Wednesday, July 6, 2011

Vendors Survival: Will Apple Survive until 2021?

Picture source: Wikipedia

The answer yes seems as an obvious answer to the question in the title of this post.   
Apple, formerly Apple Computers, is very successful company. The following articles are glances about how successful it is: 

Apple Is Now Worth More Than Intel And Microsoft Combined


Apple unseats Microsoft as world’s biggest tech company

Apple now 4th largest phone maker worldwide

Even by reading only the articles' titles you will be impressed. 

It is the mindshare leader in the growing markets of Smart Phones and Tablets, as well as the Music devices market. 

Anyone's ten years predictions could be totally wrong. I am not an exception. 
However, I already asked similar question about companies such as Microsoft, Google, SUN, HP, Software AG and EMC .

Yes was not my answer to this question for any of the companies cited above.
For some of them the answer was Probably Yes.
However, my prediction about Sun's acquisition by another company was correct.

If you will read my post about Microsoft's survival, you could read about a Mega Vendor named DEC which did not survive.   

Will Apple survive until 2021?
My answer is that the probability that it will not survive is higher than the probability that the other vendors (not including Software AG and obviously not including SUN) I discussed will not survive. 

An Apple or a Mountain Train?
Look at the two images in the beginning of this post. Which of them is more associated with Apple?

When I am looking at these images, I see no apples and no oranges. The Mountains Train is the image which is strongly associated in my mind with Apple.
There where lot of Ups and Downs in Apple's history,
which resemble a Mountains Train' s movement: going up and down, up again and down again.

As you can understand by reading the articles which are pointed by hyperlinks in the previous section, Apple is now up or even in a summit. But will it be in similar position or will it be in its worst position ever, i.e. will not survive at all, in few years?

Apple's History in the context of Survival
Apple Computers was founded in 1976. Steve Jobs was one of the founders. Steve Jobs was (and is) the most dominant and influencing founder.  

The Macintosh was its major product of the first half of the 1980th.
It was a Personal Computer (PC) with a dedicated Operating System.

The competing PCs vendors were Microsoft, IBM and Apple.
Technically Apple's PC was the best and Microsoft's Windows Operating System with Intel based PCs was the worst. 

The worst Operating System won.
Microsoft won because of better sells and marketing strategy, by supporting Independent Software Vendors (ISVs) applications and by providing cheaper products.

Apple's platform was not supported by many ISVs, so most users who need these applications preferred Windows Operating System. Apple chose a wrong strategy, which does not compel ISVs and therefore Macintosh became a Niche Product.

The appointment of Pepsi Cola's John Sculley as a CEO in 1983 was an attempt to improve Apple's marketing and sells and to reduce Steve Jobs' high R&D expenditures. 

As opposed to the Macintosh positioning, nowadays Apple's I-Phone is the preferred Smart Phone platform for ISVs' applications.

On 1985, Apple's Board of Directors removed Steve Jobs from his managerial duties and he resigned and founded Next.  

The Macintosh Portable and the Powerbook were Apple's successful Laptops of the end of the 1980s and the beginning of the 1990s. 
Unfortunately, almost every new Apple's Consumer devices failed. 

Apple's of 1994-1997 was an unsuccessful company trying to reinvent itself
The following list includes some of the failed initiatives:

  • AIM - Apple together with IBM and Motorola founded an alliance based on IBM's Power Processors.
  •  Porting Microsoft Office to the Macintosh platform.  Porting Office to other platforms was important to Microsoft, not because the technical merits of the Office implementation on other platforms. Microsoft's strategy was still based on binding Operating Systems and Applications, but it attempted to build a non-monopoly image by availability of Office versions on other platforms.

It is not surprising that Apple's CEO Michael Splinder, who replaced John Sculley, was replaced in 1996 by 
 Gil Amelio

According to Wikipedia, Gil Amelio described Apple as follows: 
"Apple is like a ship with a hole in the bottom, leaking water, and my job is to get the ship pointed in the right direction"

Gil Amelio acquired Next and Jobs returned to Apple.
Gil Amelio did not predict the future: Jobs will replace him on 1997.      

iMac (1998) computers were successful as well as Mac OS X Operating System (based on Next's Operating System API and BSD UNIX) which was released on 2001. 
These successful products signals a better period for Apple. 

However, Transition to Intel chips based iMac begun on 2005 and ended in 2007.  
Apple introduced Boot Camp which helped user to use Windows Operating System on iMac together with Mac OS X.

No need to describe Apple's successful Post PC period after 2007, which was cited in a previous section.

What may Risk Apple's Future Survival? 

Less Innovation
I recently read an economic article about Finland. 
Naturally, Nokia was mentioned by local people who were interviewed. The people interviewed attributed Nokia's losing its position as the leader of the Cellular Phones market to changing to a less innovative company.  

Apple is currently an Innovative company. 
iPhone, iCloud, iPad and Appstore are examples of innovative products and innovative services. 

Who can guarantee that Apple will not become less innovative company in the future? 

Do not forget that its competitors learn from Apple, as well as from their own experience and R&D and are capable of producing products not so different from the innovative products produced by Apple. 
The Apple-Samsung Lawsuit is just an example.

Steve Jobs
Read the section titled "Apple's History in the context of Survival" or any other article on Apple's history and you will find the name Steve Jobs again and again (for 35 years) as the key person behind most of Apple's successful ideas and products. Yes, you can also find him as the creator of some of Apple's failing products.

Apple without Steve Jobs is totally different company.

Apple replaced its CEO very frequently, during the period Steve Jobs was working for Next

Apple without Steve Jobs was already described by one of its CEOs it the past as "a ship with a hole in the bottom, leaking water". 

Unfortunately, Jobs is not young and is not healthy.
Could Apple survive or even evolve after his retirement? 

It should be noticed that the risk factors cited above are not independent. Specifically, Steve Jobs is the source or the driving of many Apple's Innovative products, services and ideas.

Complexity of Sales and Support model 
As far as Cell Phones are concerned Apple is currently more successful than Nokia.
Apple has only few telephone models and only one distributor.

Nokia has a large number of phone models and many distributors.

Clearly, Support, Sales and Marketing are more effective and a lot easier with a simple model (Apple) than in a complex model (Nokia).   

However, Simplicity of products offering is usually a characteristic of a new vendor. 

For example, Microsoft's portfolio of products in its early days included Office and Windows only.
Now the portfolio includes myriad of products, even if different versions or editions of the same product are not counted as different products (e.g. Windows 7, Windows XP, Windows Vista, multiple of Windows Server versions. For each of the Desktop Operating Systems you may find different editions such as Home, Home Premium, Professional etc.)   

It is reasonable to predict that Apple too will have to support more products and more configurations or editions of the same product.   
In that case will Apple be in troubles same as Nokia today or will it adapt to the new role of a Long Term Agile Market Leader?

Apple limits de-facto application development for its consumer devices to its Desktop Hardware and Operating Systems. 
It is not a formal limitation, but only a practical limitation. 

The future need for a Desktop Operating System as we know it is questionable.

This observation relates to End Users. Apple is trying to bind to its Desktop solution a community of application developers for its consumer devices. 
It may succeed, but it could also fail if developers could prefer free selection of Desktop Operating System. In the later case they will develop apps for Apple's competitors e.g. Google Android.  

What may enable Apple to survive until 2021?

So far I analyzed Risk Factors, now it is time to analyze factors supporting Apple's Survival. 

Agility and Adaptation 
A company whose history is paved with so many failures which is still one of the major players, must be a company which is able to adapt to new circumstances and challenges.

The company is more than able to adapt. Adaptation is one of its strengths.
Apple changed its products, services and Business Lines. Apple changed its Infrastructure and alliances. It even changed its name from Apple Computers to Apple to reflect its new focus on Consumer Devices. 

Apple is an Agile company So why will it fail to adapt in the future? 

Innovative Company
Apple was an innovative company through its history.
It may succeed to continue Innovations in the future and be a viable company in the next ten years as well.
    Customers Loyalty
    The Macintosh community is well known as a loyal community.
    Will the younger I-phone or I-Pad community will be as loyal as well?
    I doubt because the new generation is accustomed to frequent changes.
    I may be wrong.

    Concluding Remarks
    As already mentioned any ten years prediction could be wrong, therefore I described Apple's history, Risk  Factors and Strengths.
    Notice that there are factors described both as Strengths and as Challenges or Risk Factors.
    Today's Strength could become tomorrow's Risk Factor.    

    1 comment:

    Avi Rosenthal said...

    LinkedIn Groups

    Group: IGTCloud
    Discussion: Vendors Survival: Will Apple Survive until 2021?
    10 years ago you could have bought Apple stock at around $10, now it sells at nearly $350. From beginning of 2009 until today the stock more than tripled in value.

    Have a look at Microsoft stock. You'd have lost nearly 1/3 over a 10 year period. So why not ask: Will Microsoft survive until 2021?

    My opinion with regards to Apple: Most likely. Apple is a very innovative company that has reinvented itself several times in the past 10 years. Who'd have thought that Apple become a player in the mobile phone business?

    My opinion with regards to Microsoft: Unless they reinvent themselves, I don't see much hope. The Microsoft search engine effort was outrun by Google, then a startup. Windows for mobile - pathetic. The only area where Microsoft seems to have improved is in the enterprise and server business, but even there they are challenged by numerous contenders. In the last 10 years the innovativeness of Microsoft expressed itself in the phrase "me too", whether it's the cloud computing platform, their SaaS answer to Salesforce, you name it. Even in the OS market they are slowly but surely loosing their share (which is still amazingly high).
    Posted by Heiko Sieger

    Public Cloud Core Banking: Hype or Reality? - Revisited

      More than 4 years ago I was asked if Public Cloud Core Banking is a Hype or a Short Term Reality? If you had read the post, you would prob...