Apple should exit the hardware business to focus on software. Or, Apple should design hardware and use Windows instead of Mac OS. Oh, the humanity! What is Apple today? Hardware? Software? Or, something else?
The Three-Legged Stool
Apple executives once talked about the company as a three-legged stool. Or, a chair with three strong legs. Mac, iPod and Music, and iPhone. That’s not really a good analogy.
Apple in the 21st century is a much more diverse company. Far more diverse than any of the competition, with perhaps the exception of Samsung (not an apples to Apple comparison, though).
Our favorite Mac and iPhone and tablet company brings in an enormous amount of revenue and profits from the Mac, iPod, iPhone, iPad, software, online app stores for Mac and iOS devices, and media sales and distribution.
That’s a lot more than three legs and Apple does very well in every category. Google? It’s advertising and nothing else? Amazon? The stock is a darling but the company loses money on every sale. Microsoft? Windows, Office, and… anything else? Nokia, RIM, and HTC struggle for relevance in Apple’s wake.
While tech pundits look to Apple to save the television industry, there’s one market segment where Apple plays big time, but doesn’t do as well as in hardware and software. Where? Web services.
John Paczkowski in All Things D points out the obvious. Apple is at the top of the game in mixing hardware and software. Who’s better? When it comes to web services, who’s worse?
Not Google, that’s for sure. While the search giant struggles for relevance in smart phones it makes giant profits in search. And nothing else.
Apple’s forays into web services haven’t met with the same stellar excellence as hardware and software. MobileMe. Ping. Apple Maps. All blemishes of the third kind.
Here’s the problem with all the criticism of Apple’s failed web services efforts. What? Failed is too strong? Alright, insert struggling instead. The problem is this. Who else makes money in web services?
Google’s revenue and profits come from search advertising. Amazon is big on the web, of course, but even they don’t make money with all their web service technology. Apple may be struggling to define a presence on the web, but who isn’t? Google Maps might be a better product than Apple Maps, but so what? Is Google profitable because of their Maps app? No.
There’s a tremendous herd running toward cloud services and Apple seems intent on staying with the herd, but where is the herd going? It’s sure not heading toward the riches of profits. Apple is wise to do web services step-by-step, integrating where necessary to compliment both hardware and software, but is well advised not to bank on the cloud as having a silver lining.