RSSWhy Apple succeeds, and always will
By Joe Wilcox | Published December 9, 2009, 9:45 AM
Simply put: Apple doesn't play by the rules. It reinvents them. Apple applies what I call "David Thinking" to its broader business, product development and marketing. Apple is David to Microsoft Goliath -- and other ones, too. Goliath plays by one set of rules. David choses to change the rules, which favor his strengths rather than those of Goliath.
David Thinking is most provocative and surprising when Goliath acts like David. After all, David sometimes becomes Goliath; Apple is a giant in music with iPod and iTunes Music Store. But David turned Goliath also risks making mistakes that would allow another upstart advantage. Today, Apple is both David and Goliath, depending on market.
March 11, 2009, The New Yorker magazine story "How David Beats Goliath" is what got me to looking at David Thinking and making the realization this is how Apple operates its business. Writer Malcolm Gladwell could easily have written about Apple, but his examples are 12-year-old girls basketball and T.E. Lawrence.
Gladwell tells how obvious losers are winners more often than might be expected: "David's victory over Goliath, in the Biblical account, is held to be an anomaly. It was not. Davids win all the time." Gladwell explains why: "The political scientist Ivan Arreguín-Toft recently looked at every war fought in the past two hundred years between strong and weak combatants. The Goliaths, he found, won in 71.5 per cent of the cases. That is a remarkable fact."
David wins almost 30 percent of the time when playing by his opponent's rules. But the percentage dramatically increases when David changes them. Gladwell explains:
In the Biblical story of David and Goliath, David initially put on a coat of mail and a brass helmet and girded himself with a sword: he prepared to wage a conventional battle of swords against Goliath. But then he stopped...and picked up those five smooth stones. What happened, Arreguín-Toft wondered, when the underdogs likewise acknowledged their weakness and chose an unconventional strategy? He went back and re-analyzed his data. In those cases, David's winning percentage went from 28.5 to 63.6. When underdogs choose not to play by Goliath's rules, they win, Arreguín-Toft concluded, 'even when everything we think we know about power says they shouldn't.'
Nearly two-thirds of the time is a remarkable figure. The approach defines almost every line of Apple's business.
Steve Jobs as David
Apple isn't a team player, particularly under the two chief executive tenures of cofounder Steve Jobs. The examples of Apple's rule-changing behavior are simply too numerous to recount. So I'll start with a few around the 1984 launch of Macintosh:
- While Compaq and other clone upstarts sought to imitate the IBM PC, Apple defied it. Macintosh's graphical user interface, mouse and other features defied convention.
- The "1984" commercial launching Macintosh aired only once, bucking traditional marketing approach of repeated airings to build brand and product awareness.
- Apple bought out every single ad space in the Newsweek 1984 election issue -- 39 pages.
- Macintosh came bundled with Apple applications MacPaint and MacWrite.
Apple's business was at its worst -- closest to expiration -- during the early 1990s, when the company played more by rules Microsoft established. Apple had put on Goliath's mail and brandished his sword. For example, Apple embraced clones, allowing third parties to release their own hardware running Mac OS. The seemingly sensible strategy was anything but. Apple's attempts to play by DOS/Windows PC rules put the company at grave competitive disadvantage. Steve Jobs' late-1996 return to Apple and ascension to interim CEO in 1997 set forth dramatic changes in the company's business strategy. Among Job's first actions: The end of Mac cloning. Only Apple would make and sell Macs.
Since Jobs' return to Apple, there are so many examples of Apple changing the rules, it's hard to find ways the company played by Microsoft's -- or other Goliaths' -- rules. Some examples:
- Streamlined product SKUs, from 1997 to present: Following Jobs' second coming, Apple reduced the number of products in each family. Example: Today there are three Mac notebook families -- one MacBook model, five MacBook Pro models (at different screen sizes) and two for MacBook Air. Popular convention is to offer more product families and SKUs. The counter-culture approach lets Apple streamline manufacturing and distribution while maximizing margins.
- Bondi Blue iMac, released 1998: Some Windows PC OEMs offered all-in-one designs, but none like Apple, which dumped all the legacy ports for USB and FireWire. Hundreds of translucent products followed the design trend established by iMac.
- Apple Store, first opened in 2001: Apple moved into retail during a recession and while Gateway prepared to shutter, and later closed, hundreds of stores. Everything about Apple Store, from design to retail staff training and more, defied computer retail convention. Genius Bar was a genius concept for servicing customers and endearing good feelings about Apple products. Goliaths Circuit City and CompUSA later liquidated, while Apple Store is a vibrant retailer.
- iPod, launched in 2001: Apple redefined the nascent MP3 player market with the click wheel and hard-disk storage. Then Apple reinvented the device with iPod nano and again with iPod touch. Companies more typically seek to preserve the status quo they create. Apple has chosen to instead repeatedly reinvent iPod.
- iPhone, launched in 2007: Like David, Apple played to its strengths, such as software and industrial design, rather than play by rules established by handset carrier and manufacturing Goliaths. Examples include use of capacitive instead of resistive touchscreen, multitouch user interface, synchronization and control of software, software updates and services (rather than letting the wireless carrier control them).
- Recessionary pricing, now: Apple pricing has long defied convention. The company prices high, choosing not to compete with Windows PCs in the sub $500 market. The approach preserves the brand's value and margins. No time has Apple's higher pricing been more obvious than during the current economic crisis. So far, Apple's rule-changing approach defies low-pricing logic.
Microsoft was once David
At one time Microsoft changed the rules, too, when David to the IBM Goliath. For example:
- Microsoft cofounder Bill Gates admonished early developers in 1976 "An Open Letter to Software Hobbyists. The convention had been to share code, which he called stealing.
- Gates and cofounder Paul Allen licensed what would later be called MS-DOS to IBM in 1981, rather than selling the software. The approach broke the end-to-end hardware/software model and later flourished a robust IBM PC-clone market.
- Microsoft's approach to partnering, particularly software developers and resellers, put more money in others' pockets. In the IBM model, money flowed up. By contrast, Microsoft shared the wealth.
There are many other examples how Microsoft defied convention over the years, how the company changed the rules. No longer. Microsoft seeks to preserve the status quo it established through success and becoming Goliath. For example, top perennial design principle for Windows is backward compatibility. It's the preservation of the past way of doing things.
Status quo thinking prevents Microsoft from being competitive and disruptive like Apple. Goliath thinking is so pervasive, Microsoft fails where it shouldn't. Microsoft will not beat Google in search as long as it plays by the information giant's rules. Microsoft must change the rules of the engagement, leveraging its strengths against Goliath Google. Gladwell writes in The New Yorker:
David, let's not forget, was a shepherd. He came at Goliath with a slingshot and staff because those were the tools of his trade. He didn't know that duels with Philistines were supposed to proceed formally, with the crossing of swords...He brought a shepherd's rules to the battlefield.
Microsoft must leverage its strengths, by battling Google in an unexpected way. Perhaps Microsoft should apply Apple's David Thinking to search. Apple's sales priority is profit share rather than market share. Maybe Microsoft should seek to make more money off lower search share, as Apple does today in the personal computer market.
Yesterday, at the Loop, Jim Dalrymple asked: "Apple can be copied, but can it be beat?" Apple can be beat if its David Thinking approach can be copied, I assert. But competitors let Apple set the rules in markets where it competes.
So far, Apple has resisted Goliath thinking, consistently competing, at least under Steve Jobs' leadership, in ways that emphasize its strengths rather than complying with rules set by others. Even as Goliath, Apple has consistently changed the rules to its advantage. The challenge ahead: Resisting the temptation to protect the status quo -- to truly be Goliath.
[Editor's Note: A different version of this post appeared on Joe Wilcox's personal Website in May 2009. That version is no longer available-- only its revised replacement here exclusive to Betanews.]
Why Apple succeeds, and always will? Hmmmmm, wasn't there a time in the late 80s/early 90s when they nearly went to the wall?
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|Apple sells you a computer and you are secure that they will respect it for as long as it works, while Microsoft sells you always a provisional product wuth an always shorter life cycle. You must buy updates or new computers in a short term.
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|"...an always shorter life cycle."
Excuse me? Apple has the shortest life cycles with regards to hardware and software than any other company that I'm aware of.
Need I remind you that Windows XP (as one example) has been around since August 2001, is still currently the most widely-used OS on the planet... and is being supported until April 2014.
Short indeed...
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|Thought fishing season was done for the season??
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|Hahahahaha... Apple will succeed in NOTHING
Windows XP has taken away from Mac (and Linux) loyalists their prime reason at the time to use Macs, STABILITY.
Windows 7 has taken away from Mac loyalists their newest two prime reasons to use Macs, sexy GUI and non-annoying security.
It's plain to see that in the future, Microsoft will have BETTER THAN MAC'S TIME MACHINE back up solution (to both the cloud and to physical media) and better anti-malware (Macs will get a flood of viruses the moment the Russians realize a very simple fact = it's very lucrative stealing SPECIFICALLY Mac users' personal data BECAUSE THEY ARE RICH B*ST*RDS!).
If you follow MS research you'll know that the myth "only Apple innovates" is pure BS. Apple, being the underdog, takes more risks with stuff that Microsoft prefers to cultivate in their labs a few extra years. Apple CUTS CORNERS to give you a sexy GUI on a mobile phone, so the WEAK CPU can still give you a pleasurable experience, without critical features as multitasking and app-to-app-to-desktop communication. Microsoft, on the other hand, knows that time is on their hand -- they can (and they do) create the absolutely most amazing mobile OS and release it in 4 or even 8 years, and IMMEDIATELY kill EVERYONE AROUND due to CLEAR CRITICAL IMPORTANCE of integration between desktop/work and mobile. Eventually of course a mobile phone will be pure Windows OS based, so only the most clueless would use any competing platform when ALL OF THEIR DESKTOP/LAPTOP SOFTWARE could be run also on their mobile device, with their data readable/workable without any convertion/emulation/different presentation needed...
Apple is doomed to failure. A little gay phone and portable media player ain't gonna help them survive the wrath of Goliath. The magical number of followers, that Apple must have, which translates into the magical amount of revenue, will NOT BE REACHED in the SHORT years to come... That's the fate of those who are serial rapists. They rape their users, they rape their developers, they rape their content makers (media content), they rape their hardware partners. They actually HAVE to rape to survive. Of course Microsoft will just wink at all of those and it's GAME OVER.
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|Thanks for the chuckle, I enjoyed your rant but it's clear you have no idea why OS X is worth using.
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|It's clearly worth using, especially if it was much cheaper than Windows -- only then would I allow myself to be SEVERELY RESTRICTED. But to PAY more for LESS (all things considered) -- nah. I'll leave it for you to go with the false promise of "high pricetag MUST mean better, right??". It's a doomed product from a completely doomed company.
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|"Why Apple succeeds, and always will"
Wow, I can't believe Joe Wilcox wrote such an awesome headline. Anyway, it's like I've been saying all along, Apple is the greatest company on earth led by the greatest CEO on earth. An Apple a day keeps Windows away.
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|Microsoft has a history of thinking like David and winning markets. Unfortunately its so rare most people don't remember or even notice.
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|Don't worry, after Steve Jobs is gone, a line of "brilliant" managers subscribing to current American philosophy of "don't fix it if it ain't broken" will run the company to the ground in no time.
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|Stop hating and for the record Steve Jobs will live forever.
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|True, Apple has a record of selecting less than perfect CEO's when Jobs wasn't around. Why would anyone expect them to do otherwise next time.
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|@internetworld7 That's an even bigger claim than I made. Isn't "forever" longer than "always?"
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|Steve Jobs is the only living person who can beat Chuck Norris.
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|"Recessionary pricing, now: Apple pricing has long defied convention. The company prices high, choosing not to compete with Windows PCs in the sub $500 market. The approach preserves the brand's value and margins. No time has Apple's higher pricing been more obvious than during the current economic crisis. So far, Apple's rule-changing approach defies low-pricing logic."
So they sacrifice potential long term customer gain at the expense of high margins?
It could be possible that some breakout product comes along and Apple is left at the very high end and customers won't even consider them.
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|@"Breakout product" is one way David beats Goliath.
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|I find Apple's recent success with it's iPhone/iPod products well deserved. However, I hardly feel like it's time to hail them as the new messiah, or follow the betanews trend of decrying Microsoft as the debbil.
I seem to remember Apple having some very, very hard times not too long ago, the great thing is how things can change.
The scary thing is how things can change.
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|@jc_lvngstn "The great thing is how things can change. The scary thing is how things can change." Well said. Apple's two auras of success came under Steve Jobs leadership. If he's David -- and Apple's only one -- the "Always" in my title may be shorter computing years after he leaves the company.
There's no "decrying Microsoft" at Betanews. I'm one of Windows 7's biggest supporters -- in the news media. But a company can squander its wealth of past innovation, which has been Microsoft's practice for too long.
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|Joe, I'm a supporter of Microsoft but Microsoft has never been an innovator. Even from the beginning (and I was around) Microsoft products were always middle of the road or good enough but a fair price. There were better more innovative products (Apple included) back in the early DOS day but the innovators were trying to squeeze blood from a turnip so the hesitant business community went with the safest product (as they normally do). The same is true with the Word Perfects, Ashton Tates, Borlands and other office products, Microsoft was there with a Good product at a fair price.
So it went with Windows 3 making PCs good enough for home users. Innovation has lots of things going for it but "good enough at a fair price" always wins.
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|@rebradley Each of those companies made a strategic mistake that Microsoft exploited. Is it now Microsoft that has made the strategic mistake, in mobile, allowing Apple and Google unexpected advantage? I believe so.
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|Good article, Joe. One point about this:
"Everything about Apple Store, from design to retail staff training and more, defied computer retail convention. "
You're right that the Apple Store experience defied *computer* retail convention - but a lot of the ideas behind Apple store bare an obvious relation to Gap and J Crew. And that's perhaps not surprising when you remember that Mickey Drexler, who was CEO of Gap (and was behind its massive rise), and is current CEO of J.Crew, has been on Apple's board since 1999. That was a mere two years before Apple launched its first retail store.
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|@ianbetteridge Good point, and there are similarities in Apple Store layout, design and display to Gap and J. Crew. Now who's copying whom? :)
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|I find the David v Goliath metaphor strained to bursting.
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|Have a monopoly and paying off congress people is NOT new.
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|Apple has made alot of money but because of it's high prices will always be David. Mirosoft shouldnt be called goliath cause it's just so unstopable at this point. Sure it has bad moments like Zune, which yet it a great product. But it's software is what makes it king. With 95 percent of the world running microsoft, they have nothing to fear. Regardless if failers like Vista. The people still want microsoft. Either cause they just dont like change or cause they dont wanna change or whatever. Fact is not even the mighty steve jobs has managed to put a dent in microsoft sales.
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|I think it is very true that the instinct to protect one's own achievements are one's biggest inhibitor to advancement.
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|@Viking369 Well said. That should be in a book of quotables.
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|Beta News seems to becoming an apple fanboy!!! at least have a little objectivity some times!!
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|Yeah, we know all this about Apple. Tell us something we don't know. Isn't there an all Apple all the time website to post this on? Or do you just like the negative feedback you are getting?
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|"Apple applies what I call "David Thinking" to its broader business, product development and marketing. Apple is David to Microsoft Goliath -- and other ones, too."
David slew Goliath. Is this what you think Apple is going to do With Microsoft? Seriously (I really don't think you're *that* stupid)? ...or is this where your literary allusion/comparison completely falls apart?
Of course...the fact that you're talking about 2 totally different and unrelated companies doesn't bode well either.
Microsoft sells software that can then be installed upon and sold on virtually any computer in the world by any manufacturer. Apple sells hardware upon which they install software that can be installed on nothing else by anyone else.
See the difference yet?
Apple isn't pushing software, they're pushing hardware. Microsoft isn't pushing hardware, they're pushing software.
How about now?
Comparing the two as opponents in the same field is absurd bordering on stupid. Comparing the OSes is fine... software vs software, or comparing Apple to Dell (hardware vs. hardware).
Comparing them as companies in the same field of business, though? You'd have to be utterly clueless. But, hey... That's what passes for journalism here nowadays, so I guess when we want to read about things the writers actually have the vaguest clue about we can just go to Ars Technica. My guess is most people come here just out of morbid curiosity and to play anyway.
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|Well put.
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|"My guess is most people come here just out of morbid curiosity and to play anyway."
Admittedly, that's about the only reason I continue to visit these days... and I wish it weren't so.
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|Heh...
Truth hurts. Sadly, not the people it should. They're still getting our hits.
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|Well put PC_Tool. You clearly made sense of the term, "Comparing Apples to Oranges"
Also comparing a Mac vs Dell(fill any PC manufacture desire). If a hardware fails, I love how people blames Microsoft that the hardware failed.
Just watching PC_Tool and yountmj commenting keeps me chuckling. lol
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|@sudbury: Think Waldorf and Statler (hopefully you've not been denied the pleasure of The Muppets...)
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|Funny, when I was a kid people used to write "Why GM succeeds, and always will." Of course that was then and this is now. Today people look at Apple in the same way and GM's fate falling upon Apple would not surprise me. Why? Apple looks at their customers with the same disregard as GM used to.
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|The demise of GM started back in the 60's & 70's when they refused to believe that Toyota and others were serious competitors. From that point on, they never innovated. AAPL is probably the most prolific technology innovator in existence today. No comparison.
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|@techno_bob: GM never really innovated, unless tail fins were innovative.
They resisted efficiency, safety, and colluded with the oil industry and against smaller car companies like Tucker.
It was only when sales started to drop that they picked up on features that had been in Europe for 20 years already.
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|Someone needs spell-check ;)
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|I don't see how one site can select such a great editorial piece on the one hand (about the connected problems of online publishers and web transaction security) and then this...thing. What do you even call an opinion piece that makes a huge (and possibly compelling) assertion with no support? Is that belabored and over-extended analogy about the past supposed to make it obvious that Apple will always succeed? To make a case that putting a click wheel on an mp3 player or opening retail stores are rule-breaking is kind of laughable; those things are smart, not rule-breaking. This has all the signs of someone so overcome by Apple's own marketing (i.e., we are rule breakers--buy our products) that they are not able to offer insight about their business model. And therein may lie the real reason Apple will always succeed: their marketing is so potent that people cannot think clearly in its sway.
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|@AngryAzul I think you miss the point. I'm not "overcome by Apple's own marketing." The point is how companies that change the rules can succeed against larger and older successful competitors. Google is another example of David Thinking, as it uses "free" as a business model that undermines the most sacred of informational institutions and established monopolies like Microsoft. But Google also has become Goliath, at least in search, and there it's already doing things that protect the status quo it has established.
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|If they release OS X to PC manufacturers then they will be unstoppable!!
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|Not...
They tried this, remember? It damn near killed 'em. Apple makes it's money from hardware, if they allow others to install OSX on hardware they did not sell, they *lose* the largest chunk of their revenue.
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|@Tool: EXACTLY... Why doesn't anyone else get this?
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|And they would need to support a crap load of new drivers. Everyone would be stopped at a "Screen of Death" (90% of the reason a Windows box has problems, some crappy 3rd party driver).
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|LOL... like the old sad faced mac boot error screens? I miss those. So much more descriptive than the typical BSOD. ;-)
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|"Always will"...nobody has predicted future nor will....12 years ago Yahoo was king of search...see what happened...
Always will....my foot...
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|Think "Always" in computing years and IF Apple continues to defy convention.
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|Okay, how long is "Always" in computing years? This sounds a lot like backpeddling or making your prediction vague enough as to be meaningless.
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|Great story. Many people forget that Microsoft really established the model for selling software licenses. Before Microsoft, most large software applications came from the hardware vendors (think mainframes and minicomputers). According to legend at the time, software at IBM was simply given away to help sell hardware. But Microsoft created a very profitable business of selling software. In other words, Microsoft was the maverick of the day! Hardly the case now - they are the staid, acceptable choice. "No one got fired for buying IBM" is now "No one got fired for buying Microsoft". But this is costing Microsoft mindshare among students and home buyers who want to "Think Different".
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|think about how many times this exact same article has been written on blogs, 1000x over, Wilcox offers up nothing to Betanews as far as i'm concerned, he constantly proves that point
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|And yet we continue to read and post, proving that these articles are a draw even to those of us who find them either filler or flamebait.
If it was actual "news", I'd be less likely to complain. I have not enjoyed watching this site's transition from being news about beta software to being a news site with the prefix "beta". The current direction makes me think a new name is due, but "BetaOpEd" doesn't flow off the tongue. At least there's still the nice little sidebar of software on the main site to keep it somewhat relevant...
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|@AshG That underdogs win against larger opponents in 63.6 percent of engagements most certainly has not been widely written about, nor has it elsewhere been applied to Apple -- or even Microsoft. The how they win -- by changing the rules to suit their strengths -- isn't obvious, or more companies would adopt such a strategy.
Some startups apply David Thinking and win. What's remarkable about Apple is that it continues to define the rules even as its business grows stronger. By comparison, Microsoft is unremarkable, following the more typical path of going from game changer to status quo rule protector.
That said, some of Microsoft's best recent development work comes from internal groups working on incubation projects. These internal startups change the rules, defying Microsoft popular corporate convention.
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|they have to get their Hits somehow
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|Nice flamebait, Not taking it
honestly, what exactly is the point of this article, clear that up for me
'Why Apple succeeds and always will'
is this something that really needs to be written? what do we gain from it as readers
and why are you recycling your old storys from May?
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|@artfuldoga The point is David Thinking, which Microsoft should do a lot more of. This post isn't meant as flamebait, so good you didn't take it.
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|Want to know why Microsoft doesn't use "David Thinking"? Just look at the overwhelming response to Vista. People DO NOT LIKE CHANGE. So it is actually more profitable to stick to the same just as Apple and Microsoft have done for years now.
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|@shadowlance: You're right, people are resistant to change. That really had nothing to do with the public's perception of Vista, however. Vista was bad out the door, not properly marketed and MSFT was not ready to accept that XP would be its own enemy when they released Vista.
As for MSFT adopting "David Thinking", it could work, but never in the operating system or PC markets. They kind of shot themselves in the foot by creating an operating system that is able to run on nearly any device. They would have to apply this type of thinking to their other ventures; Office products, education, innvoation (MSFT Labs) and such in order to really change the rules and shake things up again.
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