Steve Jobs, Apple and Innovation

[MacRumors]

FastCompany has posted their most recent magazine article on "Steve Jobs, Apple and the Limits of Innovation".

The in-depth article covers Apple's legacy of innovation and explores why that model has not yet been successful in placing them on top in the competitive computer market. Howard Anderson, a venture capitalist notes "Innovation isn't the key to economic growth. Management is the key to economic growth."

The article explores Apple's early attitude to "build the perfect machine" and ignoring the importance of a value-driven business model. The iPod and iTunes are also seen as Apple's most recent innovations which are quickly becoming a key part of Apple's business. Apple needs to remain wary:

Once again, Apple has pioneered a market--created a whole new business, even--with a cool, visionary product. And once again, it has drawn copycats with the scale and financial heft to undersell and out-market it. In the end, digital music could turn out to be just one more party that Apple started, but ultimately gets tossed out of.

[copperpipe]

Steve's a smart guy, yes? Well, let's hope he learned his lessons and this time he's gonna end up owning the market. So far, ya gotta say he's doing a bang up job...

[blueBomber]

I read this article about a week ago, and it really is well written. It talks about Apple the way the company really is, warts and all.

[mainstreetmark]

why pay for innovation when you don't have to?

In smaller cases, this is what copyright law is supposed to protect - gives the inventor some time to reap the benefits. Don't know why you can't patent or protect a "hard-drive based portable digital music player" or "internet based pay-per-item digital music download service" or "computer that you don't have to build from a kit" or "word processing platform where bolded text looks bold, instead of green"....

[altair]

Does it seem to anyone else that there are more and more articles being writen about Apple and Steve than in years past? Seems everyone is out to slam us just as we start lookin good.

Regardless of whether we will get kicked out of the party I really am amazed by the amount of people switching from windows.

Its a good time for Apple, regardless of what these guys say.

[x86isslow]

most of the recent articles are a lead-up to the 20th anniversary of the macintosh. its really quite impressive that the moniker has held for so long. Perfoma, Lisa, they've come and gone, but macintosh has stuck around.

[Sir_Giggles]

Reading the article reminded me of the iMac's fate.

It seems lately the iMac has become pricier and pricier with newer form factors designed to gain new customers to the Apple platform, but it seems the opposite is happening and iMac sales are suffering.

I think it's time they re-purposed the iMac line as a low cost (meaning lower quality build) computer to get people to switch to Mac. Make it as cheap as humanly possible by employing some of Dell's business model.

It's only a matter of time that these new iMac owners upgrade to the pro lines or continue upgrading their macs, and the iMac is the perfect opportunity for them to do so. Lately the iMacs are expensive and starting to look to "nichey" for general consumers.

iMac don't need to be faster as much as they need to be a whole lot cheaper.

[desdomg]

I dont know. This confict between innovation vs management is a bogus one to me. Looks good on paper, in a magazine article, but doesnt really mean anything at the end of the day.

There where a whole host of reasons why Apple didnt hold its dominance of the PC market 20 years ago. To summarise the situation as this guy has done is plaiin wrong.

And from where I am sitting Apple is not getting kicked out of the digital music party any time soon. Although to be fair I cannot see someting as important as the delivery of music being the monopoly of any one company at all. All Apple can and should hope for is for a big chunk of the pie, at best. But not the whole cake.

And although it seems hard to imagine from where we are now, in the future no one company will dominate the computing world either.

[Silencio]

Originally posted by Sir_Giggles
Reading the article reminded me of the iMac's fate.

I think it's time they re-purposed the iMac line as a low cost (meaning lower quality build) computer to get people to switch to Mac. Make it as cheap as humanly possible by employing some of Dell's business model.

iMac don't need to be faster as much as they need to be a whole lot cheaper.

eMac, anyone?

[Kid Red]

I didn't read the article but the gist of it seems to be that Apple does something cool and innovative but once others copy it, their better management ends up over taking Apple. So, innovations starts the show, but management finishes. Steve has never been good at management, so I hope he's smart enough to surround himself with winners at management.

A $100 iPod will go along way, but imagine a $800 iMac or $600 eMac? Or what about a new iPod with..gasp..a removable battery? Steve has to realize that some steps need to be taken to assure Apple grows. Competitive prices and strategies are needing to be addressed. Dare I say, Apple's fixed prices are a bad thing?

[iJon]

i dont think apple will get tossed out of this. the reason apple got tossed out of being the best computer company back inte the 80's was because apple didnt copyright their stuff so when billy boy got a hold of it and copied it there was nothing apple could do, i think apple has a better legal team now.

iJon

[mproud]

COLOR!
Yeah!

[stingerman]

The article is only partly true, people don't remember that Steve was not in administration when Apple lost a majority of the market share, he was out of Apple around 1986 and returned around 97 were he spent 4 years fixing the organization, the product lines, a new OS, building a new foundation and in the last two years really has moved ahead innovation wise, now that a solid foundation has been built. Apple has never been stronger.

[Silencio]

Originally posted by desdomg
And from where I am sitting Apple is not getting kicked out of the digital music party any time soon. Although to be fair I cannot see someting as important as the delivery of music being the monopoly of any one company at all. All Apple can and should hope for is for a big chunk of the pie, at best. But not the whole cake.

One point the article missed is that if Apple can't make much of a profit on iTMS, despite being the early leader in marketshare, what does that portend for all the other competitors scrambling over themselves to get in on the action, especially those that don't try to tie their music store to a hardware player? The fallout is going to be brutal and swift.

Speaking of hardware, it's going to be critical for Apple to stay ahead of the curve with the iPod. The rumored mini-iPods will be quite helpful, even if margins on them are fairly slim.

And although it seems hard to imagine from where we are now, in the future no one company will dominate the computing world either.

I sure hope you're right.

[blueBomber]

The really funny thing about this article is that John A. Byrne is the editor of Fast Company, he's the guy who helped John Scully write his memoirs in 1987. If you pick up the actual issue, he writes about this in his letter from the editor. He admits to being a huge Jobs fan (and even is pictured with a Steve-esque mock turtleneck. It's a great read.

[mproud]

Originally posted by Kid Red
A $100 iPod will go along way, but imagine a $800 iMac or $600 eMac?

These things exist. You can get a refurbished eMac 700MHz as a student for a low as $529 ($499 without Ethernet).

iMac for $949 (darn good for a premium family computer).

[shadowself]

In my estimation innovation is critical.

Sure Apple's products cost more than Dell's. Apple spends three to four times as much as Dell on research and development and Apple sells fewer items and has much smaller over all revenues.

Apple's plan has been, and hopefully always will be, to invent the next great thing while continuously evolving the things it already is shipping. This keeps the industry from stagnating. This takes money. Money to hire the most innovative people and money to market it. Thus, on average, Apple's machines (no matter what variety you pick: Macintosh, iPod or whatever) are more expensive to purchase than Dell's.

If everyone were to follow the Dell model and what until someone else has established a market and someone else has established the best of breed, then there would be virtually no innovation. Everyone would just sell the cheapest items possible. Who cares about making things better for the users/customers.

This is the only reason why I forbid the purchase of Dell computers at my work. I have had this position in my prior job too. I lead the engineering aspects of aerospace companies. If I expect my people to be innovative and push the envelope, then why would I ever support companies or systems which have the opposite attitude.

While there are many things wrong with Apple (I could probably list a dozen or more things right of the top of my head), Apple not following Dell's business model is not one of them.

In response to the individual who says the iMac should go back to being a "cheap" machine. Apple should NEVER sell cheap machines. Apple attempting to go cheap and sell primarily to gain market shares is one of the many things that got them into trouble in the early 90s.

If you want an inexpensive Macintosh there is the eMac. Those are within the price range of any common user. Sure, they are not in the same league as the G5 machines, but they are serviceable for most home users.

[iJon]

Originally posted by shadowself
In my estimation innovation is critical.

Sure Apple's products cost more than Dell's. Apple spends three to four times as much as Dell on research and development and Apple sells fewer items and has much smaller over all revenues.

Apple's plan has been, and hopefully always will be, to invent the next great thing while continuously evolving the things it already is shipping. This keeps the industry from stagnating. This takes money. Money to hire the most innovative people and money to market it. Thus, on average, Apple's machines (no matter what variety you pick: Macintosh, iPod or whatever) are more expensive to purchase than Dell's.

If everyone were to follow the Dell model and what until someone else has established a market and someone else has established the best of breed, then there would be virtually no innovation. Everyone would just sell the cheapest items possible. Who cares about making things better for the users/customers.

This is the only reason why I forbid the purchase of Dell computers at my work. I have had this position in my prior job too. I lead the engineering aspects of aerospace companies. If I expect my people to be innovative and push the envelope, then why would I ever support companies or systems which have the opposite attitude.

While there are many things wrong with Apple (I could probably list a dozen or more things right of the top of my head), Apple not following Dell's business model is not one of them.

In response to the individual who says the iMac should go back to being a "cheap" machine. Apple should NEVER sell cheap machines. Apple attempting to go cheap and sell primarily to gain market shares is one of the many things that got them into trouble in the early 90s.

If you want an inexpensive Macintosh there is the eMac. Those are within the price range of any common user. Sure, they are not in the same league as the G5 machines, but they are serviceable for most home users.

actually believe it or not dell spends just as much if not more on r&d.

iJon

[patrick0brien]

Howard Anderson
"Innovation isn't the key to economic growth. Management is the key to economic growth."

-Bzzzzzt!

This is why Venture Capitalists should not teach economics.

Economics 101: Equilibrium between supply and demand of a product facilitates micro and macroeconomic growth.

Management is simply keeping the finger on it.

I will agree with his other point that Apple has consistently not had a low-end to garner market penetration. The other boys do.

Of course, this factor is what leads some short-term thinkers into believing that Macs are more expensive.

[Wash!!]

I don't think they getting their money's worth for it.. I found dell equipment to be build in the cheapest matter possible and they feel and function that way remember you get what you paid for...
Even their so call ipod killer it feels and looks cheap, it does not matter how many bells and whistles they put on it.

[lem0nayde]

I really enjoyed this article and thought it was very well written. He makes a very good point that innovation alone cannot carry a company. The Windows platform just steals Apples innovation - and then uses it's widespread acceptance to one-up Apple with marketing and sales.

Apple is doing the same thing with iTunes that it did with the Mac OS. It's offering a closed system that requires ONLY Apple products - the iPod and iTunes. Unless Apple can make the iPod available to everyone (as is rumored that they will) then it's a hopeless situation. Eventually the desire for choice and lower prices will drive the consumer elsewhere.

I love Apple, and hope they continue to innovate their butts off. I just wish there were some way they could do so - and still make a crapload of money off of it.

I, for one, have invested too much money in their platform to have it go away. I hope they find a strong niche, climb their way up to maybe 8% and nestle in for the long haul.

[winmacguy]

Originally posted by Silencio
One point the article missed is that if Apple can't make much of a profit on iTMS, despite being the early leader in marketshare, what does that portend for all the other competitors scrambling over themselves to get in on the action, especially those that don't try to tie their music store to a hardware player? The fallout is going to be brutal and swift.

Speaking of hardware, it's going to be critical for Apple to stay ahead of the curve with the iPod. The rumored mini-iPods will be quite helpful, even if margins on them are fairly slim.


I sure hope you're right.

Ah product profit margins... yes you need them to make a profit (the bigger the margin the bigger the profit) but you also need market share and volume distribution which works when your catering for a lower profit margin bigger market. If Apple can get this bit right with the iPod and iTunes penetration into the PC market ie higher production runs and great supply distribution more wharehousing for their product which is "the tech toy" this christmas/new year then they will succeed. There is nothing wrong with having a higher quality product that is innovative out in the market. Even a higher quailty product that costs more that the rest. As long as you can get it to stores in time, and keep your customers happy if they have product issues. happy new customers maen that you should be able to maintain a greater market share with a quality flash new product with out necessarily lowering the price

[iJon]

Originally posted by Wash!!
I don't think they getting their money's worth for it.. I found dell equipment to be build in the cheapest matter possible and they feel and function that way remember you get what you paid for...
Even their so call ipod killer it feels and looks cheap, it does not matter how many bells and whistles they put on it.

well they are doing something right cause they are making more money than apple and they are the #1 computer maker in the world.

iJon

[psxndc]

Originally posted by mainstreetmark
why pay for innovation when you don't have to?

In smaller cases, this is what copyright law is supposed to protect - gives the inventor some time to reap the benefits. Don't know why you can't patent...

I gotta nitpick... copyright law protects creative works like poetry or music. Patent law (and patents) protect inventions.

-p

[desdomg]

Dell's R&D spend goes on how to make stuff cheaper. You know production issues, cutting cost corners, etc.

What I dont fully undrestand in all this though is the obsesion with market share. Sometimes market share dominance just shows you are good at winning market share - a bit like how some academic rusults just show you are good at passing exams. Market share is not the be all and end all to life. And is certainly no indication of the quality of a companies products, their managment or their ability to survive in the market. What is clear however is that eventualy, all monopolies come to an end.