“Apple’s recent quarterly earnings report blew past all expectations. More importantly, dramatic unit sales growth shows the company is executing a working strategy for building the Mac platform,” Daniel Eran writes for RoughlyDrafted. “That raises the obvious question: why has Apple’s market share historically been so low, and why did Apple fail to make any progress in the 1990’s?”
“Here’s a look at why Apple’s platform fell into crisis, and why the solutions prescribed by analysts didn’t work,” Eran writes.
Eran takes a look at the following:
• Market share
• Apple’s premium PCs
• Creating and maintaining a functional Mac market
• Disasters in retail (Sears et al.)
• Mac clones disaster
• Disasters in direct sales
• No compelling reason to buy a Mac
• Delayed migration to NeXT/Mac OS X
Full article here.
Heh, the clones.
I remember the clone computers were so fast and cheap, with such rapid updates, that the Apple offerings were out of date and overpriced.
Things may have changed with Jobs back at the helm, where the hardware makes competing offerings look cheap.
But still, the marketshare would’ve been greater with clones and Apple hardware sales would’ve suffered almost to oblivion.
This one is easy. Apple fell into crisis because it was led by a succession of “business” people. Apple was not, at it’s core, a “business” it was/is a collection of engineers/artists/creative minds in search of ways to change the world. It cannot be led by marketers and accountants and lawyers. It has happened to MANY companies especially in Silicon Valley. As soon as the company is handed over to people whose primary concern it is is to make as much money as possible, the creative force behind the company is lost and motivation falters, people leave, start other companies etc. It’s all very simple.
Just like government, when taken over by the greedy and corrupt and inept… you have failure.
well said.
^_^
agree with “me”
and I’d like to point out, that really, appealing to businesspeople is easy. that part was easy, they had a low standard. it was named the ‘personal computer’ because it was a real paradigm shift to think that ‘normal people’ could ever have use for a computer.
so when 1980’s windows PCs came about, were they user friendly and made for use in the home… ?
uh, no…
The Mac was, though.
And the Mac ‘failed’ because the vast majority of sales were PC sales to businesses.
Sooo… what has Apple done to ‘change’ it’s ‘mistake’..?
It stopped being schizophrenic. Stop trying to be everything to everyone. Cater to humanity, not the world of ‘banks, cashiers and ATM machines’
Once they found their target market, they could focus like a laser on appropriate willingness to pay, appropriate price points and appropriate software development.
If you’re scratching your head at the development of iWork and iLife..it’s because you still think Apple wants the big business market. They don’t. They are targeting PEOPLE. HOME USERS.
Remember that and every decision they make will make sense.
“But what about creative professionals…”
The creative professionals as a secondary market is a great move for Apple, but notice how they never actually advertise to them..? They only serve those markets because they CAN, it’s consistent with them being a home user company.
So how did Apple fail? They picked the niche market from the get-go because they were idealists, not really after the big bucks. That’s your first mistake. By the time that market had matured, they were the only company with the components to properly serve the market. The iPod, admittedly, came out of left field. It’s incredible that they decided to make a music player. It affects the Mac only that it is a cash cow to allow the Mac lower prices and allows Apple higher visibility.
Why did Apple fall into crisis? Because Steve Jobs was fired.
Why is Apple being resurrected? Because Steve Jobs was hired.
who cares history? Is all past. Future is Mac. Whole story.
yeah, so last century.
who cares history? Is all past.
You learn from history so you don’t repeat it.
Apple made many mistakes, but one of the bigger ones was remaining a single premium, proprietary brand while commodity PCs ate Apple’s lunch.
Sitting on Mac System 7 with no answer to Windows 3.1, Windows 95, and DOOM (how many PC’s got sold just to play that game?) didn’t help matters any.
Things are different today, and Apple is SO close to the “tipping point”.
MS is deeply entrenched but they aren’t invulnerable. VisiCalc, Lotus, IBM, and even Apple were all in that spot at one time too.
The problems of Apple are all in the past. Mac marketshare is going to increase slowly but surely from now on. There is simply nothing to stop it – not Vista, not high prices, not incompatibility with Windows. Mac looks way better, works way better, costs only a teensy bit more, runs Windows natively if you want. No viruses, no spyware. Never again will Mac be at a hardware disadvantage, thanks to the x86 switch. Mac has the maturity and stability of Unix, combined with the commercial software availability more like Windows. If you want to play games not available for Mac OS X – just boot up in Windows. Bam. (Thanks, Steve Jobs)
Market share isn’t a reason why the platform fell into crisis, it’s the result of the factors that made it fall into crisis.
Cause -> effect
Apple have just about convinced people that the vertical model can and does produce a better solution.
me:
Amen brother. You nailed it.
me –
I’ve gotta disagree with ya’ there, buddy. It all sounds very ‘Oprah’ to have a benign kibbutz of altruistic creative minds who have no concern whatsoever for the bottom line of the company, but Apple is, in fact, a business. In the dark years, it was still an innovative, high-minded company – it just made a series of very poor business decisions. That’s what happens when there are no businessmen among the ‘creatives’.
In addition, I guarantee that the primary focus of the current CFO of Apple is to “make as much money as possible”. It’s just that now, a wiser, more long-range, and more sweeping business strategy is underway. Your apparent disdain for the monetary motive is surprising, considering that Apple and most other innovative companies always seem to appear in capitalist countries.
It’s the creative minds at Apple that make the mac superior. It’s the creative business people at Apple that are making the mac resurgent and, hopefully, dominant in the marketplace.
babagamoosh: who cares history? Is all past. Future is Mac. Whole story.
A story has a beginning, a middle, and an end. What we have here is a continuing saga and we’ll never live to see the outcome of Apple’s story, but our children’s children might. By then though, the computers we use today will seem to them, as charming as those early wooden telephones are to us now.
History IS important and cannot be dismissed as the past, for without a well-documented history, people can say whatever they want to bolster the providence of their perspective!
One need only listen to a conversation between PC users where Apple is the topic, to get an idea of just how profoundly fictitious their knowledge is about Apple Computer. Some of their comments make my teeth itch!
Apple Computer has been swift-boated for years and unfortunately many of us were powerless to combat the outrageous beliefs held by millions of PC users and much of the blame can be laid at the feet of Apple’s leadership.
Mike is right about Apple’s schizophrenia and as long as Apple continued to define itself by comparison to the PC market it would stagnate. Apple lost their way in the ’90s and the decline into chaos was lead by the very man Steve Jobs brought onboard to change the world; a sugar water salesman no less!
Daniel Eran understands the matter completely and his perspective should be assimilated by us all but especially the zealots continue to foster the adversarial relationship. Far too many of them don’t even know what’s at stake, much less what the fight is all about. Like moths to flame-bait.
It starts with leadership. Show me a caretaker CEO and I’ll show you a company that regrets it, given time. This is even more critical in certain markets such as high technology, the creative arts & media. Apple is at the very intersection of these markets and has been for a very long time.
Sculley frittered away years of fat profits without taking the next step and the next one after that. Apple had a ton of people chasing their own tail, spending money, time and mind-power and came out with very little to show for it. No unifying vision. The same was true for his successors.
The great things Steve Jobs has going for him are these:
1- He has a clear vision for where he wants the company to go and what he wants to do.
2- He, as founder and Silicon Valley Geek God, has the cache to attract and guide the people necessary to make the vision real.
3- He has the drive to push and push to get it where he wants it. He doesn’t take ‘it can’t be done’ well.
4- He has great faith in his gut and is willing to bet the farm to get it done. He spent most of his huge Apple fortune founding NeXT and transforming Pixar from a small project at ILM into a full-fledged animation studio. He then cleared out the chaff and bet Apple on the Mac platform when he returned.
People like that are called leaders. Not by position, but by actions and results.
The article makes a long story of what I said here many many many times: Apple could not care less of global market share because Apple always had 100% of its market share. There is no way one can run Apple sw and the Mac OS but buying an Apple computer. There is no competition. It is 100% coverage of its market share.
This is the main reason Apple never died as did many other PC makers crushed by big ones. The only thing was that Apple market was much smaller than PC market. Now the Mac market is making a dent into the PC market and getting PC users switching into Mac users, hence Apple market is growing. But the share is still the very same:
100% before
100% now
100% in the future.
The only thing that the global market share of Apple will tell is the increasing number of Mac users vs Windows only users on PCs. Nothing more, nothing less.
Only remember one thing: Apple will always have 100% of the Mac market.
One further explanation for the Mac losing ground in the 90’s, the PC gaining ground and the Mac re-gaining ground these days, is word of mouth.
In the 90’s most people who were considering buying a computer would ask their friends for recommendations. Computers cost a significant amount of money and there were a confusing number of options, so people turned to others for advice and most would trust what their friends said. Their friends mostly had PCs, so getting a PC just like those of your friends seemed like a good idea. This trend then created a spiral, with increasing numbers of PCs and fewer Macs, so there were fewer chances to encountering a Mac or a Mac owner.
Since the iMac, more so since the iPod and very much more so since the switch to Intel, Macs have become much more plentiful again. There is now much more chance that somebody you know will recommend a Mac and the shortcomings of Windows are becoming better known.
Once again we find ourselves in a spiral, but this time it’s a spiral that’s going the right way for Apple and the rate of Mac adoption could accelerate very rapidly indeed over the next few years.
The iPod benefited from exactly this sort of spiral. We know that Apple advertised iPods widely, but the real sales force were the millions of users who appreciated their iPods and discovered that they did exactly what they were supposed to do. Their friends were curious, asked about them and before you know it another interested onlooker became a customer and in turn became another unpaid salesman.
The modern phrase for this is ‘tipping point’, but the principle has been understood throughout history.
Good article. However, the only real key to why Mac sales are doing so much better today, is the switch to Intel. While many of us were arguing the technical merits of moving the Mac platform from PPC to Intel, I think Jobs and Co. understood the true benefit of going Intel all along.
During the revival of the Mac platform this decade, Apple focused more on removing the objections to buying a Mac, rather than banging away at why Macs were superior. The final step was the transition to Intel. Now, when someone objects to buying a Mac because it doesn’t run Windows, overcoming that objection is simple. Yes it does run Windows. So once the consumer actually understands this, the decision comes down to desireability of the hardware versus price. Unless the consumer is looking for a $299 piece-of-junk PC, Apple wins.
Short list.
* Steve left
* Steve came back
Funny.
You can tell when professional Mac users
have nothing to do on a weekend;
MDN gets hit by detailed,
well written, replies from
people with better-than-luke-warm
IQs that have real lives during the week.
Nice.
Very refreshing,
especially in here.
Thanks, everyone!
Not targeting Corporate customers and giving Microsoft the keys to the car didn’t help either.
JEG, ya’ beat me to it. Part of this was all the pieces were in place for a coup, even if Apple was in top form– computers ready for a novel, cheapish OS. Windows was a trojan horse itself.
As soon as the company is handed over to people whose primary concern it is is to make as much money as possible, the creative force behind the company is lost and motivation falters
Well yes and no.
Every company exists to make money. It’s all in how they do it, and how consumed by greed (and/or market dominance) they let themselves become.
I don’t remember the exact numbers, but Apple had INSANE profit margins into the early 90’s. Part of Apple’s journey in to the abyss was not recognizing young punks like Dell, and how they could cut right to the bottom & Wal-Mart-ize the industry.
Now, ironically, part of Apple’s resurgence has been enabled by the likes of Dell. When you’re shooting for bottom and selling $299 PC’s, there’s no margin for creative force, industrial design, software development, retail stores, or anything else we take for granted from Apple. Competing on price alone is the business equivalent of digging your own grave.
Apple’s success today is, in part, from staying out of the price spiral and offering consumers compelling solutions that nobody else can.
Well put, grok
me:
I don’t understand what you mean. Consider the following phrase,
”Just like government, when taken over by the greedy and corrupt and inept… you have failure.”
To clarify, are you suggesting that success can be achieved by being:
1. Greedy and corrupt, but not inept.
2. Greedy and inept, but not corrupt.
3. Corrupt and inept, but not greedy.
4. Greedy, but not corrupt and inept.
5. Corrupt, but not greedy and inept.
6. Inept, but not greedy and corrupt.
7. Neither greedy nor corrupt nor inept.
I guess the next question is, what is your definition of success?
To clarify, are you suggesting that individuals with “creative force” are characterized as being:
1. Greedy and corrupt, but not inept.
2. Greedy and inept, but not corrupt.
3. Corrupt and inept, but not greedy.
4. Greedy, but not corrupt and inept.
5. Corrupt, but not greedy and inept.
6. Inept, but not greedy and corrupt.
7. Neither greedy nor corrupt nor inept.
I guess the next question is, how are persons with this “creative force” invulnerable from the same human foibles as otherwise unimaginative and uninventive people?
And I had thought that success in business was primarily making a better product than your competitor.
To all you people who kiss Steve Job’s ass so much that your heads had to be surgically removed from his rectum, here’s a few examples of Job’s and Apple’s “superior” creativity,
http://www.miguelcarrasco.net/miguelcarrasco/2006/10/10_biggest_comp.html
net worth understands how things work.
maczealot: your last post is an illustration of the old saying: If you can’t dazzle them with intelligence, baffle them with bs.
It worked. The last two sentences do make some sense…………. I think.
Hey Creative–
You don’t know a lot about successful people. It’s not that they never make failures, it’s that they push ahead anyway. Enjoy the rampant future success you’re obviously going to enjoy as you regurgitate others’ questionable judgments for the sake of saying…well…nothing.
Night sweetie.
Oh. And I had a problem once.
kenth:
Actually, I am baffled by me’s linking “virtuous behavior” with success in business. I always considered intelligence, insight, and discernment the primary factors determining success in business, and none of these characteristics are intrinsically related to one’s ethics, beliefs, and conscience. Of course, luck, serendipity, and chance also have to be considered as factors in success and none of these is due to one’s wisdom, wit, or conscience. me’s post is a simplistic explanation of an intricate issue.
Apple failed before Steve Jobs return because of:
1: Apple was still pushing the losing RISC processor aligned with IBM/Motorola against Intel and suffered from being able to produce as many cheap processors as Intel could.
I remember many times a new PowerMac was introduced that the demand was so great it took Apple months to fill all the orders. The most recent being the Powermac G5.
2: Previous high price for Mac’s because of the pricier RISC processors. Apple is now more competitve with other PC makers, but still has a long way to go in offering more hardware choice options.
3: No OS improvements before OS X. Apple didn’t innovate and it nearly died.
Peterson:
Uh, huh. My point exactly. So what that Job’s and Apple learned from their mistakes, isn’t that the least one should expect from a successful person or company? Steve Job’s is human and not some omniscient digital deity. I like Steve Job’s and appreciate everything he has done for Apple, but I’m certain that there are many other people in Cupertino and elsewhere have also contributed to Apple’s success and Apple’s blunders. People who don’t recognize that even creative people can and often make mistake need to reassess their perceptions of reality.
If that was your point, your writing needs some help. Try less inflammatory language, you hemorrhoid. Just like that.
Let me translate my point for you: graduate high school.
Rabiddog: I may be wrong, but I think the RISC processors were actually cheaper and smaller than CISC processors. I don’t think the reason Macs are competing on price as well as they do has anything to do with cheaper processors as much as better design and manufacturing efficiency. Also, Macs can offer a lot of ‘free’ software since Apple is one of the best software producing companies around, and boosts the ‘value’ of their hardware products, thus making them competitive pricewise.
Peterson”
“If that was your point, your writing needs some help. Try less inflammatory language, you hemorrhoid.”
Peterson, be honest, it seems that you had no problem understanding what I wrote. Also, don’t offer advice that you are unwilling to apply to yourself, it make you appears to be a complete ass, and who am I to disagree with that assessment.
“Let me translate my point for you: graduate high school.”
Assuming that you know my academic history is evidence of your utter stupidity. Of course, if you were able to produce my academic transcripts it would certainly prove your lack of intelligence, but you are certainly smart enough not to do that, right, Peterson?
Keep it up. Peterson, I enjoy watching people like you make fools of themselves.
I repeat, those that worship Jobs have a nitwit for a deity.
Peterson = MacDude. Will you folks ever learn to ignore him?
sboj sboj sboj sboj sboj sboj sboj, …just getting ready for my Stevenpauljobs awareness Fellowship
I agree with “me” and “mike” — except for this one small point:
“The creative professionals as a secondary market is a great move for Apple, but notice how they never actually advertise to them..? “
As a media professional, I am exposed daily to Mac-related advertising for software and via co-op ads from vendors and system integrators. Most people won’t see these ads unless they receive the trade mags or are on the Apple Pro mailing lists.
Long live Apple!
“Oh. And I had a problem once.”
Geeze louise hubby of mine, if you’re gonna impersonate the person that is impersonating you, at least get the quote right.
It’s –
I had a bad experience once.
Forbes: Why Apple Won
http://www.forbes.com/home/digitalentertainment/2006/10/20/ipod-itunes-jobs-tech-media-cz_ec_1023valleyletter.html
Long live Macdude?
I agree with “me”, too. And “net worth”.
Personally, I don’t think clones were a disaster. I owned one. It was faster, cheaper, and better than any available Mac. And I didn’t care if had the Apple logo on it, I wanted the OS and software. Besides, the Apple hardware was so difficult to navigate to add hard drives, etc, it didn’t deserve the premium price (not that Power Computing systems were the epitome of elegance).
I remember in the early ’90s when Apple was rolling out the LC and it’s derivatives as the “affordable” Macs, the audience was flat out insane with joy. They wanted competively-priced gear to sell. Well, the price was better, but the content wasn’t.
Which is where “net worth’s” assessment about creativity and drive comes in – the clone makers were the only ones inovating in any way (remember the DayStar?, et al?).
Jobs needed to kill the clones to implement his vision which includes a creative force behind it. Clearly, the CEOs between Jobs’ tenures didn’t have beyond the business margin vision. Yah, margins were insane. But they weren’t selling anything!
grok, me,
Yup and yes. To survive in a capitalist enviroment (what other kind is there), you have to have people that know how to run a business. So often the problem becomes that these business types become the top dogs in management and that’s often when we see companies begin to teeter-totter as they become top heavy, and an empowered select few strive to milk the business for everything they think it should be worth (legally and sometimes sudo legally). Never the less, running a business requires a unique skill set and lots and lots of practice.
Enter creative types who often, and let me say frankly, rarely have any real business acumen – doesn’t mean they don’t have good ideas, just not a good grasp on the reality of “making it happen”. Even so, without the so called “creative types” new businesses and services would be in short supply, and what there was would always be in a constant state of coming and going as ideas were launched, the profit made, and the next idea brought in. That’s in fact mostly what we see in the real business world. Its so rare to see a good idea capitalized on in order to keep improving on the idea, in order to keep making more money to sell more product to more people who will in turn desire more improvements, and so on and so forth. I think this is the beginning of a more ideal way to practice capitalizm, and I think in many ways that’s the kind of journey Apple has been on.
Its taken some real time, but it seems to be coming around in a way it never has before. If Apple ends up with a real competative market share, not only against other hardware makers, but more importantly, against MS, I believe that it will be one of the more solid manufacturers the country, and now the world, has ever seen. Its really a neat thing to watch and participate in.
In the late 80 & 90s, the biggest problem wasn’t that Apple was run by “business types,” the problem was that those “business types” didn’t not have a clue how to run a business.
1. Manage inventory! (remember when Apple had a billion dollars in backorders of one machine and billion models of another machine in the warehouses.)
2. Manage Logistics—ah yes, let’s build part of a computer in Japan then ship it Ireland to add a few components, then ship it back to China to sell. Brilliant!
3. Manage Retail presence—let’s sell Macs everywhere, Sears, Best Buy, Circuit City, only the machines are in a corner, broken and all the sales people are ignorant at best and hostile at worst.
4. Manage Product Line—let’s have 50 different versions of the LC, Performa, etc. to give everyone “choice”—all it did was confuse everyone and drive up the overall manufacturing costs.
5. Finally—what JEG said, “Not targeting Corporate customers and giving Microsoft the keys to the car didn’t help either.” You’d think business types would figure out some ways to sell Macs to businesses! That’s where the bulk of computer sales were going in the late 80s & 90s. Remember when Motorola was building the CPUs for Apple but even they used Windows?!