by , 8:00 AM EDT, August 13th, 2003
Steve Jobs says he's an optimist. That might be obvious to anyone looking at his ongoing fight for a minority position in the computer industry. Then again, he's started two computer companies from scratch, and bought a small little digital animation house called Pixar from George Lucas before there was such a thing as digital animation, at least in most people's minds.
It takes an optimist to do that sort of thing, but Steve Jobs makes a point of claiming that title in a very interesting interview published by BusinessWeek. The interview covers such topics as innovation in the computing industry, or the lack of it, profitability, piracy ("Stealing music is wrong," said Mr. Jobs), and even the future of Silicon Valley. An excerpt from the published interview:
Q: Many tech companies have cut research and development spending because they believe the industry is slowing down. You haven't. Why?
A: What has happened in technology over the last few years has been about the downturn, not the future of technology. A lot of companies have chosen to downsize, and maybe that was the right thing for them. We chose a different path. Our belief was that if we kept putting great products in front of [customers], they would continue to open their wallets.And that's what we've done. We've been turning out more new products than ever before, and Apple is one of only two companies making money in the PC business. We're not making a lot, but other than Dell, we're the only one. Others are losing money -- a lot of money.
Q: Are you concerned that your peers lack fresh ideas?
A: I look around, and I'm pretty stunned at how many successful young companies I see. I look at eBay, and I'm amazed. I look at Google, and I'm amazed. These are some pretty good companies in the making, and they're not just one-product companies -- they're real companies. They're already bigger than some of the great entrepreneurial companies of the past. So I think a lot of people got miscalibrated because of the Internet boom.The rate of innovation now is not significantly different from what I've seen over the last 20 years, if you take out the Internet craziness. I see a recovery in innovation coming out of this downturn. I see some very strong companies that have been built even in these very tough times. And I see some new sprouts popping up out of universities. I'm an optimist.
There is a lot more information in the full article at the BusinessWeek Web site, and we recommend it as a very good read.
All of the hardware vendors competing on price are losing money hand over fist in their PC businesses, except Dell, the other profitable hardware maker. That company spends its massive R&D budget on figuring out how to make PCs cheaper, not innovating new products, and the result is that they can make them cheaper than everyone else, and thus make a profit.
Microsoft is hardly a company we would call innovative, but that company does indeed spend a lot of R&D trying to make new products, and trying to make old products better. They might fail at the qualitative issue (except for the MacBU), but it is Microsoft's enormously high gross margins that pay for that R&D. It is Apple's industry-high gross margins that allow it to invest in R&D, and we believe very strongly that this is the only reason Apple is alive today, and is the only way for the company to differentiate itself from the competition.
Another aspect of this interview that we enjoyed was Steve Jobs taking an ethical stance on piracy ("Stealing music is wrong"), while saying that the RIAA's approach to suing music thieves was not going to solve the problem by itself.