It happens in business, government, and almost any organization. What happens to a successful young company is an age old, time honored transformation that often goes from the scrappy upstart with ideals and ethics, which changes over time to become a fear-mongering, greedy corporate entity which will do anything to survive.
Apple has a number of major competitors, all different than Apple and each other, yet quite similar to each other at a basic level. Let me take Microsoft first. What is Microsoft? It’s a software company that has prospered for two decades on Windows and Office.
What else is Microsoft? Fearful and greedy. How else do you explain the company’s tens of billions in losses to diversify itself beyond Windows and Office? Microsoft is a game platform, an online services platform, a search engine platform, and now a hardware maker (notebooks, tablets, smartphones); all far removed from the core competency and cash cow, Windows and Office.
How has that diversification (a euphemism for fear and greed) worked out? Microsoft’s history is littered with one failed new venture after another, to the tune of tens of billions in losses, covered up by massive profits from the core competency.
Next up is Google? It’s a search engine advertising company that has prospered mightily as the internet has become ubiquitous. What else is Google? Fearful and greedy. How else do you explain the company’s tens of billions in losses to diversify itself beyond search engine advertising which is highly profitable? Google has become a mobile OS platform, a notebook OS platform, a mobile application developer, an occasional hardware maker; all revenue streams far removed from the core competency and cash cow, search engine advertising.
How has that diversification worked out? Google’s history is littered with one failed venture after another, to the tune of many tens of billions in losses, and, like Microsoft, covered up by massive profits from the core competency.
What Of Apple
While Microsoft and Google seem to be in a race to diversify the core revenue streams and profit centers at any cost whatsoever, displaying their fear of competition, and their inbred greed to make ever more money by spending ever more resources in many failed attempts, Apple seems intent on remaining Apple.
What is Apple’s core competency? One could argue that it’s the iPhone, which now represents about 70-percent of the company’s revenue and profits, but allow me to argue that the core competency is artistic design and engineering. Apple builds products that create an emotional bond (the good kind; unlike Windows) with the customer. It’s the value of that emotional bond, that feeling a customer has when using an Apple product; Mac, iPhone, iPad, iPod, et al.
Apple knows the value of owning the premium end of the product spectrum, regardless of product, and works diligently to craft devices which have a usable feel that plays on the emotional relationship with a customer. That enables Apple to charge a premium for the company’s products, which results in both an ongoing diversification, and enormous profits.
Wait! What? Diversification? Yes. While the iPhone has become wildly successful in revenue, profits, and unit sales, every major product at Apple is a huge money maker when compared to competing products? iTunes? No one makes more money selling media than Apple. Mac? Half the PC industry’s profits on less than 20-percent of the industry’s marketshare. iPhone? Less than 20-percent of the smartphone industry’s marketshare nets Apple more than 90-percent of the industry’s profits.
What about greed and fear in Cupertino? It’s there, but less obvious; somewhat obscured by Apple’s tremendous financial successes. Apple is less interested in being a player in every product category in technology than it is in being the de facto leader (profits) in each category. Fear? Apple seems more afraid that the company will become a soulless drifting shell of a company (as was Disney for a decade after founder Walt Disney died), and that fear drives the company to design excellence.
Unfortunately, Apple’s penchant for great industrial design does not apply to software and online services, which it treats as second class citizens to the world class hardware it makes. Apple is a hardware company which merges usable, friendly, capable software into a product which is more than the sum of the parts. Except for online services which are treated as afterthoughts; not enough fear, not enough greed, and not enough pride.