Back to the Future

Apple is innovating like its old self once again. But can the company avoid repeating the mistakes that forced it to play catch-up in the '90s?

PHOTOS

Apple's Seeds of Innovation

Apple has never been a stranger to temptation. From iMacs to iPods, the 30-year-old computer company has repeatedly set off public frenzies with their cutting edge-and often cutesy-products. As they get consumers buzzing over the newest Mac gadget, a look back at ten landmark moments in Apple history:

Just How "Insanely Great" is Steve Jobs?

By Daniel Lyons | Newsweek Web Exclusive

Nov 10, 2009

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One of the great things about covering technology is that if you hang around long enough, you get to write the same stories all over again. In 1987, when I first started on the tech beat, desktop PCs were a big deal. Today the excitement has moved to mobile devices, also known as smartphones. Watching this new market unfold is a bit like seeing one of those movies where they've taken an old classic and remade it with new stars but the same script. (Click here to follow Dan Lyons).

Now, as then, a smaller device is displacing a bigger one. Now, as then, the platform remains somewhat primitive but is evolving rapidly. Hardware makers are trying to figure out which user interface works best. Software makers are dreaming up new ways to use machines that even their creators could not have imagined. Now, as then, a new ecosystem is arising, with disruptive technology creating new powerhouses and threatening the survival of market leaders.

The most striking Groundhog Day moment for me involves Apple. Back in 1984, Apple leapt way ahead in the PC market when it released the original Macintosh, the first popular computer to employ a graphical user interface. It took Microsoft six years to come up with something that could compare to the Mac, in the form of Windows 3.0. Six years! For all that time, Apple had the market to itself. Nevertheless, Windows took over the world and now holds more than 90 percent market share, while Apple squeaks by with less than 5 percent worldwide.

Cut to the mobile phone market, today. In June 2007, Apple introduced the iPhone, a device that was so far beyond everything else in the market that even now, two and a half years later, nothing can beat it. To be sure, Nokia and Research in Motion still hold a greater share of the smartphone market than Apple does, but their aging software platforms look obsolete next to Apple's.

The question is, will Apple do with the iPhone what it did with the Mac? Will it leap out to a technological lead and then find a way to clutch defeat from the jaws of victory? Or has Apple learned from its previous experience and figured out a way to turn its superior design and wonderful technology into market domination?

Probably Apple's biggest blunder with the Mac was refusing to let other companies license its software. (There was a time when Apple did license its software, but by then it had already lost out to Microsoft.) The thing is, Apple CEO Steve Jobs is a control freak who believes in keeping the software tightly coupled to the hardware. In his mind, this is the only way to guarantee that you'll give customers a terrific experience.

Microsoft took the opposite approach, letting any PC maker license the Windows operating system. There's a tradeoff here. Microsoft couldn't control the user's experience. But its decision led to greater diversity of machines, and lower prices. For most of the world, cheap machines that were "good enough" trumped Apple's pricier, perfectionist, control-freak approach.

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Posted By: OS11 @ 11/13/2009 11:35:32 PM

Dan Lyons doesn't understand PC history. The REASON the Mac didn't achieve massive share in the early days was that Steve Jobs was kicked out of the company in 1985. So unless he is kicked out again, his approach will take over the "lion share" of smartphones in the next 10 years... it will be similar to the iPod, just watch.

Today, EVERYONE uses the Mac User Interface, it just depends on at what level, so technically, Apple won the game and continues to dictate the direction of the PC industry. Yes, Apple should sell a low cost machine outside of just the Mac mini that increases share to the 40% range, but what would be the point? Apple already has 80% of the above $1000 PC retail market, so selling fewer machines of a high quality is a smart approach.

And sorry, but the Andriod is going to end up exactly like Linux... basically, no "share" outside of a few geeks. The entire reason the iPhone works so well and has become so popular is it has "ONE" consistent design that goes all the way through the hardware and software. It's vertically and horizontally integrated... add in the free iPod inside, and nobody can compete with it since all the rest are designed by "committee" with no access to iTunes, thus they will always work poorly compared to the iPhone and the upcoming iPhone mini..
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Posted By: mskroar @ 11/12/2009 5:11:06 PM

Key problem with this article and concern about Apple: the first macs did not achieve anything like the market depth and breadth of the iPhone/iTouch ecoystem. It is hard to say that apple might repeat its "mistake" by losing its dominance in the computer market 1984-1990 when it was never as dominant or profitable as it is today. As Spanky points out, the article completely leaves out another great innovation of apple (iPods). Tight control over software (iTunes) did not hurt apple.
My overall thoughts: Apple can continue to be highly profitable with significant if not leading market share because as the tech user base has expanded from hobbyists people are willing to pay more that does more easier. PC Owner since 1985/ Mac Owner since 2008
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Posted By: Spanky Deluxe @ 11/12/2009 11:08:10 AM

While a lot of what you say is true, you've missed out one other key milestone in Apple's history: The release of the iPod. The iPod was released in October 2001 and completely changed the MP3 player market. It was light years ahead of the competition.

Whereas Apple lost out to Microsoft after Microsoft released Windows 3.0 six years after the Macintosh, six years after the iPod was released, Apple released the iPhone. The iPod is now 8 years old and still going strong. Nothing can compete to the iPod's market share. In fact, the only thing the iPod line has lost market share to is Apple's iPhone and iPod Touch lines.

Maybe the reason for Apple's success in the iPod and iPhone arenas is actually due to the same reason Apple suffered in the early Macintosh era. I.e. Apple's desire to lock things down. Features haven't been added to the iPhone until they've been decent enough not to damage the user experience. I.e. 3G wasn't introduced until battery life could still be reasonable. I'd imagine that multiple apps at once will be enabled in future iPhone versions when Apple considers the cpu (likely dual core at that time) will be able to run multiple apps at once without causing slow downs damaging the user experience.

Apple's advantages appear, to me at least, to lie with what others would consider their weaknesses. The control freak nature means that they can maintain the user experience people will have across their product ranges. It means they have less compatibility problems in their software to deal with. Their control freak nature also means that they can maintain an image of "cool". The original colourful iMac was cool and from that day onward their market share has grown in leaps and bounds. Although their success is definitely largely due to their innovation in terms of software and hardware design, the biggest contributor to their success is probably down to their innovation in terms of marketing, aesthetics and all around coolness.