You just knew that Apple had caught a breeze when the iPod became a cultural icon representing digital music players. It was the product to which all comers were compared, and they ended up wanting. One by one, the iPod killers arrived, and one by one they failed, or gained a minor share of the market only sufficient to keep a smaller company in business.
Microsoft tried to go up against their traditional rival in two ways. First, with their PlaysForSure licensing scheme, they hoped to sign up loads of hardware makers to build gear that would soon overwhelm the iPod, but it didn’t happen. In the face of that failure, Microsoft double-crossed their partners and built an integrated ecosystem, modified a failed Toshiba digital media player, and introduced the Zune. “Welcome to the Social,” said the ads, but the young people who really discovered social networking weren’t taken in. They stuck with their iPods. The Zune has since been discontinued, representing another ignominious failure for Microsoft.
I remember once observing some young men hanging out outside a local convenience store hoping to sell a couple of Zunes. I didn’t bother to consider whether they were stolen, or the owners were just struggling to ind buyers for gadgets they didn’t like. Nobody paid attention.
Even today, where the market for such gear has plateaued, the iPod is still supreme by a hefty margin. Although sales are on a slow, inexorable decline, don’t forget that the iPhone and iPad also contain an iPod app, with all features intact. If you combine all the sales, they continue to soar, even though integrated products have become far more popular than the separate device, except for people who want something real cheap.
The iPhone was the impossible dream. What did Apple know about smartphones anyway? There were loads of good products available; the market was near-saturated, so where does Apple get off trying to build such a thing? It’s not the same as the digital media player space, where no one product had sold terribly well until the iPod came along and sales exploded.
Today, Apple, as a company, earns more revenue from smartphones than general purpose handset makers that participate in many product categories. Whenever a smartphone is reviewed, there is that inevitable comparison to the iPhone. Just the other day, I read a report that AT&T’s $49 iPhone 3GS, a model that was originally released in 2009, still outsells many current products featuring the Android OS. It argues for Apple continuing to build an older model at a cheaper price, or just creating a lower cost iPhone.
When the tech media attempts to remind you that more Android OS phones are sold in the U.S. than iPhones, many ignore the fact that Google’s smartphone OS is not a brand, really. Each handset maker is free to modify the OS the way they want, with custom user interface themes, bundled software, and perhaps a different default search engine. What’s more, no single Android smartphone has managed to best the iPhone in sales.
After years of telling us that the year of the tablet was at hand, Microsoft was embarrassed to discover that the breakthrough product came from Apple, the iPad, which many first dismissed as nothing more than an oversized iPod touch. It can’t be a real tablet, because real tablets were basically modified PCs running Windows. Rather than figure out how to build a better tablet, it appears Microsoft prefers to ignore the question, and waste their money buying Skype. I can’t see how that is going to help them figure out a strategy to compete not just with the iPad, but with tablets featuring the Android OS.
The real issue is whether this is a tablet market, or an iPad market. If it’s the latter, efforts to compete head on will be doomed to failure. Yes, some companies may sell a few hundred thousand copies of one product or another, but they will all be compared to Apple’s new cultural icon. Unless Apple really builds a bad iPad, with loads of bugs, and other show-stopping problems, the momentum won’t slow anytime soon.
Even today, weeks after the iPad 2 was released, you still have to wait one to two weeks to get one from Apple’s online store, which ought to have the best selection. You may find them at your local dealers, but you can’t be assured that the exact model you want will be available.
Supposedly Apple is not being seriously impacted by supply constraints due to that tragic earthquake in Japan, but they are clearly struggling to boost production. That’s a nice problem to have, but it doesn’t seem as if other companies are benefitting much from the difficulties in getting an iPad. As I said, it’s an iPad market, not a tablet market.
So far as PCs are concerned, sales are mostly flat, except for Macs, which continue to do well even in the business world that was once hostile to the platform. Despite an economic climate where people just don’t have as much disposable income as they used to, they are willing to pay more for a Mac, knowing that they are more reliable than Windows boxes, and that the cost of upkeep over a period of several years is usually less than a PC.
If anyone is going to supplant Apple as the builder of cultural icons, it may be Apple, if they make some serious missteps. But even if Steve Jobs leaves the company, it doesn’t appear that they will suffer seriously for a number of years.
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