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The Business Insider (TBI) is a business site with deep financial, entertainment, green tech and digital industry verticals. The flagship vertical, Silicon Alley Insider, was launched on July 19, 2007, and led by DoubleClick founders Dwight Merriman and Kevin Ryan and former top-ranked Wall... More
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  • Hey, Apple, Wake Up -- It's Happening Again
    Read Hey, Apple, Walke Up -- It's Happening Again

    We've seen this movie before.  And, last time, Apple fans didn't like the ending.

    In the 1980s, Apple took the world by storm, rolling out the Macintosh and changing personal computing forever.  Steve Jobs and "The Woz" became legends (and dynastically wealthy) and a generation of consumers fell in love with Apple's products, and investors who took a risk on the Apple IPO (temporarily) laughed all the way to the bank.

    A decade later, however, Apple was on its deathbed, a victim of a major strategic mistake that turned it into an also-ran.

    What was that mistake?

    The insistence on selling fully integrated hardware and software devices, instead of focusing on low-cost, widely distributed software.

    Yes, Apple also made other mistakes--most notably, maintaining a premium price point, ditching its famous founder and spiritual leader, and developing clunker products.  But the mistake that doomed its primary business, the Macintosh, to niche status was the insistence on maintaining complete control over every aspect of the product while Microsoft drove for software ubiquity.

    young steve jobs
    With Microsoft spraying the same software platform across dozens of hardware manufacturers, the world had a chance to standardize on a single, cheaper development platform.  The Windows monopoly was born, and the once-great Apple soon became an also-ran.

    Fast-forward 15 years to the new era of mobile computing.

    Once again, Apple has seized the early lead, launching a revolutionary product that is taking the world by storm.  Once again, consumers are head-over-heels in love and Apple investors are dynastically wealthy and certain of the company's future world dominance.  Once again, Steve Jobs is God.

    And, once again, Apple is insisting on selling a tightly controlled, fully integrated hardware and soltware device while its major competitor--Google--is spraying low-cost (free) software across dozens of hardware manufacturers, driving for platform ubiquity.

    Sergey Brin and Larry Page 1
    In its short life, Google's Android operating system has captivated developers and stolen mindshare from Apple, Research in Motion, Palm, and other companies that have been in the mobile business forever.  The "Droid" and Google Phone are getting rave reviews, and technology tastemakers are thrilled with the platform's open-ness (in contrast to Apple's app-store, which continues to get between iPhone customers and app-developers).  Apple, meanwhile, is coming under increasing scrutiny for being a domineering control freak hell-bent on secretly undermining its competitors (see the Google Voice incident).

    Will the movie play out the same way this time?  Will Apple's insistence on maintaining end-to-end control, on trying to shoot the moon by owning every aspect of the mobile computing business, doom it to failure against a competitor hell-bent on achieving software ubiquity? 

    Remains to be seen.

    But the movie is starting the same way.  And so far, at least, Apple is showing no signs of doing anything differently.

    Read, Hey Apple, Wake Up -- It's Happening Again

    Disclosure: Henry is an investor in Silicon Alley Insider, Inc., the parent company of The Business Insider. He owns options and/or shares in Yahoo, eBay, Baidu, Amazon, Spark Networks, Microsoft, Merrill Lynch, Gartner Group, Time Warner, and other companies, along with various equity and bond index funds. He serves as an advisor to Schmap Ltd. (Hong Kong), PopRule, and Turtlejob (UK).
    Jan 06 10:36 AM | Link | Comment!
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