporation, that some turn to the idea of making money. But then they have shareholders they have to satisfy.

    Falcon
  24. Re:elite by onkelonkel · · Score: 4, Insightful

    What does a Rolex _do_.? It costs a lot of money. This will occasionally impress some people. If impressing people who are impressed by Rolexes is important enough to you to make the $3000 cost worthwile then by all means buy one. Being impressed by $3000 wristwatches is totally incomprehensible to me.

    I wear a $29 timex ironman. It keeps almost perfect time (loses 4 seconds a year), it has a countdown timer and 2 alarms and runs about 5 years on a battery. Nobody is going to hold me up for my watch either.

    --
    None of them can see the clouds; The polished wings don't care.
  25. Since I've got some karma to burn: by jstockdale · · Score: 4, Funny

    I mean, hell, they've been a doomed company for what 10 years now? 12?


    Just longer than FreeBSD's been dying if I recall correctly ;-)

    Netcraft confirms it!

    (In Soviet Russia Netcraft confirms YOU!)

    *ducks*
    --
    **AA: a bunch of mindless jerks who'll be the first against the wall when the revolution comes
  26. Re:Killer App by R3d+M3rcury · · Score: 2, Interesting

    Why is GPS the killer app? First, GPS is way cool.

    Second, I hate telling things where they are when the technology exists for it to know. The "Calamari" iPhone ad was a great example--"Hmm, where's a good seafood restaurant close to where I am."

    Third, there are times when I don't know where I am when I'm driving. While I hate people who stare at their GPS while driving, it is handy to at least have a device that says, "You missed the turn."

    Fourth, I like the idea of a device that knows where I am and can configure itself appropriately. I don't have to go in and futz with time-zones. It can tell I'm somewhere around my house and set my network up appropriately. It can tell I'm somewhere around work and set my network up appropriately. It can even keep my clock accurate without an Internet connection. Heck, ideally it might keep track of all this stuff so once I year when I go through JFK airport, I don't have to spend half my layover trying to figure out how to get on the Internet because it remembers the configuration from last year and it's geo-tagged (to use a buzzword) to JFK Airport.

    While a GPS isn't a killer app, per se, having a GPS in the phone and an API to get the data gives application developers some interesting ideas...
  27. Re:elite by seebs · · Score: 2, Insightful

    There's a sort of metalanguage there; you spend the money to communicate that you're committed to making an impression, which is a way of establishing group membership.

    You know what? I never want people like that to talk to me. I will stick with jeans and t-shirts, because that gets me into conversations with people who have something to say, which is much more interesting to me than "a LOT of money".

    --
    My blog: http://www.seebs.net/log/ --- My iPhone/iPad app: http://www.seebs.net/seebsfrac/
  28. Re:Killer App by SuperKendall · · Score: 2, Interesting

    Second, I hate telling things where they are when the technology exists for it to know. The "Calamari" iPhone ad was a great example--"Hmm, where's a good seafood restaurant close to where I am."

    That's a useful feature, but if it's easy enough to set a few default locations that you frequent not very much less useful.

    Third, there are times when I don't know where I am when I'm driving. While I hate people who stare at their GPS while driving, it is handy to at least have a device that says, "You missed the turn."

    I've been misled by GPS street systems before as well though. I'd much rather have a decent map of the turns I'm supposed to make, and know I've missed my turn by a series of street names I know mean I've gone too far.

    Fourth, I like the idea of a device that knows where I am and can configure itself appropriately. I don't have to go in and futz with time-zones. It can tell I'm somewhere around my house and set my network up appropriately. It can tell I'm somewhere around work and set my network up appropriately. It can even keep my clock accurate without an Internet connection. Heck, ideally it might keep track of all this stuff so once I year when I go through JFK airport, I don't have to spend half my layover trying to figure out how to get on the Internet because it remembers the configuration from last year and it's geo-tagged (to use a buzzword) to JFK Airport.

    But GPS is not needed from any of that. OS X recognizes networks you have been to before, and also allows you to have custom network profiles (though it's seemless enough that I have never used them) so it would remember that anyway. The timezone and time can come from the cell aspect of the phone, so they are just as accurate as they would be from GPS (moreso since cell towers know if a locality is in daylight savings or not, something a GPS is indifferent to).

    And what if that network changed in the intervieing year? Having network setup behaviour rely on location triggers rather than recognizing known devices and networks, is I think more likley to have issues in the future.

    --
    "There is more worth loving than we have strength to love." - Brian Jay Stanley
  29. Over hyped? No, genuine excitement. by Gary+W.+Longsine · · Score: 5, Insightful
    Apple really hasn't done much hyping of the iPhone, if you think about it.
    • January 10, 2007: MacWorld 2007 keynote, introduces iPhone
    • Apple.com iPhone web site
    • A couple interviews showing the phone, letting reporters hold it for a couple minutes
    • A very few magazine articles with access to Steve Jobs and the iPhone
    • Super Bowl "Hello" iPhone commercial
    • June 3, 2007: Apple starts running four new commercials that demonstrate features of the phone
    Really, this is far, far less promotion than you see for typical new products. Heck, hamburgers at Burger King get more hype than this, by far, in a six month period. Even though they probably eat a whole bunch of them, bloggers don't get excited and blog about it.

    Apple's biggest contribution to the "hype" came from keeping the project secret until it was up to a point where it could be demonstrated, and then keeping their mouths shut after the MacWorld Keynote, and refusing to answer questions about anything that wasn't demonstrated by Steve Jobs on January 10.

    What we're seeing in the media, blogs, and in meatspace is, I think, genuine excitement. People can look at the information that's available, which is I grant you incomplete, but they can also look at the phone in their hand. They can tell immediately that several things they don't like about their phone are fixed by the iPhone. Visual Voicemail is damned exciting. A phone that can access the internet simply and easily is exciting. The Google Maps commercial makes girls squeel and giggle with delight when they see the pins drop... (try it sometime.) I don't think it's hype. I think it's genuine interest.
    --
    If you mod me down, I shall become more powerful than you could possibly imagine.
  30. Re:Over hyped? No, genuine excitement. by BigDumbAnimal · · Score: 2, Funny

    egads. I need an editor. Have you tried emacs?