It's clear that Apple is the king of the heap these days when it comes to the consumer space. They make tons of money and people line up days in advance of their new products going on sale. When is the last time that happened for a Microsoft product? OK, the Kinect did fairly well but as a general rule people don't get very excited when a Microsoft product is released. The same can be said for Google.
Apple is fundamentally different from both Google and Microsoft in that they are heavily involved with every aspect of their products. In business terms this means they have an opportunity to create, and capture value along almost the entire value chain. That is a very powerful position to be in if you handle it well and Apple clearly does. This ability to create and capture value across the value chain is why Apple is so insanely successful.
The Peril of Not Being Apple
All of which is wonderful for Apple but not so good for the companies that are trying to compete with them. Google is in a better position than Microsoft because the majority of Google's revenues are from advertising revenues generated primarily by their very successful search engine. Google knows however that this revenue stream can be choked off up stream of them which is why they created Android and continue to try new things to keep peoples eyeballs focused in their direction. Apple's ability to control so much of a users experience puts them in an excellent position to influence where people's attention is focused. The recent announcement that iOS 6 will jettison Google's map software in favor of an Apple created alternative is a case in point.
Microsoft is in an even worse situation. Sure, they are probably selling a few more copies of their office suite on the Mac these days but those sales are being cannibalized from the Windows PC side of things where sales are dropping so there is essentially no upside there either.
Apple gains other advantages from their current approach to hardware and software. Microsoft has to support an near infinite number of hardware platforms with each new Windows release. There is no way they can test every possible combination which is why performance and stability under Windows has always tended to lag behind Apple who only have to test on a very small number of platforms that they have all the inside information on. This contributes to the quality of the overall experience when using Apple products and also lowers Apple's R&D costs which tend to be much lower than anyone else in the technology industry.
If you're Google you're worried about Apple and if you're Microsoft you are probably more than a little terrified though you would never admit that in public, at least not in so many words but some of Ballmer's recent actions certainly seem to be telegraphing fairly clearly that he's not feeling all that confident.
One possible approach to dealing with Apple is to look for niches that they have chosen not to compete in. Many Android device makers have managed to make a modest chunk of change by following this approach. Apple offers one screen size for phones and one screen size for tablets. Most people seem happy with these choices but as the old saying goes, you can't please all of the people all of the time.
The problem with that approach is that Apple can watch and wait for lucrative market segments to emerge before introducing their own product. This means that their competition is essentially doing their market research and establishing a beach head all at no cost or risk to Apple and they've shown themselves to be particularly competent at entering markets others have already spent years in and taking over in short order. MP3 players being one example.
I still think this is a reasonable strategy as Apple isn't particularly quick to move. They like to be methodical and thorough and while they generally deliver great products when they finally enter a market there is still time to make money and maybe, just maybe establish a beachhead that they can't overcome.
This post is getting a bit long and I haven't even gotten to my main point. I'm going to leave off here though and save that for the future.
Microsoft is in an even worse situation. Sure, they are probably selling a few more copies of their office suite on the Mac these days but those sales are being cannibalized from the Windows PC side of things where sales are dropping so there is essentially no upside there either.
Apple gains other advantages from their current approach to hardware and software. Microsoft has to support an near infinite number of hardware platforms with each new Windows release. There is no way they can test every possible combination which is why performance and stability under Windows has always tended to lag behind Apple who only have to test on a very small number of platforms that they have all the inside information on. This contributes to the quality of the overall experience when using Apple products and also lowers Apple's R&D costs which tend to be much lower than anyone else in the technology industry.
How Do You Compete With Apple?
I'll be honest. I don't really know the answer to this question and so far it's not clear anyone else does either but you didn't read this far in the hopes of seeing me cop out so here goes...If you're Google you're worried about Apple and if you're Microsoft you are probably more than a little terrified though you would never admit that in public, at least not in so many words but some of Ballmer's recent actions certainly seem to be telegraphing fairly clearly that he's not feeling all that confident.
One possible approach to dealing with Apple is to look for niches that they have chosen not to compete in. Many Android device makers have managed to make a modest chunk of change by following this approach. Apple offers one screen size for phones and one screen size for tablets. Most people seem happy with these choices but as the old saying goes, you can't please all of the people all of the time.
The problem with that approach is that Apple can watch and wait for lucrative market segments to emerge before introducing their own product. This means that their competition is essentially doing their market research and establishing a beach head all at no cost or risk to Apple and they've shown themselves to be particularly competent at entering markets others have already spent years in and taking over in short order. MP3 players being one example.
I still think this is a reasonable strategy as Apple isn't particularly quick to move. They like to be methodical and thorough and while they generally deliver great products when they finally enter a market there is still time to make money and maybe, just maybe establish a beachhead that they can't overcome.
This post is getting a bit long and I haven't even gotten to my main point. I'm going to leave off here though and save that for the future.
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