In the history of technology companies, however, there are three that stand above all others:
- IBM, which defined computing.
- Microsoft, which democratized computing.
- Apple, which designs beautiful computers, devices, and software and lets evangelism and good will do the rest.
- From 1969 to 1981, the US government and some smaller companies that lost the computer race to IBM spent their time suing IBM for anti-trust. Eventually, IBM beat the feds, but also lost their way. Lawyers ascended in influence. Customers received a little less attention, and competitors took advantage.
- The IBM PC was born. Originally, this provided growth engine for IBM, but it also created clones from Compaq, HP, Dell, AST, and many others. And it created the company that ruled the desktop across all "IBM compatible" makes and models, Microsoft.
- Microsoft was the ultimate arms merchant. It ensured that IBM would never win the desktop war.
Microsoft. Bill Gates & Company democratized computing - first by putting MS-DOS and then Windows on 90+ percent of PCs in the world. Then Microsoft supplanted Novell and IBM in local area networks, desktop productivity software, development tools, and in large parts of the data center. Most importantly, despite having big market share in several key markets, Microsoft created tens of thousands of millionaires by enabling the development and distribution of capable software for the Windows desktop and server platforms. Microsoft was a channel-based company. It focused better than any company before it on making the channel successful.
Microsoft was always fiercely competitive - beating back challenges from IBM, Compaq, Sun, Novell, Netscape, and others at critical times. It's not that Microsoft executed perfectly - pundits pointed that out constantly - but it always outperformed its competitors at critical times. I like to think of it this way:
Sometimes, you only have to suck the least.Today, Microsoft is under siege - as IBM was before many years ago. Like IBM, anti-trust litigation took its toll on Microsoft's aggressive and entrepreneurial corporate culture. New Internet-based technologies have provided businesses and consumers with worthy alternatives to Microsoft products in virtually every area where Microsoft has been dominant. The Company seems to be experiencing a product rennaissance in several important categories, and it is determined to be a winner in new Internet-based markets, like search, online advertising, and collaboration. Plus, it still generates obscene profits despite losing billions of dollars a year on its new Internet ventures. I wouldn't count them out, but rebuilding mojo takes a lot of time and markets are moving faster than ever.
Apple. Apple isn't a Big Iron or enterprise software company. It's a customer experience company. IBM and Microsoft have always wanted to be essential - especially to businesses. Apple has always wanted to be "insanely great." Apple's first act from its birth in a garage in 1976 to 1996 when Steve Jobs retook the reigns showed a possible path for computing, but didn't close the deal. The software was beautiful, but the hardware broke. Or the file formats weren't compatible with PC. Or management at the top didn't get the job done. It was always something.
The last fifteen years are another story. The greatness of Apple has been in its second act, not the first. There are six, key elements to their success:
- Know your core. Apple fixed manufacturing by outsourcing to companies with more scale and expertise, but kept design close to home so that it wouldn't lose its edge.
- Address weaknesses - particularly in management. Having spent 12 years away from Apple working on NeXT and Pixar, Steve Jobs understood his own weaknesses, not just his strengths, and he hired world-class managers who could do things that he could not accomplish himself.
- Pick the right markets. Apple targeted markets that already existed but where transformation was possible - like MP3 players, laptop computing, music downloading, tablet computing, and smartphones.
- Transformative products. Apple has created devices, software, and services that are impossibly elegant and beautiful - consistently in market after market. In each new product category, Apple products seem to make their predecessors old and tired instantly. See Blackberry, Windows, the Creative Labs Nomad, Palm, and many others.
- Let evangelism do the work. Apple builds products for broad markets. It lets its evangelists who build things for their products - like OS X and iOS developers - and consumers do the work. Why do 92 percent of Fortune 500 companies support the iPhone and now the iPad? Because their employees wanted them to. Apple didn't do the heavy lifting. Apple knows that, if you build products that people admire and the price/performance ratio is right, word of mouth will do the rest.
- Maximize revenues and profits. Lots companies are profitable but don't grow. Some grow like crazy but can't make money. Apple does both for several reasons:
- Their products command a premium price.
- Their component sourcing practices are world class.
- Their product designs use the same components across platforms.
- Options are limited, and customers are driven to the options that Apple wants them to buy.
- The number one trendsetter in its industry.
- The largest and most profitable company.
- The company many talented people want to work for.
- The keeper of the flame in product design.
- A continual transformer of markets.
Unlike IBM or Microsoft, Apple seems to be ahead of the game in a time of great market upheaval. Apple is the thought leader. Its thoughts go to market as beautiful products that command premium prices. Competitors imitate but can't seem to do better, and, before his death, Steve Jobs and his team put in place a product roadmap that is said to stretch out for years. So, while Steve Jobs is gone, you'll see his genius and the genius of his team for many years to come.
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