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Published: Sep 16, 2005 01:41 PM
Wed - August 13, 2003
Innovate Or Immolate: Reflections On Apple Computer
Forget shrinking market share and
alleged irrelevance. I say, it's a good time to own a Macintosh
computer.
Every
quarter, regular as clock work, IDG Worldwide releases a study of computer
market share that shows Apple Computer well behind its rivals. And every
quarter, regular as clock work, Mac users steel themselves for two familiar
questions: "How is Apple relevant?" and "When is it going to
die?"
As a Macintosh enthusiast for more than 20 years, I've grown accustomed to this ritualistic bloodletting. So when IDG announced last month that Apple's market share had dropped from 2.7 percent to 2.3 percent, I donned my tattered "Kick me!" sign and waited for the hoots and jeers to begin.
Perhaps it was my imagination—or perhaps my hearing is not what it once was—but the catcalls seemed less enthusiastic than usual.
"When is Apple going to die?"
First off, as Daring Fireball has noted, some PC industry analysts are finally saying sensible things about Apple's market share. For the first time I can remember, analysts are pondering whether to stop measuring Apple by its slice of the overall PC market, which includes such non-Apple markets as grocery store checkout stands and automobile computers, and to start measuring Apple's performance by its success in relevant target markets such as education, film production, and publishing. This is a much more meaningful metric, and it's heartening to see analysts slowly abandoning the one-size-fits-all mindset that has dogged the company for years.
It's heartening—but it's also sensible. Not only is Apple's manufacturing business more narrowly focused than those of its competitors, making a one-to-one market share comparison unhelpful, but measuring Apple against PC manufacturers also overlooks the company's investments in areas that other PC makers have yet to explore, such as for-pay internet services. With a suite of online services that broadens every year, Apple looks more and more like a revenue-diversified internet company than like a traditional PC manufacturer. True, Apple's profits from these internet businesses are small (so, for that matter, are Amazon.com's) but the book remains unwritten on how much value it can ultimately generate from a broad suite of services, including: instant messaging, electronic mail, web hosting, greeting cards, digital photography, file storage and synchonization, calendaring, streaming video, and online music sales. Measured against the profits of internet media and entertainment companies such as AOL, Yahoo!, and MSN, rather than by its modest share of the PC market, Apple's $5.9 billion in overall sales last year made it more profitable than either Yahoo! or MSN.
To be sure, Apple is a company with problems—but if it's a company that's dying, it's a death scene worthy of Aida. Don't expect a funeral any time soon.
"How is Apple relevant?"
With as many as 305,000 iPods flying off the shelves each quarter (many to PC owners) and brisk sales for the new iSight camera, Apple seems increasingly relevant as a consumer products company—even to traditional Macintosh curmudgeons such as PC Magazine columnist John Dvorak, who has vowed not to bash the company in 2003. Yet Apple's recent successes in the consumer space shouldn't overshadow its disproportionate influence on other companies in the PC market despite a miniscule market share.
With a desperate need to distinguish itself to compete in narrow markets, to support a comparatively high product price structure, and to heed corporate values that emphasize innovation and risk taking, Apple has been compelled to take risks that other PC manufacturers can afford to avoid. This has long made the company its industry's favorite proving ground for dozens of new technologies that eventually found their way into the PC market, including:
• the first PC monitor
• the first PC floppy drive
• the first mass produced GUI-driven OS
• the first mass produced PC laser printer
• the laptop hand rest
• ethernet-ready laptops
• FireWire (an Apple invention)
• the first mass produced USB computer (iMac)
• the first PDA (Newton)
• one of the first mass produced wireless base stations (Airport)
It would be foolish to suggest that these innovations would never have been marketed "but for" Apple. Yet all were introduced by Apple and then became proofs of concept for an often moribund PC industry. Dominant mind share won't pay Apple's bills or impress analysts; still, the PC industry owes its plucky upstart a large and growing debt of gratitude for injecting a sense of wonder into a market that otherwise could seem as tired and as conservative in reality as Detroit is often perceived to be.
As a Macintosh enthusiast for more than 20 years, I've grown accustomed to this ritualistic bloodletting. So when IDG announced last month that Apple's market share had dropped from 2.7 percent to 2.3 percent, I donned my tattered "Kick me!" sign and waited for the hoots and jeers to begin.
Perhaps it was my imagination—or perhaps my hearing is not what it once was—but the catcalls seemed less enthusiastic than usual.
"When is Apple going to die?"
First off, as Daring Fireball has noted, some PC industry analysts are finally saying sensible things about Apple's market share. For the first time I can remember, analysts are pondering whether to stop measuring Apple by its slice of the overall PC market, which includes such non-Apple markets as grocery store checkout stands and automobile computers, and to start measuring Apple's performance by its success in relevant target markets such as education, film production, and publishing. This is a much more meaningful metric, and it's heartening to see analysts slowly abandoning the one-size-fits-all mindset that has dogged the company for years.
It's heartening—but it's also sensible. Not only is Apple's manufacturing business more narrowly focused than those of its competitors, making a one-to-one market share comparison unhelpful, but measuring Apple against PC manufacturers also overlooks the company's investments in areas that other PC makers have yet to explore, such as for-pay internet services. With a suite of online services that broadens every year, Apple looks more and more like a revenue-diversified internet company than like a traditional PC manufacturer. True, Apple's profits from these internet businesses are small (so, for that matter, are Amazon.com's) but the book remains unwritten on how much value it can ultimately generate from a broad suite of services, including: instant messaging, electronic mail, web hosting, greeting cards, digital photography, file storage and synchonization, calendaring, streaming video, and online music sales. Measured against the profits of internet media and entertainment companies such as AOL, Yahoo!, and MSN, rather than by its modest share of the PC market, Apple's $5.9 billion in overall sales last year made it more profitable than either Yahoo! or MSN.
To be sure, Apple is a company with problems—but if it's a company that's dying, it's a death scene worthy of Aida. Don't expect a funeral any time soon.
"How is Apple relevant?"
With as many as 305,000 iPods flying off the shelves each quarter (many to PC owners) and brisk sales for the new iSight camera, Apple seems increasingly relevant as a consumer products company—even to traditional Macintosh curmudgeons such as PC Magazine columnist John Dvorak, who has vowed not to bash the company in 2003. Yet Apple's recent successes in the consumer space shouldn't overshadow its disproportionate influence on other companies in the PC market despite a miniscule market share.
With a desperate need to distinguish itself to compete in narrow markets, to support a comparatively high product price structure, and to heed corporate values that emphasize innovation and risk taking, Apple has been compelled to take risks that other PC manufacturers can afford to avoid. This has long made the company its industry's favorite proving ground for dozens of new technologies that eventually found their way into the PC market, including:
• the first PC monitor
• the first PC floppy drive
• the first mass produced GUI-driven OS
• the first mass produced PC laser printer
• the laptop hand rest
• ethernet-ready laptops
• FireWire (an Apple invention)
• the first mass produced USB computer (iMac)
• the first PDA (Newton)
• one of the first mass produced wireless base stations (Airport)
It would be foolish to suggest that these innovations would never have been marketed "but for" Apple. Yet all were introduced by Apple and then became proofs of concept for an often moribund PC industry. Dominant mind share won't pay Apple's bills or impress analysts; still, the PC industry owes its plucky upstart a large and growing debt of gratitude for injecting a sense of wonder into a market that otherwise could seem as tired and as conservative in reality as Detroit is often perceived to be.