How Will Apple Cope with Success?

January 2nd, 2008

No doubt you’ve ready the stories already. On the basis of one set of online measurement samples, Apple’s share of the operating system universe exceeded 8% during the final two days of 2007, whereas Windows Vista scores just over 10%.

The figures were compiled by Net Applications, based on traffic measured at some 40,000 sites. Now I can’t say that those sites would necessarily favor a particular computing platform, but it means that the operating system once thought consigned to tiny niche status has taken huge strides in the past year.

Worse, it appears that Windows Vista hasn’t gained nearly the traction Microsoft expected, although they have surely made lots of claims as to how pleased they are with its reception. Then again, can you believe anything Microsoft says, other than the retail price of a new product, when it’s finally released?

To me, the trend is obvious, although the reality is almost hard to believe. Windows market share is stalling and slowly declining, whereas the Mac OS is growing way ahead of expectations, and even the level of industry growth. Is the slow migration to the Mac going to continue in this fashion, or become a stampede in the next few years?

In the tech industry, everyone, it seems, is looking to Apple as the sole source of inspiration for new consumer electronics gear, and the competition seems largely unable to provide anything more than me-too products that may be almost as good, but don’t set the world afire.

So, as lots of iPhones continue to move into the hands of end users, rival cell phone makers have delivered their own variation of touch screen products. Alas, most seem to think that taking the same crummy operating system and replacing the keyboard with a touch screen will somehow make these second-rate products as good as the iPhone. You almost see the Microsoft approach here, which has traditionally been to ape most of the benefits of a competitor’s product, and then tout the result as an example of innovation, rather than an insincere form of flattery.

With all eyes pointed to Apple, however, the pressure cooker atmosphere has become hotter and hotter. Every single product they produce must be the best of the breed, and a fast-breaking success, for otherwise it’ll be a total failure.

Witness Apple TV, which has been characterized by some as an abject failure, with sales estimated at about one million units. Now, Steve Jobs claims the product was an experiment, and that may be true. However, Apple has already moved more units than TiVo, and it’s quite possible there’d be no TiVo had they not made licensing deals with such cable giants as Comcast and Cox.

But Apple TV debuted with the heightened expectations of setting a new standard for a media center-type gadget, and when it didn’t set the world afire, Apple took a drubbing. To be sure, it may be the fact that Apple TV basically requires a high definition TV — or a costly adapter — to function, and that limits the market very much to the U.S. and perhaps Japan. In Europe, HDTV does have the same amount of market penetration.

So maybe it is truly a product for the future, when Apple figures out how best to provide media center capability without tethering Apple TV to technologies that most customers just don’t have yet. They certainly can’t take their cue from the Windows platform, because the media center TV hasn’t really taken off either. I mean, how many of you really want a big PC box in your living room cheek-by-jowl with your flat-screen TV?

The other question is how much of your TV viewing habits can be handled with an HD digital video recorder from TiVo, or the one you rent for a few dollars a month from your cable or satellite provider. If it’s time-shifting, they all work quite well. Maybe the interface of the knock-off set top box isn’t as pretty as Apple or TiVo could cook up, but they get the job done.

Apple, however, is concerned more with how iTunes will integrate with the TV. Sure, you can take your iPod and connect it to most TVs without anything more than a set of cheap cables, but that’s a bit of an awkward process. Sneaker net went away years ago. The Apple TV was supposed to be the ideal solution for seamless content transfer.

Regardless of how Apple TV turns out, anything Apple delivers in 2008 will be put under huge microscopes. They can experiment, sure, but if they don’t hit home runs most of the time, they’ll rapidly return to the land of the beleaguered. Or at last that’s what some tech pundits would want you to believe.

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7 Responses to “How Will Apple Cope with Success?”

  1. Dana Sutton says:

    Somehow, Gene, there’s a disconnect between your headline and the body of your piece. The questions you raise are interesting ones, but a much bigger and more important one is asked by your headline: how is Apple going to cope with success as it breaks out of its niche market and becomes a major player? We all have had a favorite small restaurant which moved to a larger location with more tables and went straight into the toilet, because they couldn’t manage to repeat on a larger scale what they used to do on a small one. Can Apple become a major player without falling into the trap that has ruined Microsoft: becoming a self-satisfied and sluggish bureaucracy that has lost whatever creative spark it may once have had and stumbles all over its own feet, not being able to get anything quite right, and forced to rely on sleazy business practices to maintain its dominance since it can’t do that by good quality? Well, somebody might say, this isn’t likely to happen as long as Steve’s there because his personality is what drives the whole thing. But someday we’re going to wake up and find Steve’s not there any more (and Lord only knows who will replace him — I like ocean cruises but I don’t think I’d care to go on one where nobody could identify the ship’s First Mate). The long-term question is how does Apple institutionalize Steve’s drive, innovation, single-mindedness and intolerance of anything second-rate so that it continues well into the future?

  2. Malcolm G says:

    RE: Dana’s comment above about whether Apple can succeed after succeeding — very well stated. Steve Jobs would be wise to make careful provisions for a successor in keeping with his spirit of design oriented trend setting, and high-quality product implementation…without delay.

  3. kenh says:

    Your tv should just be part of an integrated system controlled by your Mac, or your iPod Touch, or your iPhone, etc., and/or some kind of Apple remote. No more VCR remotes, no more cable company menus that are often wrong.
    Ask your tv, maybe by voice command, to show what is on your computer desktop at the moment. Etc. Etc.

    It should be possible, and I have a hunch that is where Apple is heading.

  4. Hardbox says:

    Re. the Apple TV. The TV is not the problem. Go ahead and hook it up to HDTVs, but if the video quality remains at the same crap outputs that iTunes delivers, you can forget about the Apple TV becoming the next leg of Steve’s chair. In fact, hooking it up to HDTVs will just make the Apple TV look even more of a joke than it is now.

  5. Hardbox says:

    Re. Dana’s comment. I agree: the bigger issue is what’s in your original headline. How will Apple cope with increased success? So far, it has only just touched 7% marketshare in the US and already it’s had to pull people off a core product in order to complete a gadget. How will it cope if and when the number doubles?

    If problems with the iMacs/MacBooks which Apple continue to deny exists on a widespread level are indeed a symptom of a company with overstretched resources, and one whose priority is no longer in making computers, then Apple will need to ramp up on their Mac division. If they are still interested in it, that is.

  6. Dana Sutton says:

    Hardbox asks “…and already it’s had to pull people off a core product in order to complete a gadget. How will it cope if and when the number doubles?” The answer to this question is easy and obvious: hire more people. And this is precisely the problem that troubles me. The more people Apple hires, the bigger it gets, the more bureaucratic it gets, and the more it begins to look like Microsoft and maybe to behave like Microsoft. So how does Apple move from a culture of (relative) smallness to a culture of bigness without losing the magic? The organization where I’ve worked for over 25 years has had exactly this history — it used to be that to see your boss you simply knocked on his doorjamb and chances were he could give you some time right there and then, you walked away with your problem solved, or at least the boss immediately found out that the problem existed. Now you call his secretary, who tells you she can squeeze you in for a ten-minute interview sometime later this month,. What used to be the most simple and straightforward of procedures have grown to be amazingly complicated. Over the years we’ve accumulated a small army of mid-level managers who thrive on this stuff. And committees multiply like crazy (you gotta watch out for those committees). The result is that we are always tangled up in our own feet and nothing gets done as quickly or as well as it used to.

  7. Hardbox says:

    Dana: I hear you. I have worked at two startup-type companies — one publishing, one tech — which had the typical dynamic, go-getting culture. But once they grew beyond 50 staff, things started to go south. They became more and more corporate-like, and the pressure to do things in the interest of the shareholders first and foremost pushed them to do things they wouldn’t have done before.

    In the initial stages you could get a direct audience with the CEO, which brought intangible benefits beyond speedy approvals alone. And then they started adding layers, and before long you had to go through several hoops just to get something done, if ever.

    Luckily for Apple, this had happened to them once already in their history. Nevertheless, it remains to be seen if they have learned from their experience when the time comes for Steve to leave, for whatever reason, a second time.

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