Thursday, 19 August 2010


Free markets work in wonderful ways, especially when it comes to technology. Prices come down, quality goes up, its a win-win situation for consumers. History has a habit of repeating itself and it seems to be repeating once more in regards to Apple. Once more Apple are ahead of the herd releasing new products to the market such as the iPad and iPhone but once more the market is chasing them down once more.

Apple has always been an innovative company ever since they created the first personal computer as the big players such as IBM ignored such innovations labelling them as too insignificant and 'toys'. During the 80's they create machines such as the Macintosh, which were unparalleled  innovation during its time. There was nothing on the market like it. This is where Apple always slips up. If they had a similar business model to Microsoft we would in all probability be using Apples operating systems which were always far superior, however Apples solution was to keep the hardware locked down in their own control. Microsoft in the meantime just concentrated on the software and allowed the hardware manufactures to compete in selling the computers, thus lowering the costs greatly and also allowing consumers greater flexibility and choice of product (treating people as individuals with different requirements and needs).

Apple relies on its image, its marketing. Sure the Apple OS may be better than early Microsoft versions (such as the dreadful Windows 9x OS) but for consumers there are two concerns, quality and price. Why don't I drive a BMW or Audi? The cars would be superior in quality to the cars I have had, but price is also a big factor for consumers. 99.9% of the time people want a car that gets you from A to B. Its the same with Microsoft OS compared with Apples - it gets you from A to B at half the price. You put up with no fancy cup holder or an extra gadget here because the engine turns over and its cheep to maintain. 

Since Apple have released their iPhone and iPad, Google and to some extent Microsoft are again packaging the software for the manufactures to use. Just like the Mac in the 80's, Apples early products have market share which is sure to be eroded in the future once more. Android is already gaining popularity with its open format and with Chrome OS due to be released later in the year this will surely take away market share from Apple (and Microsoft) as they are open, free and do the job. People can openly contribute and build apps for such systems and its only a matter of time before more applications appear for such devices. Over £400 for an iPad? Please, it sounds like daylight robbery to me. The competition is already offering much reduced priced products at half the price. It's not long before the quality catches up too and surpasses Apples offerings.

Of course you could claim that Apple do this on purpose, ie appeal to a niche markets and work from high margins. However unlike the German car companies who compete with the Koreans and the Japanese on quality and charge the premium, I can't see Apple being able to do the same against Google. Google have opened up the code and are offering it for free, allowing all sorts of customisation, thus will appeal to the masses once more. They won't need to copy Microsoft's model of vendor lock in. Times have moved on. It seems Apple have not learnt anything from 25 years ago and are repeating the same mistakes. Give it another 10 years and we will in all probability see a repeat of Apple in the wilderness once more, similar to the 90's.


  1. So if we look at your examples of BMW and Audi I don't see them in chapter 11 like the low-end producers. The key strength of Apple is its R and D capabilities and product differentiation. They can never survive in the low-cost market and have to continue to be ahead of the competition. Your argument seems to suggest everyone should go low-end cheap manufacture effectively leading to the market being owned by low-cost asian non-brands. I believe actually in the recession it was the high-end manufacturers that did well, leading to the likes of Apple having a share price worth more than MS$ at one point...

  2. Thats my last point - Apple currently are ahead of the market, but the rest of the market are catching them up on quality. It was like this in the 1980's. Apple were ahead in quality and fell behind during the later part of the decade and into the 90's, where their company value went down. They look to be doing the same again.

    In fact the share price went sideways during this period and generally for the decade went down.

    By the way where do you think Apple products are made - China same as the rest (so not high end manufacturers). Therefore it is the design of such products and the software on them that makes them. The competition however use open software so users have greater control and I think there are already other products such as smart phones on the market that look better than the iPhone (personal opinion obviously).

    Apple have too much vendor lock in and brain wash people into thinking the same laptop as an MS one is worth double the price. Most people see through it and just get a functional computer. Since MS has moved away from the 9x platform it has generally been stable (if slower). However Google have Android and soon Chrome OS which will put more pressure on Apple. Google is about speed and stability and open software, therefore will probably have a better product than Apple in the next few years. In fact anyone can assist in developing these platforms (google even awards monetary rewards to people who fix priority defects), which is far better than having a limited closed software development team such as Apple and MS.

    Android smart phones are already beginning to take away market share and its still early days. Next will be the iPad or Tablet market. Just like regular PC's did to the Macintosh in the 80's. Apple had the lead but collapsed as time went on.

  3. Interesting to note that the last Vodafone update of Android was not rolled out completely because Voda had filled it with bloatware and porn (!) and users rebelled. The openness of the platform is now being addressed by Google in the next release as the platform shatters into different variants and upgrades never get rolled out. Java ME was an open platform and a disaster all the same. Andriod has also got Oracle on its back now so things could get interesting.

    The fact that Apple have locked down the hardware is a key competitive advantage to Apple as it means "it just works". People buy into the halo effect which has never been so strong. Chrome is only stronger at the moment because most people are moving to smart phones and all manufacturers bar Nokia are moving to Chrome as their only means of attack. A single integrated platform is giving Apple more and more advantages and as people buy into software that only works on their platform the cost of moving will increase. One reason I would never get Android is my usage of Mac means I get superior integration with ipod/iphone. This effect works equally well in reverse. As for Windows, well start-up times are shocking on XP and even Ballmer agrees Vista was a disaster..... I believe the support contract for XP is going to run until 2020 now - not what I would call success and killing the MS partners.

    The iPad outsold the original iPhone which is amazing. It is still out of stock.

    I agree the prices are high, however, the economics must "just works" as market share increases and production cannot keep up with demand. It also depends on how much value you put on the O/S as well as the hardware. Linux is free but no-one non-techie uses it on desktops.

    Although once niche the Apple symbol is everywhere now, which I guess could be the biggest weakness....

    We will see who is right in the long term but I would not bet against a company that has released the perfect product every year since 2000.... R and D and marketing will be key.

  4. Hi Dafydd, :-)

    We could dig faults for every software product ever released. We both know the industry and how bugs will always be a fact of software development. We could talk about Steve Jobs releasing the new iPhone in-front of reporters and not being able to connect to the internet. Hardly "just works".

    Chrome web browser is open source, yet like you say its the most stable one out there and fastest. It's able to leverage all those child genesis out there. And Google pays rewards to them.

    Nothing is wrong with lock down if thats what the company wants. But the market will get you eventually. Apple did lock down in the 80's and it failed spectacularly. They are doing the same again.

    Regarding "it works" that's why we pay the premium mantra, I use Vista and you know - it works! I've not rebooted it for months (therefore don't see slow load up speeds). It only reboots for windows updates.

    I mainly use it for internet access which is what most people use a computer for. If you use apps all the time then yes you will need to reboot its flaky shell. But local apps are a thing of the past. The next decade everything will revovle around the web.

    I use an iPod and don't have anything else Apple - not had any integration issues yet. As Googles tools are open people will just write tools for them if they have issues. Its still early days - wait a year or two and the apps explosion that will take place.

    Electronic products always sell out - they don't make enough so giving them exclusivity - Wii, Xbox etc. All the big companies do it.

    Yes we all know about Linux, but why didn't Linux sell well? It's because apps didn't install well on them. So people didn't use it. I had Linux but I also had a Windows build as there was always a need for certain apps on Windows ie Games, Office etc. Could have got a Mac - but at twice the price - and nothing new to offer - I opted for Windows.

    Now what Google are doing is clever. They have recognised this issue that Linux had, so they are building their own OS based on the superb core of Linux but with a twist. What they are doing is creating apps in the cloud. All their office apps etc. They are also due to release google chrome web store. A shop were people can develop applications and games for free or for a fee - online available to people at the click of a button. All central. All with peoples reviews. Professional companies. Platform independent. Check it out at :

    They are moving the apps away from the local machine - the monopolies Apple and Microsoft have established.

    They are taking Apple and Microsoft head on in their bread and butter operations and I think they will slowly edge out.

    All of this is set up for tablets and smart phones. For computers in your TV, or around the house. Games online available on any of your numerous devices. Away from installations on all of them. Google Chrome OS will maintain the basics - fast, secure, stable - and free. With Chrome browser acting as the user interface to all of the apps. What can Microsoft and Apple reply with - their name? That only remains true for so long.

    In relation to:
    "We will see who is right in the long term but I would not bet against a company that has released the perfect product every year since 2000"

    They did the same in late 70's and early 80's then the market took them out. The Mac was miles ahead of MS-DOS. But MS-DOC and Windows for workgroups still won out. It did what people wanted. Same again my friend :-)

  5. Quite relevant to the discussion but naturally very Apple-centric...

  6. And something of Amusement ...