Kirk: Now, look, Krako, we’re takin’ over the whole ball of wax. You cooperate with us, and maybe we’ll cut you in for a piece of the action.
Spock: A miniscule… a very small piece.
Apple’s business model has changed. It has gone from being a Mac hardware and boutique UNIX company to an ecommerce giant, taxing everything that passes through its portals. How will this affect Apple and its executives and what future is in store for the company?
Often, when a company grows, it does so by spreading out into new businesses. Good examples are Amazon.com and Google.com. Amazon started selling books in 1995. Today, if you want, you can buy clothing, tools, shoes and even cashews from Amazon. As a company expands into the market, driven by its success and brand, it steps on other company’s toes by necessity.
Star Trek: TOS “A Piece of the Action” (Credit: Paramount)
The ability to create enemies out of thin air is the forte of any growing company.
A by-product of working on many fronts is that the founders’ emphasis on hard work can take second place to expedient business decisions under pressure. The emphasis can become shrewd and aggressive decisions instead of just working harder, a trait often seen on Wall Street. Case in point: Apple’s iBookstore only has about 60,000 titles (and that includes project Gutenberg) while Amazon’s bookstore has over 450,000 titles. The reason is explained by a former Amazon engineer: Amazon is willing to do the hard work of conversions to digital format. Meanwhile, Apple via its App store policies can just create money with no effort at all, as witnessed by the recent Sony Reader kerfuffle. Shrewd is the word.
The rate at which Apple is making enemies takes one’s breath away.
Enemies lurk everywhere - it wears one down
To drive the point home, what if Steve Jobs took a dislike to Mister Peanut and started to offer Apple’s own line of salted cashews? Then Apple’s new enemy would be The Planters Peanut Corp. And Amazon because they sell cashews too.
There are rumors that Apple might start selling HDTVs with iOS inside, a true “Apple TV.” Then Apple’s newest enemies would be, to name a few, Samsung, Sharp and Panasonic. While Apple buys billions of dollars with or displays and Flash memory from Samsung, it already competes with Samsung on tablets.
With these hypothetical examples, I hope you see my drift.
The Inevitable Result
How much larger can Apple’s enemies list grow? How does a company with so many enemies stay focused on new products and avoid becoming paranoid? When will the need to undermine opponents at every turn create a company mired in paranoia and bitterness, especially if Steve Jobs is no longer around to enforce focus?
I am reminded of a cool Cold War story I heard. I don’t know if it’s true or not, but it makes my point. You must recall that that each of the three major branches of the U.S. military is always fighting for its share of funding, and each believes it can best protect America.
An Air Force three star General is walking down the corridor of the Pentagon and chatting with his aide, an Air Force Captain. These were the cold war days, so the Captain made a casual remark about how the United States needed to take a harder line with its enemy, the Soviet Union. Quickly, the General stopped, swiveled, and pinned the young Captain against the wall, snarling. “You’ve got it all wrong, son! Listen carefully. The Soviet Union is our opponent! The U.S. Navy is our enemy.”
In 2005, Apple had one enemy: Microsoft. And that war was lost in terms of numbers, so Apple continued its mantra of being the best. After all, branding school says that there are only four basic brands: the first, the biggest, the best, or different in a special, appealing way. Apple focused on great hardware and attending to the hard work details like: Active Directory plug-in, MS Office compatibility, POSIX compliance, a great X-Windows experience, and so on.
Now, with Apple’s expansion, who can claim that the iBookstore is the best or biggest ebookstore? Or that The Daily, which Apple has a stake in, is the best newspaper? Or that Ping is the best social network? Or that MobileMe is the best cloud service? Dilution of brand is always a problem for growing companies.
Apple Competes with its Customers
By taking a piece of the action, a cut, via the iTunes, App Store and now MAS, Apple competes with everything we do. That very act interferes with the creative mind that Apple fought so hard to engender amongst us.
If, being an Apple creative type, I come up with a great idea for a news delivery system, Apple has the option of either tax my profits out of existence or undermine it by energetic support for something it has a stake in, say, The Daily.
If I come up with a great idea for a music social network, Apple will counter it with, say, Ping.
If I come up with a competing way to sell music, Apple will consider that a threat, (like Spotify) not a blessed creative venture using Apple products.
Of course, Apple doesn’t mind at all if millions of developers sell 99 cent apps, even some silly ones, and make decent money. A healthy ecosystem is, after all, fundamental to a getting a pice of all the action.
This is why Google tried to buy both Groupon and Twitter. They threatened the agenda of Google, so absorb them, morph them, exploit them. The founders of those companies, realizing their future potential and wealth, wisely backed out — and will likely become the next generation’s Bill Gates and Steve Jobs
The Brilliance of the Past & Unexpected Future
Microsoft’s brilliance, and the way it got them rich, was by imposing a Windows “tax” on almost every PC sold on the planet.
Cough it up!
Apple’s brilliance, and the way it got them rich, was by building spectacular, desirable hardware, then imposing a tax on almost every app (and book and newspaper and song). And now they appear poised to tax every purchase we make with NFC technology and digital wallets. Apple was beleaguered for so long, we’re still occupied reveling in their success. But that’s okay only for a little while longer. Time to move on.
Modern companies like Facebook, Groupon and Twitter will do everything they can to avoid giving Apple a piece of their action. That desire, that business instinct virtually guarantees that Apple will miss the Next Big Thing, created by the unexpected companies of the future that bypass Apple, as Apple is bypassing Microsoft, and become the new, dreaded enemy. But life will go on.