Six reasons why Apple will not surpass Microsoft in longevity

I just read Richard Martin's Will Apple Outlast Microsoft?.  I disagree with the article's closing.

Simply put, Apple could probably make a lot of marketing mistakes and screw itself up silly, and it will still be around in a hundred years.

The number one problem with the assertion is that Apple has positioned itself as a consumer company.  I will address fanatical fans later, but consumers are notoriously fickle.  The idea that Apple will always have the next iPod is wishful thinking.  I have not seen any evidence that Apple is building a brain trust that will keep it in the lead years from now.  A few other companies will tell you that inventing that next thing that consumers want for the next one hundred years could be challenging.

The number two reason why Apple might not survive the hundred years is that the company is not even on the list of the top places to work.  If you could dig into the statistics I am certain you would find that Apple is challenged at hanging onto its best engineering talent.  Apple has not made Fortune's list of the top 100 hundred places to work for years.  In fact Apple is conspicuously absent.  Google is number one in the most recent list and Microsoft is number 50.

I actually know employees in many of those top one hundred companies. In fact I know a few who interviewed with Apple, were offered jobs, and turned Apple down.  I worked at Apple for nearly twenty years, and I still know plenty of Apple folks who confirm the company has not changed significantly as a place to work since I left other than the company is making more money and lots more iPods.  The employees are quick to point out they are not making more money.

The third reason that Apple has plenty of challenges in store is that a corporation with a wide range of products has much more difficulty maintaining the same level of quality and customer satisfaction than a company with a narrow range of products.

A good example of this is the recent release of Leopard and the number of recent applications which do not seem to be of the same quality as previous products.  While Leopard will get over its initial quality concerns, how do you fix products that just never seem to get really better like .Mac or iWeb?  I continue to maintain that Picasa2 on Windows Vista has a better and more productive user interface than iPhoto 08.  I have seen far more user interface innovation that translates to actual user productivity in the latest Office 07 release for Vista than I have on the Mac.

Another example of this is Apple's inability to continue to really innovate in the computer hardware space while doing an innovation like the iPhone.  I continue to wait for some real computer hardware innovation from Apple.  Apple does not even have a laptop with a slot for reading photo memory cards.

If as some analysts assert, that the iPhone is Apple's future, I am not sure that Apple will have that same fanatical fan base that was built on years of computer loyalty.

In fact there is anecdotal evidence that some of those fans, myself included, are giving Windows another look.

The fourth reason that Apple will not be an everlasting success story is Apple's management culture.  I was a director at Apple and went through training with a number of Apple's other directors.  The training was managed by outside consultants.  The outside consultants were stunned by the lack of freedom to make decisions within Apple. 

To most of us, that was just the way Apple did business.  I can still remember one of the developer directors complaining that his team was almost impossible to effectively manage because of Steve's connection to a couple of the employees.  Any and all decisions at Apple are subject to being over turned by Steve.  While that is probably fine in a company with a few products, it will not work in a company with a large number of products.

The training was held to help directors understand how to impact company decisions.  All it did was confirm what many of us had known for years, very few people at Apple can make real decisions.

The fifth reason that Apple might not survive the hundred years is that the company continues to show its inability to get out of its cool niche. The best way to understand that is to examine this chart at AppleInsider.  If AppleInsider's numbers are right California contributed $185M of the $410M in total revenue from Apple Stores in the US.  That indicates that 45% of the total revenue from the stores is  coming from 12.2% of the US population.  Apple is more of a California company than it should be.

Apple's store strategy has been phenomenally successful in California, but it needs a little tweaking to get it really going in the rest of the country and the world.  For years Apple has needed a blue collar strategy, but the company has continued to focus on being cool which might or might not be the right strategy for the next one hundred years.

The final or sixth reason why Apple might not last the one hundred years is Steve Jobs. The article, Can Apple Last Without Steve Jobs?, from CoolTechZone.com has some very good points.

I think the biggest challenge for Apple is that Steve Jobs is commingled with the brand.  Apple is not a fast food company where you can place a paper cut out of Steve at each store and expect success.  Steve Jobs is Apple's DNA.  Few people can name anyone else at Apple.  For a company so much in the spotlight, that is truly amazing.  Apple is a huge ego trip for Steve Jobs.  The challenge is that there is no one standing in the wings who can fly the plane after Steve is gone.

While the enterprise world of computers is exceedingly boring for a company like Apple, it is like a large ship, once it sets sail, it is very hard to change its course.  No matter how much those of us who love Apple products might wish it, Apple is not going to conquer the enterprise.  The enterprise would add years of longevity to Apple.

I am really hoping that Apple gets back on stride with computers in January. Otherwise, while I see increasing sales, they will not be anything of real significance.  Even with this past quarter's excellent computer results of 2,164,000 units, Apple still only has 3.2% worldwide market share.  It is hard to believe that in 1995 Apple had 9% of the world's computer sales.

While Apple grew its most recent quarterly sales 549K, HP grew its units sales almost six times that.  Even Dell whose sales have been anemic had unit growth that was 68% of Apple's unit growth.

None of this means that Apple will not continue in the short and medium term to be extremely successful.  Apple has plenty of great products to keep it going for many years.

However, there is a big difference in being successful for a number of years and being around in one hundred years.

To be a company that is around for one hundred years or more, you need a sustainable corporate culture that delivers exceptional value to employees and customers.  I think Apple fails miserably on that one.

You also need to deliver consistence customer experience across all your product lines. You must focus on that experience year after year.  That is a work in progress for Apple and not looking particularly good. It is exceedingly hard to keep your old customers happy while finding lots of new ones.

Apple is an iPod company that wants to be an iPhone company.  It is going to take more than that and being cool to get to one hundred years.

That is it for me today from the Southern Outer Banks where the tomatoes are still ripe in spite of the cool weather, the fish are biting, and real estate is looking better even taking into account that I have to use a Window machine to be successful.

Comments

[Viswakarma]

Small mammals outlasted large dinosaurs, and evolved into humans. So will Apple!!!

[kboggs]

OK, I can kind of agree with most of this but the part about the "slot for reading photo memory cards"? I don't want this on my laptop. It makes me think of this HP laptop I had to configure for a client that had every conceivable "reader". I expected to find one for punch cards. The thing weighed a ton and sounded like a hovercraft when the fans kicked in, but yeah it did have all the card readers built in. Even the ones no one uses anymore. I much prefer the express card I bought for under $20 that I can throw away when it is eclipsed by something newer.

I notice that a lot of the Apple bashers are hung up on features and how their XYZ PC can do this or that faster, cheaper, etc. I don't drive a top fuel dragster to work. I give up some power and other extreme features for a better user experience. I do wish Apple would be a little closer to the cutting edge on its components but I'm more concerned with the user experience and not on having the fastest frontside bus or graphics card.

As for some of the other stuff; I've never been an Apple employee like you but I've been a very happy customer for over 20 years. In my mind they do deliver a consistently exceptional value. In fact that's the reason I'm a fan. The only other company that I can think of that strikes me the same way is Sony. So, for me at least, they've made it one fifth of the way already.

[ocracokewaves]

My HP has a single small unobtrusive slot. It reads my SD cards which is great. I have standardized on that and it is very important to me. I did not like keeping up with the extra hardware.

The HP also has a better keyboard, trackpad, and screen than my MacBook which cost substantially more. It came with twice the memory and a hard drive 50% bigger, and it only cost $849 with Vista Ultimate. It even has this lightScribe disc technology which might be useful.

Anyway the point was that the HP had more than just a photo memory card slot.

You can read a whole post on it.

http://viewfromthemountain.typepad.com/applepeels/2007/10/on-the-eve-of-a.html

The HP and Vista with Outlook have turned out to be far better than I expected.

Also I don't find Apple consistent anymore in user interface. The guiding hand that used to be there on user interface seems to be gone.

I have been an Apple customer for over 25 years. I plan to continue to be one, but I am not sure that what I want to buy for a computer the next time will be a Mac. I want a good desktop, but I don't want to pay a lot of money for it, and the current iMac is not for me.

And unfortunately I need to run Windows and found it was cheaper to get it on the hardware than shrink wrapped.

I also use Sony and Nikon products. I wish their software worked better with Apple products.

I considered a Sony Viao but they were too expensive also and no one convinced me that they had better service or support to justify the price difference.

Still this is all short term in the world of one hundred year companies.

[John Swift]

Apple may or may not be here in another 100 years but then anyone reading this will most likely not be around to care one way or the other. I'm 55 now and if Apple lasts until I die that's all I care about.

[veggiedude]

We give a billion dollars a day to the middle east for their oil. All the brains will be in China and India in the next decade at the rate we are going. So if Apple gets bought out by the Arabs and moves to India, it can last 100 years easily. If it stays in California, it is doomed.

[lrd]

I work for large pharma biz that is often one of the most admired places to work. And guess what? They may not be around in another 10 years!

No new products or innovaton or buy-outs ( which is what has fueled our growth for the last 10 years ) and all those places you talked about are pretty much dead in the 25 years forgot 100 years.

[Partners in Grime]

Apple will probably be around longer than any of us. :)

[Blake]

kboggs I have had a lot of experience with the hp dv series laptop you are speaking of. It's a complete piece of junk. It overheats and the display leaves something to desire.

As for your expeience with outlook. Thunderbird is 1000x better and runs on windows, mac, all flavours of linux.