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October 14, 2010


Time to Break up Apple?

By Larry Walsh

Apple 2010; the 1927 Yankees; the 1986 Celtics

Let’s see, Apple’s stock is at $300 per share, an all-time high and up from $10 per share in 2003; Apple is the second-most valuable company in the U. S., behind only ExxonMobil. The Macintosh is at 10% of personal computer sales and Apple is the third largest maker of personal computers behind Hewlett-Packard and Dell; Microsoft is coming out with Office 2011 for the Mac – which will put it close to par with the PC version; a new version of MacOS is waiting in the wings.

It’s an amazing story. To appreciate Apple’s accomplishment you have to go back to 1997 when Apple was practically in life support and the hated Bill Gates threw Apple a lifeline in the form of a $150 million investment. The uphill climb to the pinnacle of today started there.

Along the way there were many important milestones. Perhaps the most important was the switch from PowerPC to Intel processors in 2006. That went a long way to erasing the price differential, still there, between PCs and Macs. Here are some more factors in Apple’s rise:

Apple is the style leader. Apple has come out with a bunch of different styling looks – like Detroit cars from the 1950s. Remember the silly “Barbie” Macs in different colors? Silly, but Dell copied by offering color inserts.  Good or bad, the styling changes generated buzz and kept interest in the Macintosh alive. The current look of Macbooks is a classic that won’t go out of style right away. There is a coolness factor to having one next to your latte at Starbucks. Never underestimate the importance of the coolness factor.

The  “I’m a Mac, I’m a PC” ad campaign: Hilarious, if somewhat inaccurate and cruel to PCs. But very effective.

The iPod, iPhone and iPad. See coolness factor above. All generate a “halo effect” that benefits the Mac.

Windows Vista. Microsoft’s Windows Vista debacle was a gift that landed in the lap of Apple. But give Apple credit for capitalizing on it. See ad campaign above.

Windows viruses. Now largely abated, viruses attacking Windows left the Mac unscathed – and increased its attractiveness for personal and business users.

Looking ahead, there are some trends that should continue to help Apple. Many young people coming into the workforce want to use their Macs from college rather than a corporate-issue PC. Many companies are adopting BYO computer policies under which these devices are welcome. This trend to embrace heterogeneous end-user devices has been active for several years and Apple is the biggest beneficiary.

The move to client virtualization should further pave the way for Apple inroads in the enterprise – you get to use the device you want while your applications are running on the server.

There’s no denying the genius of Steve Jobs in all this – it’s an amazing thing to watch. But Apple’s current lofty state is more than just a reflection of a brilliant gadget designer. It’s a testament to simply not quitting when things looked very bleak.

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