The New, Smarter Apple

| Analysis

Apple is on a roll. I donit know of any other company thatis been so hot for so long, period. The folks at Apple are releasing great products, selling them around the world, and making oodles of money.

It wasnit always so, and Appleis history is clouding analysis of its present. Apple watchers still describe Apple as an "innovation factory" with a "renegade" image and an attitude that makes it "bad at partnerships." That story line no longer holds water, because Apple has become smarter.

Of course, Apple is -- more than most firms -- very much the expression of its CEOis personal attitudes, so these misconceptions extend to Steve Jobs. Now, I donit know Mr. Jobs (Iive never been invited over for tea), but Iive read and seen a lot of Apple analysis based on commonly held notions about Mr. Jobsi management style, and some of it conflicts with the recent evidence.

Apple has gotten smarter. Steve Jobs has gotten smarter. In the next decade people will write strategy, management, and marketing books based on this period in Appleis history. Thatis because in the last decade, Apple -- and maybe Mr. Jobs, too -- have backed off of some self-destructive business habits.

Branding
Apple has always been good at branding, starting with that now-cliched 1984 superbowl ad. The old Apple brand was, indeed, a renegade, counter-culture company aiming to take down Big Blue. But todayis Apple brand doesnit drive-tackle competitors. The rough-and-tumble ads Apple releases now are more along the lines of the Windows Vista Security spot, and those have a goofy, aw-shucks attitude. Itis not so much about taking down the hegemony as saying, "Hey, having a Mac could solve this problem for you." Thatis more friendly advice than call to revolution.

More to the point, Appleis most successful, branding-heavy ads are really about emotion, namely rocking out and (product) lust. Think of the iPod ads, the new iMac ad, and the iPhone spots. The point isnit how this device will take down the hegemony. Itis not even that you need this device. Itis that Apple is so hot right now, and this product is super-sweet.

That "Apple is Awesome" message is way more durable, and less destructive, than the old message. Itis less easy to twist into self-righteousness, and can be endlessly refreshed and re-debuted. The anti-establishment-branded Apple had a tendency to look pompous, self-righteous, and pride-blind. The smarter Apple is building a brand that appeals without grating.

Partnerships
John Martellaro, TMOis afternoon editor and author of the Hidden Dimensions column, has written extensively about how Apple operates in partnerships. The general thrust is that Apple is reluctant to enter into partnerships -- particularly with large customers -- because it restricts Appleis ability to do whatever it wants, whenever it wants.

Bryan Chaffin, TMOis Editor-in-Chief, says frequently that Apple "likes to control the whole widget." Often, including on an episoode of the Apple Weekly Report last Spring, he uses this statement to argue that Apple will avoid or neuter partnerships with other firms.

Thereis truth in both points, and itis supported by Appleis history. These points, however, are often used in analysis to declare that Apple is bad at partnerships. The smarter Apple, while picky, it is actively looking for partnerships, applying pressure, and producing great results.

I spoke to the CEO of a startup company that owns technology for mobile phone software. The executives at the startup have a relationship with product managers at Apple, and are discussing if the technology is a good fit for Appleis new cell phone business. The partnership may never develop, but the startup says that Apple is paying attention.

Parallels, the company that makes Windows virtualization software for the Mac, received a call from Apple back in 2006, asking to use information about their product on Appleis website. Separately, Iive spoken to folks at a major iPod peripherals manufacturer that maintains a close relationship with Apple. The product teams feel theyire well supported and get the information they need.

And then there are the marquee partnerships. Apple and Intel, by all accounts, have an incredibly productive relationship. Intel has never leaked information about Appleis product plans. Apple has said nothing but a kind word about Intelis execution.

Apple and AT&T have also built a remarkable partnership in which AT&T runs the cell network and Apple controls almost every element (except signal quality and billing) of the user experience. Steve Jobs has explained it thus: "Let Apple be Apple...let AT&T be AT&T."

Where partnerships have been tense, Apple has demonstrated extraordinary judgment in applying pressure. It made a highly publicized argument for DRM-free music downloads, based on sound business, branding and legal reasons. NBC Universal has made initial moves, threatening to pull both its music catalog and TV programs from the iTunes Store, and Apple quickly won the PR battle [start audio at minute 8] by arguing it was protecting consumer interest. Apple is getting so good at partnerships that even the adversarial ones work to Appleis benefit.

The misconception about being bad at partnerships extends to Mr. Jobs, about whom stories of temperamental behavior still occasionally make rounds. His own comments, though, in a recent joint interview with Bill Gates [minutes 55 and 84] suggests he knows how valuable partnerships can be, and that he has identified himself as part of any partnership problems that Apple may have suffered in the past.

Innovation
Thereis an air of Willy Wonka about Steve Jobs. (At press time, Iim the 132,001st person to make the comparison.) Apple watchers often discuss the company as Wonka-like innovation factory. That may at times have been all Apple did -- think of the innovative but flawed Newton, eMate, and Pippin -- but the smarter Apple uses innovation to build coherent products.

This piece posts just a day before Appleis music-related media event. Today, the safest prediction in the tech world is that tomorrow Apple will release new iPods with a multi-touch, iPhone-like interface. The story of multi-touch coming to the iPod is an interesting one, because itis a great case study in how Apple uses innovation.

Multi-touch, as a technology, is very interesting. As Mr. Jobs argues, it puts the entire interface into software, meaning itis completely transient (a single device can have many interfaces) and changeable (the interface can be tweaked over the product lifetime). Products with table- and wall-sized screens suggest itis also scalable (interfaces can be made for devices of varying sizes). Demos of multi-touch tend to emphasize features, like moving, scaling, and rotating of pictures. Itis a sweet feature -- no doubt about it -- but itis not a product.

Multi-touch wasnit developed by Apple, Apple just made it visible. The smarter Apple doesnit think innovation means shipping hot new technologies. It understands you can innovate by integrating features (multi-touch) into coherent products (iPhone). For Apple, innovation is in the design.

Thereis more. With multi-touch, the interface development is all software, and the software is OS X. Assuming Apple releases multi-touch iPods, OS X development will benefit the Mac, iPhone, and iPod concurrently: three for the price of one. Actually, itis better than three-for-one. Software developers know that you generally get a better product if youire designing for more than one client. In other words, your MacBooks get the power saving algorithms of the iPhone, and iPhones run Safari.

Multi-touch is now built into OS X. When I see how well the features work for certain tasks, I can only assume multi-touch is coming to the Mac, particularly when I see things like the new skimming feature in iPhoto and iMovie. Regardless of when or how it happens, you have to respect the efficiency of it all: from the wiggling sea of gee-whiz innovations out there, Apple draws out just a strand and uses it to rethink all of its product interfaces.

The smarter Apple innovates just as selectively as it builds business partnerships. When Apple picks a technology, it puts it to work, using it everywhere it can help solve a user problem. Meanwhile, Apple searches for a new technology, looking to dump the old as soon it makes sense for the product. This is business-smart, because itis efficient. Itis marketing smart, because it keeps the product line cutting-edge yet encourages a consistent look and feel at any one time. And itis just plain smart smart, because it builds tightly integrated, user-focused products.

As for Steve Jobs, his greatest skill these days seems to be patience. In that joint interview with Mr. Gates, Mr. Jobs argues [minute 65] that wild innovation canit happen on the PC because customers donit necessarily want it. When you have something super-flashy, like multi-touch, I can imagine it takes real patience to keep your mouth shut and wait until you have a coherent, usable product to ship.

The Smarter Apple
Apple is smarter. Steve Jobs is smarter. So Apple watchers, letis stop talking about how Apple is a renegade firm, how Apple is impossible to partner with, and how R&D labs at Apple are like Wonkais labs. The reality is much more impressive: Apple is a $20 billion-plus, eye-on-the-Fortune-100 company that looks as smart and nimble as a startup staffed by veteran entrepreneurs.

Ricky is a contributing writer for The Mac Observer. How do you think Apple is mis-analyzed by Apple watchers? Sound off in the comments section below.

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