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How Apple Had a Spectacular Year
Hugh Pickens writes "John Boudreau writes in the Mercury News that during its just-completed fiscal year, Apple broke four consecutive quarterly revenue and profit records and amid the worst recession in decades, hired thousands while others cut jobs, but what most distinguishes Apple is that while other tech titans spent 2010 cutting costs and acquiring new technology through mergers, this $65 billion company has been relentless in innovating like a startup and ruthless in promoting technologies that disrupt its own product lines. '"It's been an awesome year. The frequency of new stuff just boggles the mind," says Charles Wolf, an analyst with Needham & Co. "There is no company that is remotely close to what Apple is doing. They are the Energizer Bunny." In September 2005, Apple killed off the popular iPod Mini to make way for the the iPod Nano; Apple openly acknowledges that the iPhone is cannibalizing its iPods — and they don't seem to care; and the iPad tablet could ultimately threaten its core laptop business. "[Apple] has a different cultural mind-set," concludes Wolf. "They are acting like a startup, though they are becoming a $100 billion company."'
I never bought into Applethink, and after every product annoucement I falsely predict they've finally blown it and nobody will "fall for it" this time. Meanwhile they're approaching $100e9 and probably wouldn't give my resume a second look. You win.
Apple openly acknowledges that the iPhone is cannibalizing its iPods — and they don't seem to care
Should they care or should they celebrate? The iPhone offers a superset of iPod functionality and the iPhone generates greater profits.
Completely subjective view here, but the new iPod nano was impressive enough to elicit a 'holy crap' reaction when I first saw one, and it's been a while since any piece of tech has made an impact like that.
Sure, it is just another touchscreen music player, but what they've managed to cram into that case does seem to me to be a good distance beyond the rest of the market.
Completely subjective view here, but the new iPod nano was impressive enough to elicit a 'holy crap' reaction when I first saw one
Same here .. except it also included a WTF about all the stuff they dropped that was in the previous edition of the nano. You didn't see Steve on stage saying "oh yeah, we removed the camera, and the Contacts App and ..."
I am Slashdot. Are you Slashdot as well?
To stay extremely profitable you can't be in the race to the lowest price. This is where most other tech companies epically fail as they march forward on thinning margins until they go broke "making it up in volume".
As margins decline, you end up with capacitors that are substandard and covering up that fact as your customers leave in droves (DELL). Apple's success has always been about standing out from the rest of the Tech crowd, which allows them the comfort of profits most other companies would kill for. But most other companies love resting on their laurels (Microsoft) or attacking their customers (Oracle, SCO) in the drive to create margins.
What Apple does better than anyone else is taking existing ideas and making them better than anyone else. Slashdotters make fun of iPods, iPads and iPhones for being "lame", and not having the greatest specs, but they aren't Apple's customers, and Apple doesn't listen to them, and it shows up in the bottom line. For every slashdotter that cries "lame" there's a couple hundred average people saying "cool".
Before iPods, MP3 players existed, but Apple did it better (and held the price). Before iPhones, "smart phones" existed, but Apple did it better (and held the price). Before iPads, tablet computers existed but Apple did it better (and beat price expectations) (No table exists that is better even now).
Apple will find some other area that is lacking a polished product, introduce a iWhatever with a polish that is missing, and the slashdot community will cry "lame" once again. The price will be higher than "comparable" whatever, and Apple will sell gazillions in spite of what slashdot community thinks.
Apple knows how to make a profit where none seems to exist, in a market that looks like it is wallowing, in an economy that sucks. Apple will become the largest market cap company in the next 12 - 18 months. And slashdotters will say "lame" and still not get it.
Agent K: A *person* is smart. People are dumb, stupid, panicky animals, and you know it.
Industrial product design matters. Marketing too. I'm not a fan of Apple's policies, but they get quite a few things right while the competition seems mired in stupidity and copycat disease land.
- Decent quality control (iphone4 attena aside)
- Great marketing/PR/Hype
- Extremely nice looking products
Apple does these things well and makes great devices. They now even have an army of good developers thanks to a platform that caters to people willing to spend money. In the meantime, the competition seems to sometimes innovate, and other times gets stuck copying, confused, and greedy. Looking at the Nexus S -- it looks to be almost a clone of an IPhone 3G? What is Samsung thinking? At the same time Samsung has the tablet which looks to be pretty nice and more original. Verizon is a great example too: first they hyped the Droid to huge success, but then they decided to start putting Bing on phones and open their own app store.
Still, it's great that Google seems to be adding serious competition to this market, but they seem to fail to grasp that they CAN'T hand control back to carriers and win this race. Giving up on the Nexus One right out of the gate was a bad move. Consumers dont want to go back to the flip phone days with $2.99 30 second vcast ringtones.
Apple will see continued success due to all these issues regardless, at least in the near future. However if Google steps up it's game and does the following:
1) Streamlined patch/update process
2) Making manufacturer skins removable
3) limitation on how manufacturers and carriers can lock down devices. (ie no forcing specific apps on the user).
That's when things will get interesting. If Google can silence the fragmentation trolls, and keep the carrier greed in check, there is hope for this market, and especially a bright future for consumers. There is even room for carriers to still add value. But if they FORCE it on people, they will all lose to Apple.
meep
Somebody invented the transistor. Somebody invented the microchip. Somebody invented the cellular radio. Somebody invented the LCD screen. Somebody invented the speaker. Somebody invented the touchscreen. Somebody invented headphones.
Are you saying that everyone else is releasing old technology?
Then perhaps the electric car is old technology. We've had batteries, electric motors, wheels, brakes, etc. for years. Maybe the flying car is old tech. We've had the basic components for years, but have had trouble combining them into useful, compact flying transport.
It doesn't have to be completely new, to be novel or innovative. Nearly every useful new technology is the result of applying innovation to combining existing technologies.
All my liberal friends think I'm a conservative, all my conservative friends think I'm a liberal.
It's better for you to cannibalize your own products, than for your competitors to do it for you. There was a recent quote from El Jobso (can't find off hand, sorry) saying that (in his absence) Apple just sat on the top end of the market with the Mac, got greedy, failed to innovate, and suffered. Their success with the ipod seems to support this. They cover nearly the whole market while still remaining the high end brand.
And, no one else makes things remotely close.
But let's make it clear: Apple is a systems company.
The fact that you are trying to figure out whether it's a software or a hardware company means you don't understand systems-level design.
They don't make Silicon, they make CPU's. The don't make CPU's, they make motherboards. They don't make motherboards, they make the computer. They don't make computers, they make a system. Etc..
Yeah, how do you explain the fact that there have been tablets for maybe ten years, yet it's suddenly it's a new, desirable, market after the iPad? How do you explain the fact that, time and time again, Apple can create a product that many people actually want to use? (hint: it's not hypnotism)
The iPhone 4 antenna issues was unfortunate, but once you use a case or other protector, it's a very nice device. If the iPhone 4 had a bumper in the box with it, with advice along the lines of "If you experience reception issues, please install the bumper." no one would have thought twice about it.
Just a quick comment from a former Apple employee; most people are familiar with the old saw, "Perfect is the enemy of good enough." I.e., instead of trying to get something perfect, you should get it good enough and then ship it. Within Apple the perspective is slightly different. There, it's more along the lines of, "Good enough is the enemy of great." I.e., good enough isn't acceptable -- for an Apple-branded product we're going to look for the next level of polish and care that differentiates our stuff from everybody else's.
I think this comes from the fusion of NeXT and Apple engineers. Most people recognize that NeXT brought a heckuva foundation for Apple's next generation operating system to the table in 1997. However, few people recognize what Apple brought to the table -- an engineering culture that regards rough edges as anathema. There was plenty of NeXT software, but much of it was very rough; it wasn't easy to pick up for the new user, was missing essential features, crashed often, or all of the above. This was a direct consequence of the fact that Foundation and AppKit allowed you to create apps quickly and easily, but then as a software developer you still have to trap errors, check for corner cases, add documentation, tweak the UI design so that common tasks are easy to accomplish, etc. This can easily take three to four times as long or more as standing up the initial core functionality. Most NeXT apps never went through this stage and so they lacked the polish for mass market users. Once the NeXT technology went through the polishing process (and it took four years before the first consumer release, really five years and 10.2 Jaguar before it was truly ready for my mom!), the new OS was a completely different animal from OpenStep 4.2 -- much more polished and suitable for mass-market consumers.
--Paul
Just because your grandma can figure it out does not make it better.
Um, yes it does, when you are in the business of selling widgets you want Grandma to be able to use.
If, on the other hand, you are so mired in zealotry that you can't see that if Grandma can't get a widget to work, a widget that is intended for the mass market, it puts a serious limitation on that widgets eventual success, well, then, we don't have much to discuss.
Put my fist through my alarm clock with its ding-dong death inside my ear. - The Blackjacks.
a systems company that manages to reach demographics that most other technology companies (systems or not) don't target and/or don't reach, making them uniquely profitable.
So often the discussion on Slashdot is simply a matter of comparison: "The Apple ____ is similar to the Microsoft/Sony/HP/YouNameIt ____ but with a very narrow focus, therefore it is insufficiently flexible, particularly at a premium price point."
This kind of logic is often couched in "objective" terms but in fact represents a very particular value seen primarily in the technology/hacker community: general applicability/maximal flexibility. In this community these values are claimed to be "objective" goods, while other values like ease of use, system(s) integration, industrial design, simplicity, and even inflexibility (which is often, frankly, a need) are openly mocked as "objective" negatives.
In fact, what's at work here is a difference in users' value orientations. Apple often care less about flexibility/generality than other things, and there's nothing wrong with that just as there's nothing wrong with Slashdot geeks caring more about flexibility/generality than other things.
But it is not a stretch to say that the rest of the world doesn't see it as particularly "cool" that a single handheld device can (a) multi-boot four operating systems, (b) provide a remote login for multiple root accounts textual and graphical, (c) act as a remote control for multiple household entertainment systems, (d) be dropped into a Toyota as an engine ECU with real-time wireless reprogrammability, (e) be used as a logic probe and oscilloscope by plugging in optional cables, (f) receive HAM radio signals and run a version of KA9Q, (g) simulcast FM and Internet radio on/from user-chosen frequencies/addresses, (h) provide access to IMAP email and the mobile web, (i) act as a flashlight by turning the screen white, (j) offer a built-in high-resolution CCD capable of being programmed to operate as a scanner, as a camera, or in AI research for visual perception experimentation, and (k) with the addition of a bluetooth keyboard and mouse, act as a complete general-purpose computing system capable of playing all of the latest FPSes available to the operating systems mentioned at the start of this list in (a), all while fitting in a shirt pocket and light enough to be put on a keychain.
For a Slashdot user, this description is of a kind of "holy grail" device. For a non-Slashdot user, this is an incredible constrictive description of a device that likely requires extensive programming, extensive management, long and detailed user interface interactions to accomplish even simple tasks, low task parallelism, and a risky concentration of many functions into a single, no doubt highly expensive, device.
The goals are different. Apple is amazingly able to grok and fulfill the particular goals of one class of very productive user that does not happen to be the Slashdot user by designing fully integrated, high-usability, cost-effective systems to suit their needs.
STOP . AMERICA . NOW
sold, released, whatever, the point is the same. They had products in the pipe the people BEGGED to PAY for. In a time when most OTHER tech companies couldn't sell a paper bag, Apple released a whole new product and updates to all its others. In fact you would be correct, Apple didn't "innovate" in 2010, they innovated on products like iPad in 2008 and 2009 when the stock market crashed, banks failed, and automakers went bankrupt..... most companies were in severe layoff mode. Apple was chugging away spending money on NEW products.
Rethink that statement again, and awe in their ability to manage and grow their business even when chips were terrible.
Part of this year's sales is just that, Apple had NEW products on tap and people are just starting to loosen their purses a bit. They get one "treat" product this year and Apple was ready for them. You'll notice only the makers of "cheap crap" and "impulse buys" are still having a bad time, makers of BMWs Apples, etc are doing great, people aren't spending as much on crap, but they finally have enough to spend on something nice.
They "innovated", you know, by making a new version of an iPod (with a broken antenna this time), by making a little bit better net-book, and by remaking the HP tablet PC from 2001, except without all those bothersome functional ports and things, but with less memory and computing power. Yup, real innovation. They did put the prices up a lot though. But just now they put them "down" about 8%.
How quaint. Somehow these "inferior" products are outselling by orders of magnitude those things you seem to think are better...
One possible explanation is that people are just really stupid. Not just really stupid once, but repeatedly so. They buy an iPod, see some superior product (I'm not sure what though. Zune?) but then go out an buy a new iPod when their old one breaks down. And not just a few people, but millions upon millions do this? It's strange that Apple somehow happens to be the only company that manages to do this.
Another explanation is that those aspects which you see as negatives which make Apple's products inferior in your eyes actually make the products superior in most other people's eyes. You mention the memory computing power of the iPad vs old HP Tablet PCs. Do you think the average consumer knows or even cares specifically how much memory or what CPU their devices have? All they care about is how well it works. And an iPad with 256MB RAM and a ~1GHz A4 CPU running iOS 4.2 runs better for them than any Tablet PC with any CPU or RAM running Windows 7. That's because the problem with Tablet PCs isn't the computing power or capacity, it's the form factor and the software.
Why do you think HP's Windows 7 Slate (the current top of the line Windows tablet) only sold a few thousand units? Do you think people are really so stupid that over 10 million have bought an iPad but only an embarrassingly miniscule fraction of that bought an HP Slate?
Since clearly there's no way people can actually prefer the iPad over other products like the Slate, we must all be incredibly stupid on a ratio of about 1000:1. It must be excruciatingly painful for you to have to live amongst such inferior minds.