Apple has been grabbing all the innovation headlines with the iPhone and the iPad and its iMac business has benefitted in the process. Microsoft showed off Windows 8 at D9 today and in so doing showed the world that markets are always open to those who innovate. Windows 8 has a completely different look and feel to the current operating system. Gone is the start button and the icons for apps. Instead the new version will use live tiles. These will be familiar to those who use a current generation of Windows phone. Indeed this is part of what makes Windows 8 so clever. It shares the same interface across mobile and PC, meaning you learn one way to find and access content. It also makes it easier to share content between systems. To get a good feel for Windows 8 see the demo on YouTube. Windows 8 looks very cool and may well be the kind of innovation that will draw Mac users back to the Windows platform. It also demonstrates why Nokia may have chosen to go the Windows route for its mobile products. I love it when you can actually see innovation and with Windows 8 that innovation is not just visible it’s also screaming at you.
Apple has applied to trademark that expression. Even if they hadn’t it always reminds you of them. They made having thousands of apps available for you to buy and install on your phone something we all thought was very important. They made it so important that all their competitors had to copy them. Google, Microsoft and RIM (BlackBerry) now tout the thousands of apps you can choose from. Of course the reality is that for most of us, having thousands of apps to choose from is nice but we are never going to actually buy thousands of apps. I have about 40 apps on my iPhone. I used to have a few more that my kids had downloaded but most went unused and I managed to purge them from my phone. When I do buy a new app, I tend to buy from the top 25 list. Only rarely will I seek out an app not amongst that list. Now I’m sure the apps I need differ from the apps most students want. Indeed my daughter has games that leave me cold. Even then she has no more than 100 apps. So, by my calculations, less than 1% of the apps for sale actually get a big market. Put another way, the vast majority of apps get no audience whatsoever. Today’s app developers are like the Victorian prospectors in search of gold. They’ll invest in a piece of land in the hope that they’ll strike it rich. Most of course don’t. So when you think about it, all the app choice message that Apple started is effectively just marketing. They want us to believe that we should buy their phone because somewhere out there is an app we don’t know about that we might need. Truth is the universe of apps we really need is really small, maybe a 1000 at the most. I don’t blame Apple for taking this path. They are, after all, protecting the market they created. But sooner or later, two things will happen:
1. All the phones will be able to offer all the apps you want
2. Consumers will realize that they don’t really need hundreds of thousands of crappy apps. Instead a few hundred good ones will do very nicely.
Until that happens, the app war will continue and we’ll all wonder if there is an app out there that would make our day that bit better.
Steve Jobs has done an amazing turnaround at Apple since he retook the helm. Apple was in a death spiral it appeared; yet today they are the most valuable tech company in the world. For a while Apple was a bitter, twisted company that produced nice looking products that nobody but fanatics bought. Today, everyone but my mother has an iPod, iPhone, iMac or iPad. Some poor souls like me have all four. Apple, in short, is king of consumer tech right now. Will that last forever? I for one doubt it.
Right now Apple has a great team headed by a visionary leader. At some point that team will grow old, run out of energy and start to fragment. Apple’s future will be determined by the ability of the company to create a new generation of leaders. I know I’m stating the obvious when I say that but my point is that it is easy to assume that Apple has that problem nailed in the same way they have their product strategy right now. But do they?
When news of Steve’s illness was pushed on to the market, people speculated about who would take over from him. All of that speculation tended to focus on internal rather than external candidates. This makes a great deal of sense and is most likely what will happen. However, if they do go internal we can expect the losers of that battle to be at best disenfranchised and at worst leave. This will in turn lead to a weaker team at the top. Furthermore Apple is likely to have to live through a period where any new CEO is constantly being measured against Steve. That’s a hard act to follow. They’re not going to get standing ovations like he does when they walk on stage at the Moscone for product launches. The crowd isn’t going to laugh at the little jokes that are thrown in. In other words the ‘Steve factor’ will be lost and Apple will be just another good company, rather than a great one.
When this happens, the door will be wide open for rivals large and small. Right now Apple is all but impossible to beat in the consumer space. Sure there are some that hate them but they are a minority. That could change very quickly. Microsoft could fix its mobile strategy, RIM could design a BlackBerry that iPhone users would like or some new player could appear.
My point in all this is that innovation within a company is directly linked to its success but is also linked to the people that run that company. They are the ones that decide which products to sell to whom and at what price. They are the ones that create the markets, the excitement and so on. While some companies do a good job of creating a culture of innovation, even they know that it is what you do with that innovation that matters. Put another way, you will only keep on winning for as long as you have the best team. Today Apple has that team but there will come a time when they don’t. And come that day, others will take their chance.
For a while now Microsoft has struggled (in relative terms) while Apple has gone from apparent strength to strength. Apple, it seemed, could do no wrong. Then about 18 months ago a few things started to go against Apple. These minor issues have largely been ignored or brushed off as, well, minor but I wonder if Apple may finally be starting to feel the heat from Microsoft?
What has gone against Apple? Here’s my list:
1. Steve’s illness was very badly handled and has shown how critical he is to the success of the company. Microsoft handled Gates departure with some style – even making a quite funny ‘last day at the office video.’ At some point Apple needs to face up to the fact that Steve won’t be around forever and start preparing customers for that world.
2. Microsoft ran a pretty successful ad campaign that showed how expensive Macs were versus a PC. It clearly impacted Apple as they a) cut the prices of their products and b) asked Microsoft to stop running the ads.
3. Microsoft launched Bing. While Bing has a long way to go to topple Google it has achieved some success and has shown that Microsoft can actually compete again. Meanwhile Apple launched Snow Leopard, while it’s a good product various reviewers, including the notable Walt Mossberg at the WSJ were disappointed.
4. Apple has resorted to a very negative ad to address the launch of Windows 7. They wouldn’t have done this if they didn’t believe Windows 7 may well lure some Mac customers back to Windows and of course stem the tide of people like me that moved to the Mac at home and finally at work.
I think if Microsoft wants to knock Apple of its perch as the customer favorite and mindshare leader when it comes to technology it may well be in with a good shot at it. Steve is back at the helm of Apple and I’m sure they’ll usher in some great new products. But Windows 7 has shown Microsoft still has real teeth and could well get a whole bunch of people to feel proud of owning a Microsoft product again.
I was talking to a friend who works at Microsoft and he told me that starting January 1st, Microsoft has offered employees a choice within its benefits package that is both unusual and potentially interesting when it comes to the economy. This year they are letting staff either sign up for a health club membership as usual (this was part of the old package) or they can spend up to $800 on something like a bike or a kayak. Anything in fact that will be good for your health and Microsoft will pay them back. I believe Microsoft employs some 50,000 people in the US. If all of them were to spend their $800 on leisure equipment it would have quite an impact on the sales of Bike and athletic stores. It makes me wonder what would happen if all the major employers in the US were to re-look at benefits and do something similar.
Yahoo! may not want Microsoft to buy them but I suspect they are enjoying the attention the Microsoft offer has brought to the brand. For a while now Yahoo! has been struggling to regain the spotlight from Google. With Microsoft’s offer they suddenly have that spotlight albeit for different reasons. I’m curious to see whether this attention translates into increased sales revenues – I suspect it could. If it does, the old saying that: “no news is bad news,” may well prove correct.
btw – for those of you that track this blog, you may recall my YouTube measure. Since I last checked (which was back in December) Google’s postings have increased from 169,000 to 192,000 (an increase of 13.6%), while Yahoo!’s have increased from 123,000 to 149,000 (an increase of 21%).
Google is clearly scared that if Microsoft succeeds in buying Yahoo! it will lose it’s dominance in the search/online ad sales business. So it is using the idea that if a deal gets done Microsoft will suddenly become the dominant email and instant messaging player as a way to get the deal called off by antri-trust lawyers. There are few things that make this a hard line to swallow:
1. Microsoft is already the dominant email supplier in the workplace thanks to Outlook. Indeed if you taker the email market as a whole I’m sure Microsoft is way ahead of any rival thanks to Hotmail so this doesn’t really change things that much.
2. They are so obviously picking a fight that has nothing to do with the real… fight. The real battle is about online ads. Google has been killing the competition for several years now thanks to the dominance of its search engine. A deal with Yahoo! would simply make Microsoft a real competitor as opposed to a potential competitor.
3. They think it is OK for them to be a dominant player but not Microsoft. In effect they are suggesting that Microsoft’s history suggests that if they become dominant in the Internet business then they will treat the Internet just like they did the PC business and that will be a bad thing. I think we all know that even if Microsoft pulled off this deal and even if they then de-throned Google, the governments around the world would be watching them like a hawk. And the governments have been pretty successful in getting their way when they take on Microsoft in court.
Of course you can’t blame them for reacting to the deal but judging by the drop in Google’s share price (now below $500 for the first time in over six months) it is clear that the market thinks they are running scared. I almost wonder whether they would have been better to play down the deal rather than look as if they are scared by it.
PS – I know Yahoo’s name has an exclamation mark after it but Google’s Blogger won’t allow me to use one in the labels section…