iPod = Apple 2.0?
When Apple first became a legal partnership just over thirty years ago, few would have suspected that the next thirty years would end up being little more than a prelude to being the next big thing. Most surprised would be the founders, Steve Jobs, Steve Wozniak and Mike Markkula, they thought they were just going to be making a really profitable personal computer.
The personal computer they had in mind was, of course, the Apple II. The trio’s instincts were correct, the Apple II was a monster hit. For a time, until the IBM PC was introduced, Apple was the player in the personal market. Once the PC got around to being the PC, well, Apple took a quick backseat.
This seems confusing, how could Apple go from dominant computer maker with scads of software, software that included Oregon Trail, go from dominance to irrelevance? The chain of events seemingly defies rationality. If the Apple II was markedly inferior to the PC, why hadn’t some other computer maker made a machine demonstrably better than the Apple II? The truth is that plenty of people made better machines than the Apple II, and plenty of companies made equivalent computers that cost substantially less. Unfortunately, for the competitors, they got their product to market after Apple.
Thus, Apple had the huge advantage of being first to market. How big of an advantage is being first to market? Take pharmaceuticals, every so often some key piece of research will be suddenly uncovered and a drug will be pulled from the market. Usually the drug pulled is the first one in some supposedly new class. The interesting thing is that before the drug is pulled from the market, generally, it is still the best selling product in that segment of the market. This despite the fact that when drugs are pulled from the market it isn’t because of concerns over efficacy, it is because they tend to cause the adverse reaction known as death. It is easy to conclude at this point that being the first to market is of the utmost importance. The idea makes sense, a void for a product exists and the first company to fulfill said void naturally has a huge advantage.
Of course, the first to market advantage doesn’t last forever, Penicillin isn’t the world’s go to antibiotic anymore not because it is dangerous but because it has been outclassed by other drugs. Apple wasn’t stupid, it knew that the reign of the Apple II couldn’t last forever so they tried to be first to the market again with the Lisa and the Mac. The company might have had the edge in tech and usability but Apple lacked the legitimizing force of three important letters: IBM.
In truth, there was little Apple could do to actually compete with IBM and later the clones, short of giving up on the hardware side of things and start licensing the software. The move was suggested but by the time it was taken as a serious option it was far too late. Apple shouldn’t be seen as shortsighted, no one expected the eventual winner to be a software company and there was nothing in Apple’s previous experience that would indicate that massive profits and world shaking power would be found in something as fleeting as software.
By 1983 the days of Apple dominance were fading quickly and the long slide to “beleaguered” and “dying” had begun. The Mac only broke into double digit market share for a single year and most people, including the board of directors, saw Apple as a company that needed to be bought out by a company that could actually get something right.
While pundits, CEOs and the stock market all saw Apple with one foot in the grave Apple employees went about doing their jobs and trying to make some great stuff. Year after year, the company did crank out enticing, if not always successful, products. The Newton spawned the PDA market, Apple had one of the first digital cameras, and came out with a very early videoconferencing camera. These products and others kept Apple in the public mind as a company capable of making cool and cutting edge stuff.
When Steve Jobs returned to Apple he quickly realized that Apple couldn’t beat Microsoft Windows on features alone. The power of Apple wasn’t in their gizmos, the power off Apple was in the company name. The public did have a positive image of Apple, the average person would say (incorrectly) that Apple invented the personal computer. They would also likely opine that Macs were in some intangible way better than PCs but that they were also very, very expensive.
Apple’s reputation for ease of use, the perception that Apple made an inherently higher quality than other manufacturers spurred the adoption of the iPod. What started life as a Mac only, FireWire portable hard drive with a headphone jack and a few extra chips took the .mp3 player market by storm. Actually, saying the iPod took the digital audio player market “by storm” actually understates the influence. The iPod created a huge chunk of the market.
The iPod yearns to be much more than an .mp3 player. In the ideal world of Steve Jobs all your media will come to you through Apple branded products. The concept makes sense, is there something inherently better about watching a cable TV show via the cable? Is there something that makes a physical CD superior to an iTunes purchase? Is there a legitimate reason why a DVD is preferable to a download? While the answer to the questions may be “yes” for the moment, in the long term the answer is a resounding “no”.
Apple wants to be the company that manages all of the previously mentioned information and, what the heck, the company wouldn’t mind being the one to sell all of the digital goodness to the consumer as well. The iPod is the perfect way to achieve that goal, a perfect way to take Apple to the market dominating company Mac fans are so desirous of seeing. Can Apple pull it off, will Zunes “squirt”* feature derail Apple’s plans? The next six months will tell and it will be a very interesting half-year.
*Sometimes it is better to let the market come up with a name for a feature. The Zune’s wireless transfer feature has been dubbed “squirt” by Microsoft. As in “I’ll squirt you a video of my vacation.” The name sounds forced and incredibly lame. Below I present 20 better terms for “squirting.”
Ooze, push, transfer, WiFile, zip, jump, slap, slam, spurt, side load, slide, barf, splooge, spill, drive, zing, breathe, blow, charm, infect your Zune with a virus
del.icio.us
Digg
Facebook
Slashdot
StumbleUpon
Comments
Tell me the “squirt” thing is not true! Please! While I am very well aware of the meaning of the noun in a technical context that perfectly matches what happens, the word itself has an overtone that is not really appopriate for something you’d do in public… but that is just my non-native understanding.
I like “splooge” and “zing” personally.
It’s fairly undeniable that the iPod is Apple’s second chance at what Jobs set out to do in the first place.
It remains to be seen how this plays out. I don’t foresee the Zune overthrowing the iPod, but it could be more competitive than others have been.
I know that I’m not comfortable with one company, either Apple or Microsoft, owning the digital living room.
Interesting times, though.
The name sounds forced and incredibly lame.
Nice article, CS.
I agree Balmer as an orator of tech coinage is very lame, indeed.
I like your list of other possibilities yet I would like to add, “beam up”. When I was working on the first smartphone (the Qualcomm Q), we used to refer the IRDA wireless transfer as “beaming” up an app to another PDA.
It was short and sweet. It also invokes memoirs from Star Trek fans everywhere, doesn’t it?
Well, bad beaver the squirt thing is true. Though that complaint coming from Bad Beaver is endlessly hilarious!
I’m exceedingly uncomfortable with a digitla living monopoly be it Apple, Microsoft or any other company.
Beaming is a huge improvemnt over squirt. In fact it is difficult to think of a name worse then “squirt” perhaps excrete… “Let me excrete you a photo” Well, excrete is worse, I guess we know the term squirt beat out…
I have no idea what you’re talking about
“Beam” is much better. Unless my memory fails it was also used as the term for infrared-transfers between Newton MPs. There was a very cool commercial featuring it…
Some (not so brief) comments:
Regarding the analogy of pharmaceuticals: I believe I know what you are trying to communicate here, but I’d like to clarify something. First to market CAN be important for a drug in a new class, if it does something that no other drug has done before. And if that “new thing” is a significant advancement in medical care, and if the creation of similar drugs is very difficult technically, the company who is first to market with a new drug has the advantage of DEFINING that new class of drug. They may capture a large share of market for treatment with this new drug, especially if there is nothing else available that does what this drug does.
As for withdrawal of a drug from the market: It is not necessarily going to happen ONLY because the drug caused deaths (although that is definitely a good reason to take the drug off the shelves of your local pharmacy). It may happen because of non-fatal safety issues that were not identified in pre-release testing, issues that are significant enough to make the disadvantages of the drug outweigh the advantages.
Sometimes drug #2 or drug #3 in a class actually outperforms drug #1, the “first in class” drug that DEFINED the class, or it may be significantly safer, or more convenient, or whatever. But if this happens, that first in class drug will fall back in popularity, because a new product does the same job better, cheaper, more conveniently, etc.
Comparing this to Apple Computer: The Apple II was NOT the first computer available, nor was it necessarily the best (it had 40 columns of text, when a close competitor, the Radio Shack TRS-80 had 64 columns of text). It did, however, have some things that made it “first in class” and “best in class”, before anyone else had it. One first was color graphics that were easy to produce; another was BASIC in ROM (didn’t have to be loaded from tape); but the most important was VISICALC, the first spreadsheet program, which ONLY ran on the Apple II in its first incarnation. This was the COMPELLING APPLICATION that actually SOLD Apple II computers to businesses who would not have bothered getting a computer before.
The connection to the iPod is a good one. Other companies had MP3 players prior to the release of the iPod; there were sources of digital music to play on MP3 players prior to the iTunes Music Store. But Apple took what was available and what was in demand, and made it BETTER, FASTER, and more CONVENIENT than the other players out there, and as a result, they captured a large share of the market. And they have continued to evolve the product (both the iPod and the iTunes Store) since then, gradually increasing its value to both old and new customers.
Continuing the analogy with the Apple II: If Apple had done to the original iPod what it did to the Apple II, we would have seen them release an “iPod II” that was not necessarily compatible with the original iPod, didn’t use all of the same music formats, and maybe even required users to re-rip their music or re-purchase songs. Even if technically this was a BETTER MP3 player than the original iPod, it would not have done as well as things actually have transpired.
Similarly, if Apple had treated the Apple II the way they treated the iPod (and the way they have treated the Macintosh for years now), they would have evolved THAT platform to add features and capabilities, rather than going for a totally new platform (the Apple III, the Lisa, the Mac 128K).
As far as the next six months are concerned, if Apple can avoid the arrogance that can go along with being the best in show today, they have a good chance of zinging the Zune. They probably can; they have hopefully learned from their own company history about what NOT to do this time.
if Apple can avoid the arrogance that can go along with being the best in show today
Too late.
As for “squirt,” it’s everything we’ve come to expect from millions of dollars in corporate marketing.
Whatever they call it, though, it beats Jobs’s sharing solution for the iPod: taking one of your earbuds and sticking it in your friend’s ear. Now that’s innovation. Anyone wanna come up with a word for that one?
Hmm… I have some difficulty with the comparison of the former Apple II dominance vs. the iPod dominance.
The Apple II and PC relied on market forces outside of Apple or IBM—other software companies. A computer in an of itself did very little. You had to add software. Back in those days, it was the likes of VisiCalc and WordPerfect that were the killer apps.
The Apple II failed to capture the business end of the market, specifically due to mis-steps of Apple’s marketing and not pursuing the right software developers (and we all know how huge a disaster the Apple III “business computer” was).
The Macintosh continued some of these same marketing problems. It was clearly marketed as the computer for “the rest of us”, courting artistic professionals, but as a result was shunned by the rest of the business market.
This was a huge marketing mistake on Apple’s part. A really good spreadsheet app and some other killer business software could have given Apple a foothold in the business market, even if only a small one, instead of relegating it to the desktop publishing niche.
Ironically, games also played a part in the popularity of the PC over the Macintosh. Jobs was so worried about the Mac being percieved as a “toy” he actively discouraged game development… and yet Apple wasn’t correctly marketing to big business, either… So who exactly did they expect to buy those machines?
Lastly, Apple’s profit margins were gigantic on the Macintosh. They were the largest margins in the industry by far (for some machines, as high as 50%). Apple refused to get into a price war with the commodity-priced PC machines. While I don’t blame them for protecting *some* of their profit margin, putting a $2500 Plus/SE class machine against a PC at half that price was another major mistake. Recall that the Lisa was introduced at $10,000.
Apple should have lowered their prices earlier. The compact Macs could have sold many, many more had the introductory price been below $2000, as they initially had planned, and come down from there. The Macintosh II, the first color “business oriented” desktop Mac was a remarkably high $4000 - $5000 depending on configuration. Unfortunately, Apple’s board of directors were greedy sons of bitches and marketshare was sacrificed on the altar of short-term profitability.
Anyway, I’ve gotten away from my main point somewhat. The iPod (and other MP3 players) is basically a closed system. It doesn’t rely on other software publishers and is priced competitively with others in the market. If the iPod were twice the price, then, yes, the dominance would quickly erode… but it’s not. It also doesn’t rely on software development houses to build a “killer app” for it. It is its own killer app, especially with the iTunes integration. You could argue that the iTunes Store is the killer app, in this case.
Therefore, Apple’s dominance in this category isn’t really the result of any one feature. Other MP3 players have had additional features that haven’t cut into the iPod market much, if at all. It’s the whole package of usability and sleek design that makes it so successful.
In any case, that’s why I think the Apple II / Mac market share comparison falls flat, and minor features on the Zune will likely make little difference.
First the Wii, and now squirt. Have the boys from South Park grown up and got jobs in marketing? What next?
It is its own killer app, especially with the iTunes integration. You could argue that the iTunes Store is the killer app, in this case. -VB
I reckon I made this point awhile back yonder. Many folks, especially odious ones, saw this argument as nonsense. A killer app, they said can’t be the product itself. A killer app must not be itself. A killer app must fit the definition of an application…blah, blih, blah…
Anyway, you make a good points of the iPod’s closed-loop system. That is exactly what will keep it from falling the way side. You are very correct that the iPod does not depend upon third parties. I doubt Steve is having sleepless nights from the Zune’s day of reckoning coming. If the Origano..err, Origami launch is any insights, well I wouldn’t either.
And as for the comparisons between the iPod and the Apple II, besides the appeal of the Apple brand and its renowned industrial designs and quality, the two are completely bipolar.
That has been debated too much already and you make good refreshers. I’ll leave it at that.
Let me tell ya a story…
- Palm/PocketPC
- Netscape/Internet Explorer
- PSP/Xbox
- Word Perfect/Word
- Lotus 123/Excel
- Turbo Pascal/Visual Basic
MS don’t give up easy. The same “untouchable” attitude displayed here is the same one that believers in all those products had. Their products enjoy massive market share. Except for the PSP, MS has taken over their markets and reversed the marketshare.
XBox hasn’t killed off PSP by any stretch, but it has done significantly better than most expected.
And interestingly, XBox is the only one on that list that couldn’t leverage off or build its success on Windows.
The Zune can and will leverage off Windows too.
Excellent post, Chris. The “untouchable” attitude as you describe it is systemic. It permeates virtually the entire iPod universe, from the company itself to the diehard user base.
But arrogance breeds complacency. The last real iPod innovation was over a year ago.
The first Zune iteration is lacking, but as Chris points out, Microsoft is a rev 3.0 company. A few changes here and there and the Zune is a very attractive product with the same vertical integration as iTunes and the iPod. And with Microsoft promising total integration with Windows, it might become too much to resist.
Microsoft is a rev 3.0 company Nice point, Beeb.
Apple users should understand that too. Apple is at least a a Rev 2.0 company, but probably more like a Rev 3.0 themselves.
Chris,
I understand your point.
However, there is a bit of irony in the fact that despite its success, the Xbox product line hasn’t made one red cent… or rather, one black cent. It’s been plenty in the red. (The lose over $100 per unit sold… I recall seeing one reported loss estimate around $4 billion over the life of the Xbox & Xbox 360… [about -$800m/yr] Yikes!).
I’m not convinced Microsoft is a rev 3.0 company as you all state. Their revenue is still wholly based on leveraging the Windows monopoly. Windows and Office are the same items their revenue has been built on since Windows 95 and before.
Windows CE (PocketPCs), their development tools and their other products make up a tiny portion of their total revenue. Internet Explorer does nothing for their bottom line since it comes with the OS. They were even going to update it before Vista until Firefox started looking so polished and they had to change their tune.
Anyway, I’m not sure Apple sees the iPod as “untouchable”. I’m certain Apple is always considering new ways to maintain its market position. Beeblebrox attributes arrogance to Apple’s attitude about the iPod marketshare, but I’m certain Apple engineers watch the competition carefully and unless Beeb knows a bunch of Apple insiders, that opinion has no basis.