Piece of mine in The Guardian today about the iPod and how Apple's history shows that the company may soon cock it all up and become just a bit player.
It's a shame the article was so short – 1,200 words – because the first draft covered the whole thing and gave greater overall clarity. That was 2,500 words though and in cutting down I had to kill some of the balance and instead make it a stronger piece. One of the advantages of the US newspaper style where they run long features. But then at least in the UK we're not bored to death with 5,000-word articles on the latest plumbing advance (I'm not making that up btw).
The other thing that is slightly annoying is that I split the articles up into three main points in order to make it easier to read but The Guardian sub-editors have stuck cross-heads in according to aethetics as opposed to readability, so a fundamentally different point appears suddenly in the middle of the text – something that will cause people's minds to skip a beat.
Anyway, here is the article and here is a link to it on The Guardian.
The song remains the same
After transforming the digital music industry, Apple is on a high. But the company has enjoyed success before – only to see it vanish, warns Kieren McCarthy
Thursday November 3, 2005
The Guardian
Apple has stunned everyone with its latest product: beautifully designed, streets ahead of the competition and threatening to revolutionise the market all by itself.
We're talking about the iPod digital music player, of course. But that intro could just as easily have been written about the Macintosh computer in 1984. Or the Newton handheld in 1993. Or even the Apple II in 1977.
You've heard of the Mac, you say, but the what and the what?
This is not the first time Apple has found itself with the best product in a market it has almost single-handedly created. And yet the Mac – launched with the famous TV advertisment 1984, which was aired once during that year's Superbowl – is now no more than a bit player. The Newton is long dead, and the Apple II is a museum piece.
The whole history of Apple Computer is a series of astonishing successes followed by disastrous collapses. And two clear threads run through each cycle.
One is chief executive Steve Jobs. Co-founder in 1976, kicked out of the company in 1985 only to return in 1997, Jobs is a brilliant, forward-thinking and inspiring perfectionist. But he is also an egomaniac prone to believing there is only one possible solution: his.
Then there is Apple's corporate culture, which is independent, creative, imaginative and determined. The company's engineers and designers have produced awe-inspiring technologies over the past 30 years. But this innovation comes with a price: arrogance and a deep-seated control instinct.
Having created a market, Apple's conviction has frequently mutated into stubbornness and it has seen the market run off in a different direction once competitors have caught up.
At the moment, Apple can do no wrong. But the warning signs are already there. If the company is to achieve its lifelong dream of leading and heading a market, it has to tackle three key areas. Without them, the iPod could become just another cultural footnote.
Digital dominance
It is a little-known fact that in 1985, Microsoft chief executive Bill Gates wrote to Apple pleading with it to license the Mac operating system. Apple refused. It had built its business by keeping strict control of both the hardware (the computer itself) and the software (the operating system), and feared the money from software licences would never cover lost hardware sales. It was the biggest mistake Apple ever made. Gates decided to do it himself with Windows and the rest is history.
Apple now enjoys Windows-style dominance in the digital music market – 80% of player sales and 75% of online music sales – and it has got there by keeping close control of the hardware and software. “What has made it so successful is this incredibly tight, seamless linkage between the iTunes service, the user's PC and the iPod,” explains Gartner analyst Mike McGuire.
But, as more people start downloading music, Apple risks losing the market by insisting everyone do it its way. It has its preferred format – AAC – and it makes sure the iTunes software and the iPod hardware speak only to one another. It will only take one company to produce and license a sharper piece of software for Apple's products to become just one among the compatible many.
Apple appeared to have answered this fear in September by licensing iTunes to Motorola for its Rokr phone. “Apple has shown that for the right deal, it is going to be willing to license it,” says McGuire.
But Jobs has made known his real feelings about splitting the hardware and software, slamming as “thieves” those producing alternative software for the iPod. He had a different word – “leeches” – for those that did the same with the Mac operating system. And yet the shortcomings in iTunes are enough that one such product, Anapod, can charge users $20 (£11), while Apple's version is free.
The iTunes Music Store charges a flat 99 cents (79p in the UK) per song, and has so far sold more than 600m tracks. By running a closed shop, Apple has guaranteed iPod sales and dominance. But music companies now want change. Specifically, to charge more for the latest songs. We know this, because Steve Jobs told a recent Apple conference about their “greedy” demands. Owen Linzmayer, freelance journalist and author of the company's unofficial biography, Apple Confidential 2.0, thinks Jobs knew exactly what he was doing: “Sometimes it pays to hash things out in public.”
'Commercial suicide'
Apple's apparent refusal to budge from its decided model is an echo of past stubbornness. One music industry executive said negotiating with Apple was like dealing with a cult.
Apple also made a bad name for itself by trying to use its dominance to pressure independent labels into taking a smaller cut. One executive said it would be “commercial suicide” to accept the terms.
The music companies don't have to let Apple sell their music, and since Apple doesn't own a record label, its hand will be drastically weakened once iPod's dominance is eroded. The multibillion-pound music industry has a very poor digital record, but Apple's attempts to pressure it have motivated it to look for, and push, alternatives.
Much of the iPod's allure is in its design. It has been perfected to the extent that a database of several thousand songs can be accessed with just your thumb. From the very first graphical Mac that popularised the mouse, to the curvy and colourful iMac that revamped its image, Apple has an illustrious design past.
But it has also got it horribly wrong. In 1980, Jobs's obsession with aesthetics led him to insist the Apple III not have a fan, to make it run quietly. The machines simply overheated and died. Jobs then repeated the exact same mistake with the G4 Cube in 2000.
Apple also got into hot water in 2003 when, after 18 months' use, the iPod's rechargeable batteries started dying and customers were told they could not be replaced. They would simply have to buy a new iPod, the company told them.
Small problems
Jobs's most recent design obsession with the iPod being “impossibly small” has created problems with its two latest products. Thousands of Nano customers complained within days that their screens were scratched or had simply shattered. And by keeping the new video iPod so small, its battery will power it for just two hours – putting the player's whole practicality into question.
Apple's current dominance of the digital music market can't go on forever, but how the company deals with events over the next two years will show whether it has learned lessons from the past.
“There is a chance that Apple will stumble,” says Linzmayer. “But it may simply be because they have pointed the way to the future of music, been terrifically successful, and have attracted swarms of competitors. With so many people gunning for the market leader, it's almost inevitable that you'll be shot in the back sooner or later.”
Much of it will come down to Steve Jobs – a man who has undeniably turned Apple around since rejoining in 1997. “He is somebody who has learned from his difficulties before. He now has age, experience and wisdom,” says McGuire.
Lightning success has always come naturally to Apple, but its real maturity as a company will be in avoiding failure.
Strange fruit: Apple's most famous designs
Successes
Apple II (1977), with its integrated keyboard, was many people's first foray into personal computing.
Macintosh (1984) was the first computer to popularise the now-familiar graphical user interface.
iPod and iTunes Music Store convinced the music industry that digital delivery was theway forward.
Failures
Lisa (1983), the first personal computer to use a graphical interface, was both slow to run and very expensive.
The Newton (1993) was the first PDA, but it proved clunky, difficult and failed to stop competitors from thriving.
While the Power Mac G4 Cube was stylish and small, it was too expensive, and within two years it was history.
