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Money isn't everything

July 14, 2005

Nearly five years ago, in October 2000, I wrote a column for the Industry Standard about Apple's resurgence and the innovations that were powering it. I was reminded of that article last night when the company announced another blowout quarter, fuelled by continued rapid growth in its iPod business as well as expanding sales of Macs.

Through most of the 1990s, you may remember, the common wisdom was that Apple was doomed because, with its shrinking market share, it wouldn't be able to keep up with the innovations on the Windows side. "The argument that Apple would fall behind in innovation sounded reasonable," I wrote in 2000. "R&D on the Wintel platform was spread among dozens of big hardware and software companies, each of which was making vast investments in developing new technologies and products. Apple, by contrast, was pretty much on its own. There was no way it could come close to matching the dollars and time spent by the Microsoft-Intel axis. But look what happened. In product innovation, Apple has leapt ahead of the competition."

A half decade later, Apple continues to outpace the competition in the innovation race. And it's not ahead in one narrow area. It's the leader, arguably, in PC hardware design, PC operating systems, PC multimedia software, digital music players and online music retailing. That's a pretty broad swath. Innovativeness is by no means synonymous with business success, but Apple's experience in recent years provides a fascinating case study. It underscores, above all, one important fact: Whatever lies at the heart of business creativity sure ain't money.


Your comment "Innovativeness is by no means synonymous with business success," actually fits Apple pretty well in another respect. While Apple is one of the most innovative product companies around and is right now riding the back of the iPod success, why have they been stuck at an under 3% market share? There are lots of theories but having been an insider there for twenty years, I maintain that Apple's inwardly focused corporate culture which works great for product development in most cases, doesn't work very well for what should be an outwardly focused computer sales group. The iPod, being a consumer product, doesn't need the same type of sales effort that is required to convert corporations and government to using what are arguably the best products on the block. The Apple "my way or the highway" style doesn't play very well with CIOs and CTOs. While Dell focuses on making it easy for customers to do business with them, Apple often focuses on forcing customers and partners to bend to their ways.

Posted by: David at July 15, 2005 12:07 PM

"My way or the highway" sounds a lot like most CIOs and CTOs attitude as well. In a time where technoloy has made so much possible, people whose fingers actually touch the keyboards are not given the ability to choose their preferred computing platform. You might be able to have some say in which Wintel platform you are given, but just try to get a Macintosh. Hopefully the success of iPod, will fuel Apple's desire to develop a more aggressive strategy and invest more effort in penetrating larger corporations.

Posted by: David Too at July 15, 2005 03:12 PM

Well as much as I would like to see that, the iPod will have an opposite effect on Apple. Selling to corporations is hard because they want to have input into the products that they buy. That also want consistency and to stay away from disruptive technology. That's not Apple. The success with the iPod just reinforces the theory that Apple executives love to believe, which is that they can create products which require little or no effort to sell. Unfortunately selling to large corporations takes lots of sales effort and relationship builing, neither of which are Apple strengths

Posted by: David at July 15, 2005 10:03 PM

"R&D on the Wintel platform was spread among dozens of big hardware and software companies, each of which was making vast investments in developing new technologies and products."

This is bascially crap. What comapnies do is is invest money into how they can squeeze every possible penny out of whatever money has been spent or technology that has been developed. They try to protect current revenue streams to the detriment of everything else. R&D be damned. (See RIAA & MPAA.)

Posted by: ordaj at July 29, 2005 12:18 PM

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