
Apple Chiefs Discuss Strategy, Market Share, and the New iPhones - olivercameron
http://www.businessweek.com/printer/articles/153204-apple-chiefs-discuss-strategy-market-share-and-the-new-iphones
======
podperson
The constant comparison of iPhone vs. Android to Mac vs. Windows is tiresome.
Mac never had more than 15% market share. Microsoft won 95% market share not
on its merits, but on the back of IBM's pre-existing mindshare dominance. So
let's just put that idiotic comparison to rest. It's just as obviously not
iPod vs. Zune, right?

(And despite never having had much market share, virtually every Windows
program anyone uses started life as a Mac program and was ported to Windows,
from Excel, Powerpoint, Photoshop, Illustrator, and Quark XPress, to the GUI
version of Microsoft Word. Even Windows programs everyone hates, such as
Flash, were developed on the Mac. Not DOOM though -- that was written on a
NeXT Machine.)

As it is right now, Apple enjoys well over 10% of the cell phone market
(depending on how you measure it, they are the dominant vendor in the US),
having aimed initially for 1% of the smart phone market. They have something
like 70% of the app market (in dollar terms). And they're doing it with a BMW
strategy, not a GM strategy. You may recall GM recently went bankrupt _while
having the largest share of the US auto market_. (Oh and how about Mac vs
Amiga? Amiga vastly outsold Mac for several years and then Commodore went
bankrupt.)

And most of this happened post-Jobs.

~~~
cromwellian
Commodore went bankrupt unrelated to a low margin strategy, they were actually
bankrupted by a patent troll during a risky attempt at entering the console
market. The CEO and other executives mismanaged the company, but the story of
Commodore's bankruptcy because a patent on the XOR Cursor (!) is one of the
reasons I've had a lifelong hatred of software patents.

I tell this tale often, but the Amiga was in every way, a better machine than
the Mac, so much better it's not even funny. The Amiga 1000 was half the price
of the Mac it competed against went it sold, it had higher resolution, color,
more RAM, multitasking operating system, expansion slot, hardware accelerated
co-processing for display lists, blitting, and a good sound chip. In fact, the
Amiga custom chips were better than every other consume PC graphics display at
it's time, and it was that way for several years. The Mac128k was a
ridiculously overpriced and gimped machine, and for someone who was a kid or
teen, migrating from something like a Commodore 64, totally boring. If you
were a young kid learning to do graphics or sound programming, the Amiga was
inspiring. I probably would not have gotten into computers the way I did had I
not be influenced to learn 6502/68000 assembly programming to write demos on
the C64 and Amiga due to the multimedia capabilities of those machines, not to
mention the excellent games.

BTW, while it is true that most productivity software originated on the Mac,
most games originated on the PC, very very few games originated on the Mac and
ported to the PC. iD games developed on NeXTs and SGI workstations were the
exception, but again, still not a Mac, because until recently, Macs sucked for
gaming, and have so since the era of the Amiga.

I don't think Android is going to kill Apple, but I think the writing is on
the wall for it to become a niche. Most of the advantages Apple had have now
been commoditized as the market matured. If you look at how open source Linux
has devastated the server-side market as well as the embedded market, there's
no reason the same thing isn't going to happen in mobile in the long term. It
was a nice run, but I don't think Apple's dominance is going to last forever.
And the BMW analogy is apt, because while BMW survives, they are just one
brand out of many, and do not control or dominate the market unduly.

~~~
podperson
If you think Apple fans can be rabid, check out Amiga fans :-) -- I frequently
got flamed by fellow Amiga users for having a realistic view of the Amiga's
limitations (such as not having a single usable word-processor -- and do not
say ProWrite or Excellence -- neither could handle a 10-page document without
choking).

Commodore did not turn an operating profit during any year in which they were
selling the Amiga. The idea that it was just a patent troll is ridiculous.

The Amiga was ridiculously superior to the Mac as a piece of _hardware_
(ignoring the lack of a good graphics mode for doing office work on -- you
could pick between flickering display and rectangular graphics). It's OS was
absolutely awful (AmigaDOS 1.3 or 1.4 -- don't remember which -- was actually
created by Commodore licensing the ARP from _hobbyists_ who'd rewritten most
of the OS to suck less.)

~~~
cromwellian
If you want to talk about exactly what triggered the entering in Bankruptcy,
it was the injunction caused by the XOR patent preventing the CD32 from
shipping.
([http://en.wikipedia.org/wiki/Amiga_CD32](http://en.wikipedia.org/wiki/Amiga_CD32))
Commodore stupidly went "all in" on the console market, no one knows if it
would have been another Pippin, Dreamcast, etc failure. But it is not
ridiculous, Commodore had moved manufacturing to the Phillipines and if there
was no injunction, it is likely CD32 shipments (demand exceeded supply) would
have repaid the short term debt they racked up allowing the company to
continue as a going concern.

You may argue they would have been doomed eventually, but remember, Apple
itself was almost bankrupt at one point.

Also, you claim about operating profits is false. One Google search was all it
took to debunk,
[http://articles.philly.com/1989-02-01/business/26154229_1_ir...](http://articles.philly.com/1989-02-01/business/26154229_1_irving-
gould-amiga-sales) in 1989, EPS was $1.2 and the Amiga was selling well.

AmigaDOS was awful? Compared to what? The MacOS at the time was extremely
primitive and ugly. Amiga had a real shell, it had ARexx, vastly superior to
AppleScript, it had the equivalent of FUSE filesystems for tons of stuff,
compression, networking (DNet), I regularly multitasked between my
terminal/dialup and my programming environment. "Workbench", the drag-and-drop
"Finder" equivalent was ugly and shitty, but Amiga users didn't use it for
much anyway.

Yes, the Amiga was not a good "office" computer, it was a home computer, and
in that regard, for the market it was targeting -- grown up 8-bitters, it blew
away the Mac hard. I had a MacSE, it sat in a closet and in fact, running a
MacOS emulator on my Amiga was a better experience than running the real Mac,
and I only ran the Mac when I needed to run something required for college
that was not available for the Amiga, and that was rare.

Nobody I knew in my age range when the Amiga came out gave a hoot about Word
Perfect or Excel. The Amiga had perfectly usable, "Google Docs"-like simple
word processors that were perfectly fine for most work. I did a lot of my
college work with an awesome text editor and LaTeX on the Amiga.

There is nothing the Mac really had over the Amiga in it's day, except for
AppleTalk, and some high end DTP software, at huge expense. For the home user,
especially the creative person interested in art, music, or coding, the Amiga
was far better. Compare MacPaint vs DigiPaint for example.

Commodore lost their lead by the time the MacII color and PC SVGA rolled out,
because they did not put priority into new custom chipsets until it was too
late. AGA/AAA arrived way after it had been surpassed by commodity SVGA cards,
and the radical designs Dave Hayne/Jay Miner and others were working on for
next-generation 3D graphics chips for the Amiga never got the resources.

Ultimately, they failed by mismanagement, but the fact that it took the
industry 5-7 years to catch up with Amiga Hardware is a testament to how far
ahead, how much of a step-function change, the Amiga was. It was the iPhone of
1985 IMHO, but too much ahead of it's time.

(BTW, the flickering issue in hires for people who needed it, was fixed by
Flicker Fixers
[http://en.wikipedia.org/wiki/Flicker_fixer](http://en.wikipedia.org/wiki/Flicker_fixer))

~~~
podperson
What triggered the bankruptcy is pretty irrelevant. Commodore had been losing
money for the entire time the Amiga was on sale and circling the drain.

As someone who was both an ardent Amiga and Mac user, yes AmigaDOS was awful.
Yes, it was a multi-tasking DOS -- awesome. The utility of the multi-tasking
in AmigaDOS (given the way applications split screen real estate -- i.e. into
horizontal bands) was in practice far inferior to what Apple kludged with desk
accessories, switcher, and eventually multifinder. AmigaDOS also used weird
and inconsistent command-line conventions (that ARP made both better and more
consistent).

In any event, there's no point having multitasking if there are no decent
applications. Amiga had, basically, DeluxePaint, games, and lots of cool
software for facilitating piracy. (The Mac ports of DeluxePaint -- Studio/32
and Studio/8 -- were among my favorite all time applications.)

> BTW, the flickering issue in hires for people who needed it

Yes, having a third party hardware solution so you can display halfway decent
office software is great. When I _needed_ this, it wasn't available.

~~~
icedchai
You could have multiple applications running on a single Amiga "screen". I
remember running several windowed apps right on the Workbench.

AmigaDOS was pretty damn weird though. No arguments there.

------
ZeroGravitas
“One thing that clearly surprised Apple and everyone else was how quickly
Android took off,” says analyst Horace Dediu of Asymco, a research firm in
Helsinki.

Maybe they spent too much time reading Asymco, who predicted Android would
never attain more than 15% of the market and would have less than Windows.

"What do you have to believe for an Android dominated future?":

[http://www.asymco.com/2010/11/03/what-do-you-have-to-
believe...](http://www.asymco.com/2010/11/03/what-do-you-have-to-believe-for-
an-android-dominated-future/)

~~~
czr80
So, I read the article and your summary is very poor - quite intellectually
dishonest, really. He clearly lays out the conditions which would have to hold
for Android to grow significantly, and it turned out that they were met (Nokia
collapsed, Windows proved unable to compete with free, and Samsung was able to
establish a viable Android business)

~~~
Kylekramer
Well, that interpretation of the article ignores how Deidu was constantly
saying it is unlikely these conditions would come to be (he says "unlikely"
that Android licensing will beat Windows Phone's licensing, Android dominating
is "wishful thinking"). Seems like your view is Deidu couldn't be wrong. If
Android didn't become very successful, Deidu predicted it. If Android did,
Deidu predicted it merely by saying there was a small possibility of it
happening.

~~~
czr80
My view is that it's a fine article, that correctly identifies the issues that
you need to address to make a prediction about the market. That's a good piece
of analysis.

His actual prediction is beside the point - he laid it out in enough detail
for the reader to intelligently disagree, if they had better information on
the drivers he identified.

------
S_A_P
I suffer from mobile device analysis fatigue. Further who are all these
analysts that get quoted in these articles? Is that their job to take stock of
the mobile space and say things like “One thing that clearly surprised Apple
and everyone else was how quickly Android took off,” says analyst Horace Dediu
of Asymco, a research firm in Helsinki.

Did he talk to Apple? did they call him and say "Horace, this really surprised
us." This is just pure speculation and a ridiculous statement.

------
cliveowen
I'm sick of people talking about iPhone's market share only to follow it up
with "Android, meanwhile, continues to increase its market share". You're
comparing an OS with a product, that's like comparing the market share of a
Hyundai sedan with the market share of Shell fuel (if the Hyundai sedan could
only work with a given brand of fuel). It doesn't make sense and it doesn't
serve any purpose.

~~~
devx
Well I seem to remember there was a time beating iOS as a whole was hard to
believe, and some still think that's true for tablets, even though Android
already has more market share in tablets (each quarter, not yet in total
userbase), and it's only a matter of time until it more or less replicates the
success in smartphones. This would've happened sooner, if Google's employees
weren't so dense to think that they don't have to do anything to push Android
tablets, and thinking that devs only need to let their phone apps scale to
tablets, which in hindsight I'm sure they also realize what a stupid statement
that was at the time.

~~~
czr80
When? iOS never had the dominant share (globally) - that passed from Symbian
to Android.

------
ackfoo
Pure damage control.

Steve Jobs had a brain and a backbone to go with it. Not sure the current crop
do. I hope they find someone with vision and an expiry date to inoculate Apple
against the stupidity of business people.

~~~
blinkingled
Sounds like the management has installed Gruber and MG as their sources for
getting talking points! Hopefully just talking points and not strategy.

Case in point - “For us, it matters that people use our products. We really
want to enrich people’s lives, and you can’t enrich somebody’s life if the
product is in the drawer.” That's bull. Apple doesn't really benefit from
people using web on their iOS devices. They benefit from selling hardware. Let
aside the validity of such "surveys" ( do they count Chinese and Indian web
traffic and how? Because thats where growth is.) - even if they were valid it
isn't anything for Apple to bank on.

~~~
Sevores
> Apple doesn't really benefit from people using web on their iOS devices.

Not directly. But if you buy a tablet and it sits in the drawer, you probably
won't buy the next one.

~~~
slantyyz
>> Not directly. But if you buy a tablet and it sits in the drawer, you
probably won't buy the next one.

Yes.

Most of what I did on my iPad 1 was surf. Upgrading to iOS 5 killed my iPad
(Safari crashes constantly) and it basically went into the drawer. iOS4 killed
my iPhone 3G in an even more dramatic fashion.

While those OS upgrades happened in the age of Forstall, it is no longer a
foregone conclusion that I would upgrade to an iPhone or iPad.

It used to be an easy decision, but now that there is more parity among
platforms (compared to say, 2010), it's that much more important for Apple to
ensure that people can continue using their device.

Hopefully with OS upgrades in the age of Federighi, we won't see as many
performance crippling major releases as we have in the past.

~~~
cremnob
So you switched to Android which is known for getting timely releases of
software updates?

~~~
slantyyz
I've only had my Nexus 7 since spring this year. There have been two updates,
and both of them made my device __faster __, which was a refreshing change
after having three iOS devices where OS upgrades made the devices slower, and
in two of the cases, unusable.

While I'm more curious about WP8 to replace my iPhone 4, I have no issue with
upgrading to an Android Nexus phone, given my experience with a Nexus tablet.

