Whenever a company becomes too big and powerful there are calls from critics to break it up. Microsoft experienced a similar cry back when Windows was incredibly dominant and Apple was struggling to survive.
These days we hear occasional misguided cries for Apple to spin off the iPhone. Or, spin off the Mac into a separate company. Betteridge’s Law of Headlines notwithstanding, I cry rubbish. The world already has one Alphabet and that hasn’t worked out too well, has it?
What Is Broken?
It takes little effort to pronounce Apple broken because of how the Mac has languished in recent years. MDN:
No properly-run company can do what’s been done to the Mac – for years – and not be broken. Apple is simply so massive and the iPhone so thoroughly blots out any and all mistakes, that, to the casual observer, the company looks to be well-managed. It is not, and the Mac – along with all of the recent software errors, poor hardware design choices, poor communication with customers, etc. – proves it.
And yet the Mac’s sales continue at a record pace while the rest of the Windows-based PC industry continues to suffer. Critics criticize (yours truly is on the list) while customers continue to buy Macs in ever increasing numbers, so proof of neglect may be more elusive than we think.
David Gewirtz on the Mac:
The conventional wisdom is that Apple just doesn’t have the share of mind to give these machines, compared to the behemoth that is the iPhone. In Q1 2017, Apple shipped just 5.4 million Macs compared to 78 million iPhones.
In other words, compared to the iPhone which gets new models every year, the Mac is an after thought and Apple just doesn’t care about the customer base as much. How does the Mac shape up compared to other personal computer rivals?
The Mac’s $25 billion in revenue is close to that of its rivals. Lenovo, the world’s largest PC maker by unit market share did $6.7 billion in Q4, or an annualized run rate of $26.8 billion. HP did $8.4 billion in PC sales in Q3, which puts it at $33.6 billion annualized. Dell’s PC revenues were stronger, with $9.9 billion in its last reported quarter, or $39.6 billion annually.
Microsoft isn’t even a consideration despite the highly regarded Surface line which continues to suffer in the sales doldrums. Based upon sheer math, it’s hard to see what about Apple or the Mac that is broken. Customers love their Macs, revenue and profits are highly competitive.
Pull An Alphabet
Not that long ago Google, the advertising company, decided to become something else and became Alphabet. In essence, Google spun itself off, but in a different way than Gewirtz wants to spin off the Mac from Apple.
Alphabet’s portfolio encompasses several industries, including technology, life sciences, investment capital, and research. Some of its subsidiaries include Google, Calico, GV, CapitalG, Verily, Waymo, X, Nest Labs and Google Fiber. Some of the subsidiaries of Alphabet have altered their names since leaving Google and becoming part of the larger parent company—Google Ventures becoming GV, Google Life Sciences becoming Verily and Google X becoming just X.
Alphabet, despite all the bets on alpha technology remains pretty much an advertising company. In other words, the spin off idea looked good on a Power Power presentation and a spreadsheet, but the end result is still the same. Advertising is dominant.
All that brings us back to the idea of spinning out the Macintosh business. I know, I know. There are lots of structural reasons why this might not be possible for Apple. The company has merged development groups, macOS and iOS are growing ever closer, yada, yada, yada.
Agreed. It doesn’t make sense because everything Apple makes money hand over fist, so what’s the incentive to spin off the Mac?
Would a stand-alone company on the verge of market dominance ever let its flagship top-end machine languish for five years? What about its most versatile (the Mac mini)? Would it let that machine languish, without even a processor bump, for three years? Apple went two years without updating the iMac, and that’s a top-seller.
Why Apple allows the Mac to languish as it has should be obvious. Apple’s executives are too busy with building new iPhones and managing the growing services business– the lion’s share of which comes from nearly 1-billion iPhone customers– to pay much attention to the Mac. Why? The Mac is so last century. The iPhone is the future.
Hmmm. Think about it for a moment. What if the Mac, the iPhone, iPad, Watch, Apple TV, et al, were merely standalone companies with Apple as the Alphabet-like umbrella? Mac first:
What would happen if a bunch of hungry Apple engineers were let loose on the Mac? What would happen if a whole company were imbued with the fanatic attention to detail Apple is known for, and the fanatic love for the Mac that Apple has cultivated for decades? Would we finally get a new Mac mini? Would there be a touch-screen Mac? Would we have a Surface Studio-like mounting for the iMac? Would there be something new and exceptional introduced to the PC market?
This would be a dramatic change in Apple’s organizational structure, but maybe that’s a requirement going forward. The Mac has languished and no longer leads the industry by example. Sure, sales are good. Sales were better at BlackBerry for years after iPhone launched, but look what happened. Apple Inc would become the Alphabet-like parent of Mac, iPhone, iPad, Watch, Apple TV, Stores, Services, et al and allow each product to run in its own direction.
What would Steve Jobs say?