Apple is About the Mac
There are articles floating around which suggest Apple will switch focus entirely to the iPhone if it takes off. The company's name change is suggested as proof. Many people writing these things only came into the Apple universe in the iPod era, so the confusion is understandable. The real deal is that Apple is a company which uses its expertise in computing to make consumer devices.The reason the iPod and iTunes succeeded where other solutions failed was Apple knew how to make great software and hardware from their experience making computers. This is a massive advantage over specialized device manufacturers and record companies who don't have experience outside of their domain.
Apple Matters has an article on the subject, which ends like this:
The more talented engineers will move to the iPhone and the talents that make the Mac what is will be busy making the iPhone even better. [...] Apple is a company that believes success comes by maintaining a narrow focus on only the most important aspects of the business
Apple is a company that believes on maintaining focus on what Apple thinks is important. Only sometimes does this overlap with what analysts think is important. Following the short-term money is certainly is what most technology companies would do, but that's why most high-tech companies don't last for thirty years.
The Mac's imminent demise has been predicted approximately 1.21 million times, yet people just keep doing it, despite coming off the best year ever for Mac sales. The Mac generated $2.4 billion in revenue for the last quarter. Not pocket change. What would be the point in investing two years in a new chip architecture, new operating system, and new development tools if they didn't plan to pursue it long term?
Most importantly, though, Apple would never be content being relegated to specialized devices. Computing is in their blood. I can't imagine the logic in spending ten years building to this point, and then getting distracted by something shiny. Apple wouldn't be satisfied leaving the world to Windows.
I ran across a Walt Disney quote recently, which seems to sum this up perfectly:
Disneyland is a work of love. We didn't go into Disneyland just with the idea of making money.
Anybody who thinks Apple set out to reinvent the Mac because it was guaranteed to make a lot of money doesn't have a clear view of history. The iPod is a great product and a big money maker, and the iPhone looks very promising, but from a creative perspective, Apple is all about the Mac. In my opinion, the rest is just details.
Apple is About the Mac
Posted Jan 26, 2007 — 33 comments below
Posted Jan 26, 2007 — 33 comments below
Kol. Panic — Jan 26, 07 3407
Mike Eggleston — Jan 26, 07 3408
If anything, I see more people being brought in so that focus never wavers on the prize.
clint — Jan 26, 07 3410
i respectfully disagree as well. i believe they have been down this road read about it here.
tight integration between the hardware and the software...
i consider this a feature, one of my favorite actually. from my experiences, everything in the mac "eco-sphere" works well together, which is awesome. i have never had that experience anywhere else before my powerbook.
Arne Martin Aurlien — Jan 26, 07 3411
Mayo — Jan 26, 07 3412
As far as licensing OSX separately from hardware, I believe that would be one of the worst things Apple would do. It's one of the strengths of the platform and I believe OSX wouldn't survive very long if it were licensed out. It would just be a nightmare for support and all the end-users who expect it to work and behave like a Mac and Apple product.
And the name change? I side with the people who say "When was the last time you heard anyone say Apple Computers as opposed to just Apple?" Even Steve didn't call the company in full. And admit it, Apple Inc. just sounds way cooler than Apple Computers, Inc. It also may have something to do with Apple Corps, but I doubt that :)
Blain — Jan 26, 07 3413
What makes a Mac a Mac? It's not the processor, we've jumped families twice already. It's not the operating system, as we've already changed that as well. It's greater than the sum of its parts, it is the interoperability. It's not just the iMac hardware and OS X and the iPod. It's all of them together.
Those that say the sky is falling because Apple's only been about the central box (the computer) and not other devices have bad memories. They do not remember Newton, nor Quicktake cameras, nor ImageWriter, nor LaserWriter, nor PowerCD, nor external Superdrive (1.44Mb), nor Apple HD (20MB), nor Apple Monitors, nor...
Granted, the Quicktake never got the press the iPod does, but if anything, the Quicktake is further from the Mac than iPod; the iPod is dependent on the computer for getting new files.
Will the devices in the years to come look vastly different than the computers we use now? Undoubtedly. Will the user interface be different? Of course. But that doesn't mean they won't be Macs.
Scott Stevenson — Jan 26, 07 3414
They could, but the question is if they want to. I don't think they want to. Both NeXT and mid-nineties Apple tried this approach and both were a disaster. If anything, the industry is slowly waking up to the fact that integrated hardware/software is the only way to make a solid consumer product. That's at least part of Microsoft's motivation for the Zune.
Enterprise may be better served by multi-vendor hardware and a platform-centric view of software, but the consumer doesn't care about any of that. They just want the thing to work. I think the Alan Kay quote that was highlighted during the keynote eliminated any doubt as to how Apple sees the relationship between hardware and software. They're two parts of a whole.
Chris Ryland — Jan 26, 07 3415
All I can say is, Wow. Apple is really on a roll. The depth & taste of their engineering staff is simply unparalleled, and the resulting power of their frameworks blows Vista away.
I think what people forget is that Apple is really an animation graphics company disguised as a computer maker. ;-)
Kol. Panic — Jan 26, 07 3416
Now, Apple has other sources of revenue - specifically iPods, iTunes, and iPhone and who knows what else- and they can get out of the computer hardware business altogether.
The PC manufacturers have been drooling at the chance to get out of the Microsoft chokehold for years (regardless of Michael Dell's comments about shutting down Apple and refunding the investors' money).
As a Mac user and developer, I appreciate the thought and care that goes into the design of the hardware as much as any of you. As an AAPL shareholder, I think a pretty good business case can be made for restructuring Apple more along the lines of Microsoft.
Scott Stevenson — Jan 26, 07 3417
I don't see any reason to do so. Not only does the hardware/software integration result in a better final product for the consumer, but it also makes a lot of money. Why turn a crown jewel and all of the associated revenue over to somebody what wouldn't know what to do with it?
I think a pretty good business case can be made for restructuring Apple more along the lines of Microsoft
History suggests otherwise. What do you think the case is? We might need something better than "Microsoft does it." :)
clint — Jan 26, 07 3418
i think you have valid points but i just can't follow them to the same conclusion. ...Apple has other sources of revenue...and they can get out of the computer hardware business altogether. while technically true, like Scott said, why would they want to? If their Mac's were not making them any money then perhaps, but didn't Apple sell some 30% more mac's last quarter than the year before? they seem to be doing well there.
...a pretty good business case can be made for restructuring Apple more along the lines of Microsoft. while MS is indisputably a profitable and wealthy company, i'm not sure those qualities should make them a role model.
The PC manufacturers have been drooling at the chance to get out of the Microsoft chokehold[sic] for years. i agree but i fail to see how this is a good long term benefit to Apple. i don't believe people buy iPods because they are made by Apple, i believe them buy them because they are easy to use, and work seamlessly with iTunes. The hardware + software combo makes this possible. Why doesn't Ferrari just design the shell and interior of their cars and then license the design to Ford? Or maybe have Ford supply the parts.
Nigel — Jan 26, 07 3419
I'd be interested to read this business case. I don't know why people seriously suggest they stop designing and making computers. Maybe it's a topic that will be worth revsiting in 10 years when the landscape has changed, but today the idea is so outlandish I'm actually surprised that so many blogs have bothered to discuss it.
Rob — Jan 26, 07 3420
BUT THIS OUTLOOK COMES FROM TODAYS PERSPECTIVE, we have had only ONE Christmas season where Apple totally dominated computer sales at Amazon, and at least 2 or 3 more seasons like that should be coming.
Also the new flash improved machines will help Apple.
What looks like a lock down now may later turn into an OS that uses virtualization so that Apple apps run in there OS and everyone else gets their separate OS, that way Apple apps can shine and be totally bug free.
This would be done to increase Apple quality and create TOTALLY safe platforms for selling movies in China and India where they think bootlegging is good for their country !!!
The numbers for computers in those countries is not so high because they are poor but for phones is HUGE.
Now South Korea, they might be a big new market for computers, maybe bigger then Japan.
Kol. Panic — Jan 26, 07 3421
I didn't mean Apple was going to get out of the computer business this this year or next, but maybe in five years.
Regardless of their attempts with OS X Server, Xserve and RAID, they don't seem to be making a real effort to get into the enterprise back office, and the MS hegemony on the office desktop will be obviously hard to break.
They've made great inroads into the home these last few years, espeically as iPod has captured mindshare. Even with that success, their market share hasn't grown much, and there are other threats to that market, the biggest being the gaming consoles. (Speaking of which, ?TV might evolve into a nice gaming deck in the future, with another nice revenue stream from game sales via iTunes.)
This all may never come to pass, but if the past few years is any indication, Apple can confound us all with a brash move. (Remember the week before WWDC '05, when all the pundits where saying the Intel transition would never happen?)
Scott Stevenson — Jan 26, 07 3422
I'm not sure it matters. Market share is a not a destination onto itself. The important thing to users is that they can get ongoing updates to hardware and software and find good applications. The important thing to investors is returns. Mac hardware generates plenty of revenue, and the software/hardware integration works better for consumers.
So while more influence is always better, I personally don't see the advantage (as distant and theoretical as it may be) in abandoning hardware just to chase market share. You can have 20% market share, but does it matter if the product isn't what you want it to be and the total revenue isn't as high?
In terms of the enterprise/office, I don't think there's nearly as much promise in that area as there is in the consumer market. Open source platforms do just fine there. Apple's value is much more apparent to small businesses and individuals than huge, sweeping organizations filled with layers upon layers of management. Microsoft's culture, on the other hand, is built around that sort of situation.
TV might evolve into a nice gaming deck in the future, with another nice revenue stream from game sales via iTunes
I'm not sure. That's a very different kind of business. It's all about fostering solid first-party content, not hardware or OS design. It's not even much like iTunes, where you just resell media. There's real money in both enterprise software and video games, but I'm just not sure either are a good fit for Apple, specifically.
Remember the week before WWDC '05, when all the pundits where saying the Intel transition would never happen?
True enough.
PGM — Jan 26, 07 3423
Dell: Revenue 13.91 billion, net income: 606 million
Apple: Revenue 4.4 billion, net income: 320 million
So Apple managed to make half of Dell's profits on only one-third of the revenue. I do not know the number of machines sold, but I bet that Dell had to sell proportionally much more machines to get to the stated revenue.
Blain — Jan 27, 07 3424
As an AAPL shareholder, I think a pretty good business case can be made for restructuring Apple more along the lines of Microsoft.
*COUGH*
Apple's in a wonderfully unique position where they make the whole widget. And it's not only their strongest point, it serves as a great stabilizer. Otherwise, if you want to look at cloning and licensing.
Power Computing. BeOS. Compaq. NextStep. Packard Bell. Dr Dos. Gateway. History is littered with the corpses of companies that only made half the solution and have either sold off, died, or are dying.
Michael Stroeck — Jan 27, 07 3427
So I guess you would have liked to be an MSFT stockholder during the last 10 years? *scratches head*
Microsoft has been branching out into hardware and services like crazy over the last years, and for good reason. Deep inside, every software-maker and other content-provider knows that copying is what bits are for, and once a critical mass of technology-aware consumers is reached, that is what will happen with them, without fail.
You have only three options: 1) Provide an experience that is so great that consumers actually feel compelled to contribute to its continued development. 2) Couple your software with services or hardware that are practically irreplaceable. 3) Impose artificial restrictions on your content.
Apple is currently able to do all three of those things, in all their businesses, and with most consumers' consent. This is an insanely great position to be in, why in the world would they give that up?
Marc Edwards — Jan 27, 07 3429
Another thing worth considering: The iPhone runs OS X. The new iPods will probably run OS X. The AppleTV either runs OS X, or it, or a similar future device from Apple will at some point soon.
OS X. OS X. OS X.
What kind of future does OS X have without a Mac to run it on? It seems like the best way to develop a feature rich handheld-device's OS, is to develop a full desktop OS, then slice off the parts you don't need (as Apple appear to have done for the iPhone). OS X and specifically Cocoa and Core Animation put the iPhone so far ahead of their Java-and-Flash-using-competition it's not funny.
So what I'm saying is that killing the Mac hardware platform would have drastic results on the iPhone, future iPods and other Apple goodies. Why would Apple do that?
Also, from what I've seen in sales reports, the iPod is still a smaller source of revenue than Macs. Plus... there's really only one place you can go when you have 80% of the market... down. Macs are healthy, but in the exact opposite position. There's really only one direction I can see the Mac market share going... and that's up.
"Remember the week before WWDC '05, when all the pundits where saying the Intel transition would never happen?"
Fair call. I certainly thought it was possible, but didn't think it'd happen when it did.
It's funny though... in hindsight, the change was tiny from a user's perspective. You could be completely forgiven for not noticing any difference between a PPC Mac and an Intel Mac at all. The hardware aesthetics and software is practically identical.
Scott Stevenson — Jan 27, 07 3431
Nope. In the previous quarter, iPod generated $3.4 billion versus $2.4 billion for Macs. But the point remains that it's a huge chunk of revenue, and an important piece of the complete picture. Also, the Mac had 40% year-on-year revenue growth to iPod's 18%, possibly somewhat due to price cuts on iPod.
You could be completely forgiven for not noticing any difference between a PPC Mac and an Intel Mac at all
Except for the crazy speed improvements.
Samo — Jan 27, 07 3432
I'm just glad Apple is run by someone who with a vision and drive and not by some BSA holding monkey willing to jump on the next best gimmick for the sake of short-term stock* profit.
The truth is that the only way to make money in the long run is to make hardware to run your software, and make your software stand out.
The Apple Way is working, and it's working well and I don't understand why there are still people who think it should change.
*Stockholders don't have a clue, either.
Frank Petrie — Jan 27, 07 3436
tom B — Jan 27, 07 3437
yea-Palm tried this, separating hardware and software. Look where it got them. MSFT succeeded IN SPITE of separating hardware and software, through monopoly practices (tacking a Windows tax on every PC sold, to give one example). It's not like the CONCEPT makes much sense.
Tom B — Jan 27, 07 3438
Adam Rice — Jan 27, 07 3439
Let's sit and and think about this point for a moment. It's pretty astonishing. Apple has been in the business of selling personal computers since the CPM days. Compaq can say that, I guess, but they've been through a major merger with HP. Apple remains un-merged. It's pretty astonishing. They must be doing something right.
I don't see the case for getting out of hardware. Forget about the "tight integration" of the OS and the box—at this point, that's probably not a big deal. The fact is that A) Apple makes a profit on their boxes, B) Apple makes good hardware, C) Apple's boxes provide good value for the money, and (most importantly) D) Apple knows that the boxes they sell you are capable of providing adequate performance for their OS.
Everybody harps on the fact that PCs are cheaper. This is a half-truth. PCs can be had more cheaply, but those are low-spec PCs. At feature parity, Macs are a good deal, and by enforcing a Mac-only policy, Apple is, in part, trying to ensure that you don't blame their OS for the fact that it runs like a pig on your hand-me-down Celeron box that your big brother had in college.
paul — Jan 27, 07 3441
Really? I don't see anything that suggests they are interested in anything but cutting each other's throats with low prices and fobbing off collections of cheap hardware in the guise of a 'system.'
DaveD — Jan 28, 07 3442
AAPL reported 21.5 million iPods sold last quarter, soundly beating all projections of 14-18 million.
AAPL reported $7 billion in revenue, and $1 billion in profit. EPS was $1.12, again soundly beating the consensus of $0.78.
And their stock price fell nearly 9% the day after that. Why? Two reasons.... disappointing forward guidance, and flat Mac sales quarter-over-quarter.
If Apple were to suddenly announce that they were removing a product line that typically accounts for 45-50 percent of their profits, how do you think Wall Street would react?
Blain — Jan 28, 07 3443
I call this the ATAT effect, after the late great website. Heck, their front page still has such an example: Great News! Stock Tanks! (10/12/05).
Apple's always had a bizzaro-world relationship with the stock market on specific days. The logical explanation would be that many people quickly buy the stock before the announcement, and after Apple performs well, they sell off their tidy profit, plunging the price.
My own theory, however, is that the stock market doesn't like that Apple kept consistently outdoing analysts' expectations. "Not a team player," they said. "Make us look bad," they said, "Comparing us to a PC in your ads." True, the Mac and PC ads are a recent thing, but still. It's the moral of the thing.
As for the "Scrap the Apple and give back money to the shareholders," recall that was said in '97. Before the Mac Mini. Before the iPod. Before OS X. Before the iBook. Before the iMac. PC manufacturers, as a rule, don't know how to really turn the game around in new ways. They only know how to cut corners, reduce expenses, and merger with other companies.
That's Dell's claim to fame: Not the computers, but a business and manufacturing process. But after that's honed, all they can do is play catch-up to more cutting edge companies, or hope to change their DNA through mergers.
Give a 1997 era Apple to a Michael Dell, and the only thing he would know what to do is sell it off before it completely crashes. This is why PC companies don't last long; after they've perfected the production line, they've nowhere to go when everyone has copied that. Dell hit that ceiling in 2000, and they're still slipping.
* I suppose one could argue two counter-examples. Amiga made their own widget fully, and they never survived. Not only that, but Apple hasn't made it through unscathed; they did need the merger with NeXT.
Mark Kawakami — Jan 28, 07 3444
It's equally important to realize that for all the power of these devices, including everything the iPhone can do, none of them are intended to replace the computer. Jobs -- and Apple -- know that for all the innovations new devices like the iPod and iPhone, users will still spend most of their day using a desktop or laptop computer. The power of these devices comes first from how easily they integrate with that computer, which means that there is a market for a premier level of integration.
In other words, all these really, really cool devices enhance the Mac. They enhance how useful and easy and powerful your Mac is. Granted, they do as much for Windows, but not to the same degree. In like manner, using the iPod and the iPhone is improved by having a Mac at the center rather than a PC. In other words, Apple isn't about the Mac. Nor is Apple about the iPod. Apple is about the zen-like transcendence that happens when you're using both together.
Steve Nagel — Jan 28, 07 3450
I think this article misses the point, which is this: The iPhone is a Mac and the iPod soon will be. A Mac defined imho as any hardware that runs OS X, in whatever edition. Defined as such, the love that goes into the Mac naturally extends to the iPhone, the iPod, and the tablet Macs, tvMacs, and game Macs that will eventually inhabit Apple’s universe.
Or didn’t the writer notice the name change to Apple Inc.?
Now if Apple will only provide a hypercard or filemaker app that will port to the iPod, I would be a happy camper.
“Businesses offer love to get money; consumers offer money to get love.”
Scott Stevenson — Jan 28, 07 3452
In the strict sense, I believe Apple is trying to make the point that a Mac is a computer, and only kind of device capable of running the OS X core. The iPhone runs OS X, not Mac OS X. I agree that for most of us, though, the iPhone is a Mac.
Or didn’t the writer notice the name change to Apple Inc.?
I noticed. :)
J. — Feb 02, 07 3486
What on God's Green Earth ever gave anyone the idea that Jobs—even in passing—ever considers for one moment what his shareholders think. After all, it's His company.
Dude — Feb 04, 07 3504
Apple has been in the business of selling personal computers since the CPM days. Compaq can say that, I guess
Nope. Compaq was DOS-era. Although there was overlap, Compaq was intended to compete in the IBM PC marketplace from the start.
I've read that Apple had the opportunity to purchase Compaq (early to mid 1980's) and Steve Jobs personally turned it down, but I can't vouch for the accuracy...