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On the Fate of Apple
by Glen Emerson Morris
Copyright © 1994 - 2010 by Glen Emerson Morris
All Rights Reserved
keywords: Internet advertising, Internet marketing, business, advertising, Internet, marketing.
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The recent changes at Apple, including the highly publicized departure of Gil Amelio,
the return (somewhat) of Steve Jobs, the Microsoft deal, and the continuing loses,
all indicate that a fundamentally different Apple is emerging. With thousands of
businesses in the media and advertising industries dependent on the Mac for creating print,
radio, and video ads, and now putting them on the Internet, what will happen to Apple
now is worth considering.
Apple has always been a bit schizophrenic, and understanding exactly why is helpful
in evaluating its future. Apple promised technology that would empower ordinary people
to overcome the monolithic corporate establishment, yet it was financed and controlled by some of the most conservative megapowers in the business world. This is why the
Apple engineers went out of their way to make the easiest to use, most useful computer
in the world, and the Apple marketing department went out of their way to make sure
most people could never afford one. When Khrushchev said that capitalists would sell
people the rope to hang themselves with, he was basically correct, but it was clear
he had never priced the rope.
Apples schizophrenia began when it was founded. Contrary to popular belief, Apple
Computer was founded by three people, not just the widely known duo of Steve Jobs
and Steve Wozniak. The third co-founder was Mike Markkula, who arranged the financing
that created the corporate entity of "Apple Computer," and has been the real power behind
the scenes ever since, at least until now. What began as a three way partnership
of engineering (Woz), marketing (Jobs) and corporate funding (Markulla), soon became
a one man show. By 1985, both Jobs and Woziniak were gone and control of Apple was solely in the hands of the President, and the board of directors that appointed him, headed
by Mike Markkula.
Markkula was always the principle powerbroker at Apple, determining who would be president and when they would leave, and he also shaped Apple's board of directors. It was
Markkula's influence that brought representatives of major corporate names like Rockefeller Venture Capital, Dupont, and National Semiconductor to Apples board. These
board members supported the main policies that determined Apples market share; the
high prices, and lack of clones.
Of all of the recent events, the resignation of Mike Markkula from the board of directors
is the most promising. Now Apple has at least an opportunity to make some fundamental
changes, like reasonably priced innovative technology, and a broad and generous licensing policy to attract clone manufacturers. If Apple makes the right choices
it can recover, but that's only one of several possible outcomes.
In a worst case scenario, in which Apple goes the way of Eastern and Pan American,
the advertising and media industries will have to switch to the Windows platform.
Ten years ago that would have been a problem, now it's manageable. Over the past
few years Adobe has been bringing the Windows platform up to parity with the Mac platform, helped
by a number of ex-Apple engineers. Adobe now derives 51% or more of it's revenue
from Windows products. Once PageMaker, Illustrator, and Photoshop were Mac only products, now they're available in Windows version, too. However, a quick demise for Apple
is not a likely scenario. With over 20 million Macs currently in use, a buyout would
be much more likely.
A slightly better scenario involves Apple being bought by another
corporation, which at least allows the Mac OS to die gracefully over a few years,
as some of its features are rolled into someone else's product. For instance, Sony
buys Apple to get an interface for its video tape recorders so most people will at
last be able to program them. (Possible slogan: a VCR for the rest of us!) If Apple's stock
fell low enough, it might be attractive to Sun or IBM. Apple's acquisition by another
company would mark the time to switch to Windows.
A more likely bad case scenario is that Apple manages to hang on in a small vertical
niche, like digital video production or Website development, but loses the critical
mass to ever be a major force in the industry again. This would allow business as
usual for the advertising & marketing industries for several more years, maybe more.
A mid-range scenario has Apple hanging on, periodically ranging from 3% to 9% of the
market. Every two or three years, when the numbers dip, the press will run another
flurry of "Apple is Dying" stories, followed by a year or two of largely unreported
modest gains. This is essentially business as usual.
A positive scenario, which is actually possible for the first time, is that Apple
and the clone manufacturers rebound with a 15% to 30% share of the market. For a
30% share Apple would have to do a lot of things right, but it's possible. Most people
and businesses upgrade their computer systems about every three years, giving Apple plenty
of opportunity to entice them to switch. Given sound management and vision, Apple
could easily have 20% to 30% of the computer market in three years.
It will be difficult to tell which direction Apple is headed until a new
CEO is named and his policies become clear, but it is reasonable to assume that in
all but the most unlikely outcomes, the advertising and marketing industries will
be able to continue using their Macs. Another year or two of bad decisions on Apple's
part may change that, but Apple has never managed to be that consistent. As long as Apple
is an independent company, selling systems reasonably competitive with the Wintel
platform, Apple should remain the platform of choice for the media and advertising
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