RoughlyDrafted Archives: October 2006
October 1st, 2006
Daniel Eran Dilger
Index page for articles from October 2006.
October 2006 (newer articles on top):
Why Apple Failed promised to reveal an accidental discovery that was key to Apple’s recovery. The great minds of Slashdot took various guesses over the weekend, but here’s the real reason Apple was able to create new growth in the Mac platform.
Why Apple Failed challenged the commonly held idea that Apple’s troubles throughout the 90’s were tied to its small share of the overall market. Instead, it presented PC market share as a red herring the company’s executives ineffectually chased after in efforts to become more like other PC makers–or alternatively, like Microsoft–while the real solution evaded their grasp.
Apple’s recent quarterly earnings report blew past all expectations. More importantly, dramatic unit sales growth shows the company is executing a working strategy for building the Mac platform. That raises the obvious question: why has Apple’s market share historically been so low, and why did Apple fail to make any progress in the 1990’s? Here’s a look at why Apple’s platform fell into crisis, and why the solutions proscribed by analysts didn’t work. A follow up article will describe how Apple turned its fortunes around, and why the company is now poised make further gains.
Microsoft certainly built a reputation for cleaning up the markets it chose to enter. However, as pointed out in The Microsoft Invincibility Myth, those past successes have been limited to software markets tied to the company’s monopoly position with Windows. Microsoft’s prior success with Windows conspicuously avoided direct competition, leveraged price advantages, and blazed new trails into virgin markets. None of those factors will apply to the Zune.
What’s more fun than dissecting the overwrought failures of big dumb companies whose marketers ineffectually tried to put a price tag on cool? Doing it in real time, as it happens! Ten iPod vs. Zune Myths took apart the marketing spin attached to Microsoft’s upcoming iPod Killer, but there’s plenty left to examine. Here’s a look at the whimpers of jilted executives, painful marketing drivel and fan speak, the geeky in-jokes, as well as the market realities and technical problems facing everyone’s favorite iPod Killer.
As a software company, Microsoft was only interested in selling licenses. Unlike Apple, Microsoft’s profits were never directly tied to hardware profit margins. Microsoft’s strategies aimed to widely spread the company’s software seeds on cheap, commodity hardware built by others. Of course, cheap is a relative word. In 1990, a typical DOS PC cost around $2000. It offered a 386/16 MHz processor with 2 MB RAM, 256 color VGA graphics, and an optional mouse for use with the brand new Windows 3.0. Microsoft sold Windows 3.0, and the required DOS, for $200, or around 10% of the cost of the hardware.
The reason Apple’s Macintosh survived into the 90’s–escaping the fate of a variety of other unique platforms that were slaughtered by commodity PCs–was largely because of the tight integration Apple could provide between its hardware and software. Apple wasn’t primarily selling RAM chips, a processor, and an OS; instead, Apple was offering a richly engineered and consistent experience. Smaller competitors, from Commodore to Atari, couldn’t match the enormous development efforts Apple was investing in its platform. Microsoft employed the same principle of integration in its software offerings. Rather than seeking to build an integrated computer solution like Apple, Microsoft assembled a series of integrated software platforms that created networks of added value for users.
Apple’s distant lead in graphical computing began eroding quickly in the early 1990’s. Microsoft worked to improve its DOS based Window 3.0 while it also made incremental progress in developing the entirely new Windows NT operating system. During The Rise of Windows, Apple merely entrenched in a rut of announced initiatives that failed to decisively deliver real progress or marketable products. While Microsoft looked for new markets and targeted business users in particular, Apple seemed content to rely on its existing, established share of specific niche markets that offered large profit margins.
Why Microsoft Can’t Compete With iTunes examined Microsoft’s past success in software development, and demonstrated why its past practices won’t be of any help in expanding into the consumer electronics and digital media download business. While the mainstream media is conspicuously quiet on Microsoft’s track record in consumer electronics, I’m more than willing to share!
After reading Why Apple Will Change TV and the supporting Five Ways Why Apple Will Change TV, you might be left wondering why Microsoft won’t simply beat Apple to the punch in delivering the future of the television. Here’s the secret answers that expose a series of myths concerning Microsoft’s ability to own new markets, why its monopoly position won’t be of any help, and why the company’s consumer retail strategies aren’t working.
Previous articles looked at how the iTV is positioned to add value to on-demand commercial content, users’ own personal content, a variety of alternative content, and interactive content. What other kind of content is there? #5: Original Content. For an encore, Apple will begin creating its own content, commissioning original programming by acting as a label and studio. Think I’m exaggerating or speculating beyond reason? Consider the following facts.
Previous articles looked at how the iTV is positioned to add value to on-demand commercial content, users’ own personal content, and a variety of alternative content. What other kind of content is there? #4: Interactive Content
The previous two articles looked at how the iTV is positioned to add value to on-demand commercial content and users’ own personal content. What other kind of content is there? #3: Alternative Content
The previous article considered how Apple is pioneering delivery of on-demand commercial content, in particular music, movies and television programming. Apple also has investments in the production of that content, with pro software tools such as Final Cut Pro and Logic, as well as hardware engineered for audio and video production work, from the Mac Pro to the Xserve RAID. #2: Personal Content
Why Apple Will Change TV presented similarities between the iPod and iTV, and introduced how Apple is poised to add value to existing content using the iTV in much the same way that the iPod added value to CD and MP3 music collections. Here’s the first and most obvious of Five Ways Apple Will Change Your TV – #1: On-Demand Content
Steve Jobs described the iTV as Apple’s entry into the living room, as if it were a strategic move in a larger game plan. But with several wireless TV extenders already on the market, why will Apple’s be any different? One could have asked the same question of the iPod in 2001, when there was a similar variety of music players already available. Early reviews suggested Apple’s product was simply nothing new, that it just had a bigger price tag. Why did the iPod clean up the market?