Why doesn't anybody copy Apple?

Apple’s products are the envy of the world. They have been spectacularly successful and are widely imitated, if not copied. The expectation that precedes a new Apple product launch is only matched by the expectation of the replication of those products by competitors.

This cycle of product mimicry was succinctly summarized by Marc Andreessen regarding a rumored Apple TV product:

And once the television launches, everyone will scramble to copy it. “There’s a pattern in our industry, Apple crystallizes the product, and the minute Apple crystallizes it, then everyone knows how to compete.”

This idea that the basis of competition is set by Apple and then the race is on to climb the trajectory of improvement is so well understood that it’s axiomatic: “It’s just the way things are.” Apple releases a product that defines a category or disrupts an industry and it becomes obvious what needs to be built.

But what I wonder is why there isn’t a desire to copy Apple’s product creation process. Why isn’t the catalyst for a new category or disruption put forward by another company? More precisely, why isn’t there another company which consistently re-defines categories and repeatedly, predictably even, re-defines how technology is used.

Put another way: Why is it that everyone wants to copy Apple’s products but nobody wants to copy being Apple?

Note that I don’t suggest that there isn’t a capability to copy. It may or may not be possible, but capability comes after desire and without desire there can be no capability. What I’m suggesting is that there isn’t a desire to “be like Apple”. If there were a desire, we would be seeing a massive search and debate into what makes Apple successful. Management consultants would be pounding the pavement pitching the “Apple way”. Wall Street would be sizing up companies to a standard of “Apple-ness” and rewarding those who conform and punishing those who don’t.

None of this is happening. I can think of two reasons why:

  1. Apple is not to be imitated because it’s not worth copying. I.e. Apple is not a successful company.
  2. Apple is successful but Apple cannot be copied because its success is a magical process involving sorcery.

There is a great deal of evidence for the first hypothesis. The idea of Apple being successful is not something reflected in its stock price. Being valued at a lower P/E ratio than its competitors, and indeed lower than the average company in the S&P 500, indicates that to whatever degree Apple was successful in the past, it’s not seen by the vast majority of observers as successful in the future (no matter when you choose to make this observation).

Why should one bother copying Apple if it results in being punished with a low valuation? You work really hard at innovation and then that innovation becomes commoditized very quickly. Why should one bother?

And yet if we look outside the investor community, especially if we ask operational managers and entrepreneurs, there are some who would say that Apple is actually a success story. However, when asking innovation practitioners what makes Apple successful the answers regarding the causality of this success border on the mythical. Answers which reference “skills”, “culture” and “teams” abound. The culmination of this hypothesis is the “chief-sorcerer” theory of success which places one magician in charge of casting all the right spells. These resource-defined explanations are unsatisfactory because they are vague. Without specificity they don’t help us understand why they can’t be copied.

But what about Apple’s own opinion of what makes it tick?

Bill C. Shope: How do we think about Apple’s culture of innovation today?

Timothy D. Cook: Innovation is deeply embedded in Apple’s culture. The boldness, the ambition, the belief that there are no limits, the desire among our people to not just make good products [but to] make the very best products in the world. It’s in the values. It’s in the DNA of the company.

Now if you look at some essentials for innovation, there is no formula.
If there was a formula, there would be a lot of companies that have a lot of money that would gone out and bought their ability to innovate.

Some of the essentials for us are skills and leadership. Apple is in a very unique, and, in my view, unrivaled position because Apple has skills in software, in hardware, and in services.

[…] arguably, where you can innovate in hardware, [where] you can innovate in software, [where] you can innovate in services; the real magic happens at the intersection of these.

And you know, the iPad is very magical. And it’s exactly because our company was doing all of those things. And so for many years this idea … [which] some people call vertical integration, … it was out of favor. People thought it was kind of crazy. And we never did.

And so through all of those years, we continued to build. And these skills, this isn’t something you can just go write a check for. This is something that you work decades for. Building this experience. And so I think we bring that. I think we’re unique in that. I think we’re unrivaled in that. I think there are people trying desperately to catch up in that. And I think they’re finding that it’s not so easy to do.

Tim Cook refers to integration and a great team as unique Apple advantages (but also note the references to magic and belief.) It’s a better explanation but it is still hard to understand why nobody copies this approach. Integration is something that can take a long time, but it is possible with a Herculean effort. A few companies are starting to make moves in that direction (e.g. Microsoft.) But efforts are half-hearted. There is no “move the Earth” panic to become an integrated company from Samsung, Google or Microsoft.

Maybe others haven’t quite balanced both the cost and the benefit of being Apple. It’s clearly still mysterious and unclear why one would want to do this. It’s much easier to use what you already have and how you operate to copy what Apple produces rather than how they produce it.

My own suspicion is that Apple is more aware of what makes it special than they are letting on. In other words, I believe that Apple is self aware but being careful not to share what it knows. However, as Tim points out, it’s not a formula. There is no silver bullet, no single trick.

It’s complex, it’s subtle, it defies explanation but it’s not magic. It’s a process that requires a degree of faith and fortitude. It’s collecting but ignoring data and trusting judgement when data tells you to move in a different direction. It’s a lot of willful rejection of conventional wisdom. It’s asymmetric approaches to competition. It’s art as much as science. And most of all, it’s a lot of mind-numbing polishing while trusting that only by doing great work is survival even possible.

  • adamhodgkin

    Are there companies that have a similar approach in different fields? Dyson in vac cleaners. BMW in high-end autos. Ang Lee in films?

    • I’m not convinced that making a better vacuum cleaner, a better car or a better film qualifies as new market disruption. It’s important to appreciate the sort of innovation where the need for a car, a cleaner or a film is questioned and the answer is negative.

      • Noah Berlove

        I think you are setting the bar a bit high. To which Apple products are you applying this criteria? I do not think this applies to any Mac, the iPod or iTunes. Maybe the iPhone in that it focused on areas drastically under-served by then current smartphones. The iPad did launch a new category of products, though I could argue its just a better portable computer.

        That is not to say these products were not innovative, they certainly are/were. I think the key is whether the ‘better’ products expands the market. I don’t think car sales are up because BMW makes better cars, while computing device sales have expanded significantly since the launch of the iPhone and iPad. This ties in a bit to your comments in the latest Crticial Path on Tim Cook’s recent remarks. The question is not how do you sell your products to billions of people, but how to come up with products that billions want to buy.

      • Ian Ollmann

        There were many who questioned the need for a cyclonic vacuum cleaner. It was expensive, but better, and it sold well. I see a parallel with the iPhone.

  • This is a great question and I believe it has to do more with the cult of personality created around Steve Jobs over the past decade than it has to do with any apparent lack of success over at Apple Inc: simply put, I think Jobs’ role in re-setting Apple’s culture is well-known and understood, but not many appreciate the long-lasting influence such changes at the company-level have had and will continue to have for the foreseeable future.

  • Ever since Larry Page took over at Google there has been an, Apple-like transition. Unifying businesses, focusing the company and even embedding design in their products. Many didnt like it or understand it at first. He even gave those employees the ultimatum, join us for the ride or get out. Google still has work todo during their transition, but I think a close look at Google reveals they are trying to operate more like Apple in their own way. (If that makes sense.)

    • Dan Andersen

      It seems to me that Google remains as undisciplined and as unfocussed as ever.

  • Didn’t Steve Jobs say what the secret was? The secret was in learning to say No.

    But he was the one who said No. Who at other companies have such a vision? His first No was the Consumer/Pro Desktop/Notebook graph. It all started with that. One he pared Apple down to those essentials, and got it on that foundation, he could have the luxury of doing something like the iPod, which was outside the graph. And that success allowed them more room to dream.

    Apple has in fact veered from his original earlier thinking of the “desktop as a media hub” (which came with the iPod). It seems to be killing the desktop now.

  • Destructorio

    Isn’t it just because, given that Apple exists, it’s just easier to copy the product? Who wants to be Apple anyway – you create a market that some worse product will eventually dominate and people think you’re a pretentious cult

    • What you’re suggesting then is that it’s less risky to copy than to create. But copying can be done by anybody and you run all sorts of risks in not being able to make a profit with your particular copy. Is it not less risky having the goose that lays the golden eggs?

      • deemery

        Doesn’t this approach (copying) follow the “Innovator’s Dilemma” line of evolution? Let someone else start the chain, and then come in and compete on price after the innovation’s been done elsewhere…

      • Kizedek

        Whether it does or not, I’ll let Horace say.

        But, I think your “contention” (if that is what it is) is that if Apple has made the effort and done all the hard work, what good is that since others will now come in and take the fruits of its efforts? That Apple will now be forced to engage in some kind of race to the bottom. And Wall Street’s concerns over Apple are therefore justified.

        You seem to be asking, “why innovate in the first place?” For a start, that would be bad for us consumers. What is refreshing about Apple (and what no-one seems to believe) is that they really want to see if there is a better way to do things, to make better things that help us do things differently and better than we have done them before.

        Why not praise Samsung, no matter how well Samsung is or is not able to “copy” Apple, because Apple is now doomed as the innovator? Others will inevitably surpass Apple and “beat Apple at its own game”.

        Well, I think that overlooks a lot. Number, there is a lot that is not being copied or copied well. And the value in Apple products goes far beyond cache or fashion or even plain quality. (There is something that the vertical integration for one thing is definitely adding).

        Also, what of this”chain”, presumably started by Apple? It can be argued that the others still aren’t quite hanging onto the same chain as Apple, even if Apple was the catalyst for movement on theirs. As others move in and compete on price, any race to the bottom is actually harming others rather than Apple: witness Dell from the PC wars and Nokia and BlackBerry from the mobile wars. And it is not all plain sailing with Samsung either. We are seeing some discrepancies and cracks in the reports about their success and profitability, especially as they spend so much on marketing, etc.

        The question that Horace has often asked is not, “How can Apple avoid falling prey to the innovator’s dilemma as long as possible because this is inevitable?” Or even, “How has Apple kept the inevitabilities of the innovator’s dilemma at bay for so long?” Those seem to be the approach you assume with your comment.

        Rather, I take the body of Horace’s work to be asking questions more along this line:

        “Given the Innovator’s Dilemma, and the inevitabilities that seem to arise from it in the normal course of the market and a business’s life, what is it that Jobs thought to intentionally instill in Apple that sets the course for Apple to sidestep the normal course of free market events, as it were, and allows Apple to continually navigate a course that is asymmetric or at odds with everyone else? So that what affects Apple doesn’t affect others and what affects others doesn’t seem to affect Apple…What are the intentional, concrete things built-into Apple’s DNA that set it apart and give it some antibodies to some of the things that affect everyone else?

      • You are referring to low-end disruption (as opposed to new market disruption). The low-end disruption is a form of innovation in its own right. It means building products that are good enough and compete with products which are more than good enough but do so on a different basis. It is something Apple did repeatedly including with the original Apple II and is now doing with the iPad. The practice of copying a product is often not disruptive. It often leads to a “me-too” product that loses money or is undifferentiated.

      • bertdanner

        Hi Horace, fabulous insight and discussion! Your statement, “It’s a process that requires a degree of faith and fortitude. It’s collecting but ignoring data and trusting judgement when data tells you to move in a different direction. It’s a lot of willful rejection of conventional wisdom.” Timeless wisdom! I still think you are the “Chief Sorcerer” despite your cogent arguments to the contrary! All the best, Bert

      • Me-tooism isn’t just a tech thing. When there’s a hit show on TV, the copying machines begin. So we have had years where Westerns dominated. Then police dominated. Then lawyers. Then a slew of shows that tried to copy Lost. Pixar did Toy Story. Then we got Dreamworks and others piling on. In movies, it can also start at the development stage, so we wind up with *two* movies about Wyatt Earp, for example.

      • Walt French

        “Creating” is not exactly a risk-free strategy, either. Many very smart, very plugged-in people have created neat businesses that failed. Badly. Look at 90% of what Google does for examples.

        OTOH, somebody like Samsung was ALREADY EXPERT in mass-merchandising cellphones when the opportunity for smartphones smacked them in the face. They must have known they had a better shot than Moto, than LG, than Sony, …

        They certainly acted that way, jumping in with both feet: took the “better to ask forgiveness than to wait for permission” attitude to IP, maybe added a few dozen designers, many engineers, somehow ramped up production of complex phones and blew a huge wad on sales/marketing.

        And they got a rather predictable outcome. Nice for them.

    • stevesup

      “Who wants to be Apple anyway”? Really, it’s a question of Who wants to work at Apple? Apple builds the “best for the rest” and it lives and loves that dynamic conflict. Importantly, Apples’s deep commitment to building the best allows Apple to hire and keep great engineers cus’ great engineers love great challenges more than money. Only Wall Street just loves money.

  • One word: “Balls” or as Mike paraphrases Steve Jobs above: “Learning to say no.”

    Apple behaves like a very careful gardener: pulling weeds, nourishing grown plants, sowing small seeds and giving them ample time to grow. It’s a very small garden compared to everyone else’s but this is what makes it manageable.

    Oh and the relentlessly efficient supply chain that has been built by Tim Cook from ca. 1998 until the mid ’00s. I don’t think there’s any other company in the world that comes even close – and it will take anybody else about the same time to come up with something similar.

    • WhyIsTimSpecial?

      Love the careful gardener metaphor. And certainly focus and saying “no” is critical.

      About the brilliance of Tim Cook and his supply chain, I’m just wondering what data or evidence you (and many, many others) base this judgment on. I’m in no way disagreeing. But I see comments like this all the time, and I’m just wondering how everyone comes to this conclusion…other than repeating what appears to be common or accepted wisdom. In other words, how would you disprove someone who says, “no, he’s not doing any supply chain stuff any better than Samsung or anyone else”. Thanks.

      • InventoryIsEvil

        Well, I think one objective measure is the fact that Apple’s turns its inventory faster than any major business except McDonalds. Around 70 times per year, IIRC. Google says “don’t be evil”. Cook says “inventory is evil”. And he avoids the evil/inventory.

  • Ittiam

    As of now, there is no evidence of successful Apple beyond when Steve Jobs is at helm.

    Now, what Steve did is open book, but business strategy cannot be copied as is, it has to be customized for the context and culture of the company. Apple is vertically integrated, others are not. So same business model cannot work.

    For example, Steve turned carrier relationship over its head, by exclusive contract with AT&T and minimizing carrier interference. Samsung did not have that luxury, so it launched S3 in Europe and generated so much hype, that all US carriers had to tow its line.

    Surprisingly only Samsung has gone the entire way of changing its culture by putting design and marketing teams at the front and forcing engineering guys to take a step back. Its not easy to do and I am not seeing anyone else following suite.

    Also, I have not found answer to one nagging question. Apple’s competitors (except Samsung) are not interested to make money. Example -Asus with Nexus 7. A killer tablet with Google co-branding, Asus should have flooded the world with N7 and risen to the top. But they chose to launch it only in few markets and limit availability. Why? I dont know

    • rational2

      Apple’s success has been in producing great products. Engineering is what delivers the product, the supply chain is what helps Apple mass produce the product at high quality and meet demand, marketing is helping generate hype and demand etc. They are all playing well together. If Apple, or any company that is hoping to deliver new classes of engineered products, forces engineering to take a back seat, they will end up producing shoddy products and no amount of marketing hype will help the company.

      We already see examples of companies that ignore engineering and focus much more on sales and marketing, struggling to stay relevant.

    • Johnny

      “Also, I have not found answer to one nagging question. Apple’s competitors (except Samsung) are not interested to make money. Example -Asus with Nexus 7. A killer tablet with Google co-branding, Asus should have flooded the world with N7 and risen to the top. But they chose to launch it only in few markets and limit availability. Why? I dont know”

      I think in the Nexus 7 (maybe Nexus 4 too), Asus wants to appeal to the Android “Elite” the tech “influencers”. At the same time they would really prefer to sell their own tablets at a higher profit than produce Nexus 7 tablets at a much smaller profit margin.

      Hypothetically, why would Asus flood the market with Nexus 7 tablets that they only make $5 profit on, rather than sell their own branded tablets for $50 profit?

      This only benefits Google bc they get ad revenue, while Asus rarely gets any addition revenue.

      Asus wants to make money and the Nexus 7 earns them less money than a non-co-branded tablet.

  • obarthelemy

    I think it comes down to:

    1- Leadership. MS in particular is riven by internal squabbles and political agendas, which result is products that are cumbersome for customers, though pleasing to management (Hey ! let’s stick our touch interface on desktops, so that we can have the same success we previously had when we stuck our desktop interface on touch… Oh, wait…). Note that Apple too seems to be losing it on that score, the Maps debacle is clearly an example of internal stuff winning over customer satisfaction.

    2- Perception. Apple is perceived as an innovative luxury brand. On the “innovation” side, Apple’s last category-creating product was the original iPad, 3 years ago. Products and features introduced since then have been mostly me-too. Apple still have to prove they can keep innovating, and/or reverse the tide and prove that once they have innovated, they can keep a high market share.
    Luxury they still undoubtedly are, but not everyone can be. Sony seem to be waking up recently though.

    3- Competitive pressure. True manufacturers need to keep those factories churning, ie they favor volume over margins. Betting the farm on a single product the way Apple did 3 times (successfully: iPod, iPhone, iPad) is not really an option, especially when longer-term prospects are murky (Apple is quickly losing ground in all their markets), and all your other competitors are basically selling the same devices you are.

    4- There is a lot of innovation and magic going on, but with much less hype. Only Apple can get away with launching a Skype clone and calling it magic. Samsung for example is accelerating with customer-oriented features (touch, AMOLED screens, split screen, Picture-in-picture on tablets). For some reason that does not get half the recognition that even half-assed Apple me-too “innovations” get. Wait for NFC and wireless charging to become “magic” next.

    5- As you say, “being Apple” may not be that desirable in the long term. Apple seems to follow a script of creating markets, then losing them to become a niche, high-margin player. That played out in PCs, in phones, seems to be heading that way in tablets… Apple have been very successful at the creating 2 markets and at remaining at the high end, but those segments are not that big. And what it takes to be successful in the other segments is quite different, so “being Apple” would probably not be a very good idea for others.

    6- Finally, Apple had the luck to get in there at the right time and thus have the time to correct mistakes. Don’t forget Apps and the AppStore where grafted onto the iPhone at the request of developpers and customers, Apple not only had no plans for those, but even resisted them strongly at first. Nowadays BB10 is being bashed for having not enough apps at launch. The iPhone at launch not only had fewer apps, but no provision to add any subsequently. Unless another tsunami as powerful as the de-nerdification of tech happens (and I don’t foresee any), there’s no more opportunity to invent another magic formula.

    So basically, “being Apple” requires having nothing to lose at the right time (which has passed, the right time was when IT products moved from nerds to the general public, creating a new opportunity for socially-boosting easy-to-use products), and then having momentum plus 150 billion in the bank and no factories, to have the luxury of having time to think things through.

    We’ll probably see Apple cruising on, making other stuff easier to use and sexier looking (indeed, TV remotes seem ripe for that), but the bulk of sales, if not profit, is in making everyday products that many can buy and justify buying.

    • Kizedek

      As usual, your desperate efforts to cast something about Apple in a negative light detracts from your points — distorts them even.

      For example, a couple of things:

      3) Volume and Margins are linked. Apple gets high margins precisely because they sell a lot (an awful lot) of a very limited range of products. They don’t come out with 6 new phone lines every quarter, and that is why they have the margins they do. They sell a couple hundred million of each model, not 2 million or 200,000. You are presenting a false dichotomy.

      So far, Apple’s bet has been right on the money. Except, when they do dip from a 42% to a 38% margin and Wall Street goes nuts, it is because, what do you know… they are introducing a new or additional model and not sticking to the same lineup. Really, they are damned-if-they-do, and damned-if-they-don’t in your eyes. But, hey, you are in good company with Wall Street.

      It’s good for suppliers, too. So, who are these manufacturers that would rather have churning product turn-over amounting to lots of little contracts for 600,000 Surfaces and 600,000 of this, and 600,000 of that, instead of 200Million devices for which Apple pays billion in advance and/or completely invests in a brand new assembly line? Do you even read what you write?

      6) Another “damned-if-they-do-damned-if-they-don’t” false scenario. If you want to talk “grafted on”, let’s talk Metro/Zune + Windows 7 = Windows 8. Let’s talk about how the RIM-like Android became the iOS-like Android the minute the iPhone was first unveiled.

      Apple may have been reluctant to expand the iTunes store into a full-fledged App Store, but that doesn’t equate to “grafted on” or “no provision to”. Afterall, hey, iOS is OS X at heart. How do you think Apple came up with so many world-class APIs in such short time, APIs that worldclass software companies and developers immediately went to work on and committed themselves to, coming up with some great stuff (yet to be beat on other mobile platforms)? Because the ability and the provision were indeed there.

      In fact, this all just shows that Apple, 1) listens, and 2) is quick, nimble, versatile and adaptable, despite its size. All good things. Apple/Steve might have made certain unofficial statements, and they were either misdirection or Apple changed its mind. So?

      But you want to come back later and act like Apple’s success is down to serendipity; or that the simple things that everyone tweaks (screen-size, etc) are the great defining things and that in most of these Apple is a “me-too” copier. Well, they aren’t the great, defining things. This article is trying to discover the great defining things, or rather the process which produces some defining things. So, work with us here, and try to look past the surface.

      It is just sad that you act like these things are the defining things, despite your time around this site and your hundreds of posts here that most of the time get fully and respectfully answered. I was starting to feel a little encouraged with some of your more recent comments, but this one was really disappointing. Speaking of “me-too” and “innovation” (your number 4), are you sure you didn’t just copy and paste from some of your old comments.

      • obarthelemy

        3- Volume and margins: my point is not about number of product lines, but about choosing lots of sales at a lower price point vs fewer sales at a higher price (cf “price elasticity of demand”). You should re-read what I’ve written: I’m not saying OEMs *prefer* low margins, I’m saying they don’t have a choice because they have factories and workers (as opposed to Apple), and need to get product out the door to avoid losing money on those assets. To them, a low-margin sale is better than no sale because no sale does not even mean 0 money, but a negative amount of money because rents and wages do still have to be paid. Hence also their acceptance of smaller product runs, it just gives them something, anything, to use their factories and workers for.
        They can’t have large product runs, so they make do with several smaller runs.

        Also, my take on Wall Street jitters about Apple’s lower profit margin is that Wall Street thinks it might indicate not so much raising costs nor one-off setup costs, nor even declining sales (obviously not) nor a lower rate of growth…but a loss of pricing power. In that line of reasoning, Apple is having a harder time charging a premium for their features and design. Could be due to the competition getting better, to Apple getting worse, or just to perceptions changing. It could also be due to the high-end market being saturated, and growth now being in the lower-price segment, which is not Apple’s forte, and which is probably intrinsically lower margin (counter examples abound though, but probably not playing to Apple’s strengths anyway)

        6- I’m not saying it’s only luck: Apple had a phone that people desired, and quickly came up with a way to sell apps for it that was satisfactory to the end-users, the devs, and themselves. The other players at the time (MS, Palm, Nokia…) entirely missed the boat. But the end, the whole iOS ecosystem is not a carefully crafted master plan, it is quick adaptation to an originally-overlooked market opportunity. Apple got themselves in the position to grab it that one time, but I don’t really see any reason why they’ll be there next time around, nor even if there will be a comparable opportunity in a reasonable timeframe.
        The fact Apple were using an OSX derivative for iOS may be forethought, or just asset re-use. I’m sure Apple planned on writing more software for the iPhone, maybe even on letting a few select 3rd parties do so. I’m also sure they had *no plan* for the AppStore as it is now. They switched tack quickly, kudos to them.

      • claimchowder

        And what, if not a quick adaptation to an originally-overlooked market opportunity (to borrow your own words) is Google’s, Samsung’s, Microsoft’s, HTC’s and many others’ copying of the iPhone?

        And what, if not a quick adaptation to an originally-overlooked market opportunity is their copying of the iPad…?

        And what, if not a quick adaptation to an originally-overlooked market opportunity is their copying of the iCloud…?

      • obarthelemy

        First, we can discount the iCloud, which was definitively not an Apple innovation at all.

        You speak a lot of “copying”. Don’t forget Android started in 2003, well before the iPhone came up, and that “XP for Tablets” was released in 2002. And the Palm Pilot line turned out much more successful then the Newton, for a while, and was headed, in a slow a winding way, to modern smartphones. Windows Phone (Pocket PC, Windows Mobile…) existed, and allowed 3rd-party apps, long before the iPhone (2002 vs 2007). Apple contributed significantly to the mix, but so did technological progress, and experience.

      • Dan Andersen

        Actually, Android is a direct descendent of Apple’s General Magic/Magic Cap project of the early 90s. In fact, Andy Rubin was an Apple employee working on that project at the time.

      • ymelenhtrabo

        FYI, obarthelemy is a well known Apple troll on this board

      • StillTopShelf

        “Also, my take on Wall Street jitters about Apple’s lower profit margin is that Wall Street thinks it might indicate not so much raising costs nor one-off setup costs, nor even declining sales (obviously not) nor a lower rate of growth…but a loss of pricing power. ”

        Well, first grade math would solve most of that dilemma. The drop in margin was much higher than the change in average selling prices. Case solved.

      • obarthelemy

        Well, I’m trying to use 2nd grade investigative powers, and getting this: from this site:, which also says the iPad is 20% of Apple sales, and lost $100 out of $570 a year ago (now $470), which does work out at 17% ASP loss for 20% of turnover = 3.4% ASP loss. That’s Q1 2012 to Q1 2013

        I didn’t double-check the data, nor compute the influence of other products; ASP-Wise iPhone is flat and Macs are up, but revenue-wise Macs are very down (10% of total sales, from 14% a year ago), and the iPad ends up flat (20% in Q1 2013, same as Q3 2011).

        ASP did go down some, and partially (not totally) explains Apple’s lower margins.

    • ProfitTrumpsMarketshare

      What nonsense. If you feel that what’s going on with iPhone and its markets is failure, we need much more of that failure.

      And even in their historic “failure” with traditional personal computers, they’re slowly but steadily clawing their way back there.

      Fact is, in every market they’re in, the earn the overwhelming majority of the PROFITS. And they make the best stuff. Best stuff + most of the profits = the right formula.

      Let everyone else scramble for the profitless “marketshare”.

  • Wall Street will never value what it doesn’t understand. It can’t manipulate what it doesn’t get.

  • Roger Bannister is famous as the first person to run a mile in under 4 minutes. But his world record only lasted 46 days. Once he showed it could be done, lots of others followed.

    Ten years later Jim Ryun ran a 3:59 mile as a high school junior.

  • Sony was Apple before Apple existed and then Sony lost their way.

    It’s a combination of many things although Jobs used to talk about “taste” as a key ingredient in a way that few do today because it sounds snobbish.

    Simplicity, a particular aesthetic, and the willingness to put a product out and take a risk. The reason other companies don’t do this is because they don’t have to, they have Apple putting huge resources into it and they’re happy in Apple’s wake, copying and as they can, refining, or more likely making worse with complexity and featureitis because they don’t get it.

    • AppleTrumpsSony

      Sony was a great creative business, but their physical design and engineering never even came close to what Apple is doing today. Not even close.

      • I agree, but it’s all relative. In the old days, Sony was “it.” And, you can’t deny that the Walkman was a disruptive device, the iPod of its time and they got a lot of iterations out of it, some great designs, and a lot of years of decent profits. Seems I remember Jobs speculating about an Apple-Sony relationship in the old days…

      • WalkmanNoIpod

        Walkman was great, but what exactly did it disrupt?

        In any case, it didn’t disrupt the music industry like iPod did. It didn’t fundamentally change the way people obtained music. And it didn’t have anything proprietary to lock in customers (although eventually iPod didn’t either).

    • Every company try to learn from success. They can learn what to build next, fast follower, copiers like samsung, or they can learn what works in making money and in management.
      New management ideas spread like a virus between companies when they work. New managers that followed the new way become the new stars in management until something else happens.
      Big money is alway looked with respect and everyone searches a way to obtain the same success. Is in the human nature, is understandable, is what happens in reality everyday, except for Apple.
      Only products are copied blatantly, not improved in a meaningful way, just blindly copied. The one that change the most fails, is like something magic, since you know you can not understand magic, you just copy it as it is, because any change without understanding will make the magic disappear.
      Copying management techniques? Introducing simplicity, too risky, works but only for Apple. No one else doing it, billions or not.
      Copying Apple’s way to business, focus, customer care, non market surveys, just incredible products instead of cheap junks, no way only Apple can make billions from that, no one else tries.
      This is incredible.

    • JohnDoey

      No, Sony was never Apple. Sony lead in markets that Apple now leads, but Sony is more like Microsoft. They are a conglomerate of tiny companies under one larger brand, often working at cross purposes, never working together.

      There were some great Sony products, but there were also many crappy Sony products. You could never just assume a Sony product would be as great as other Sony products. And Sony crippled their hardware products to prevent cannibalizing their media products, for example DAT was disabled from making digital-to-digital copies, MP3/MP4 was ignored in favor or a proprietary audio format. And Sony never understood software.

  • SimonCopenhagen

    Most companies enter a market in order to compete. Apple has entered its markets in order to change the game. And is able to do so repeatedly because of two simple promises. To the consumers Apple gives an empowerment promise: “Apple will make you better at what you want to be good at on a level you didn’t imagine possible”. To the employees, present and future, Apple gives a vocational promise: “Come with your creativity and talents, and Apple will give you the possibility to do your life’s best work”. Most other companies don’t have such high thoughts of their consumers and their employees, hence the outlier nature of Apple.

  • Jonshf

    Perhaps the current patent system makes it hard for other companies to be like Apple. It’s much easier to just copy the products and “innovate” on top of them. I’m sure Samsung can’t wait for Apple’s next big thing.

  • 52weekendsoff

    @twitter-16212408:disqus one word “it costs too much”. Innovation – of the type Apple does – is EXPENSIVE. And most of Apple’s competitors are copiers-by-design to lower their costs.

    • deemery

      I think you’re halfway there. For most of its history, under either Jobs era, Apple was not driven by near-term results. Apple is not unique, but is unusual in its willingness to ignore quarterly results and make very long-term investments. Then Steve Jobs “learn to say no” comes in, with the willingness (unlike Microsoft) to release products that are immature.

      That being said, I see a disturbing trend downward in Apple product quality. It’s not just the big things, but also the little things that make a quality product. So not just the problem with, but also bugs in the latest release of iTunes, etc.

      Whenever I hear one of my bosses (in the government) say “We need to be more like Apple,” I remind him that Apple -never- (a) releases budgets; (b) releases delivery dates; (c) provides “product roadmaps” or (d) releases “requirements documents”. Google pretty much follows the same pattern for most things, it’s interesting to see Android break some of that pattern.

      • HardwareIsKiller

        “That being said, I see a disturbing trend downward in Apple product quality.”

        Maybe on the software side. Not at all on the hardware side. Their hardware is simply awesome. Across the board.

        Hopefully they can get their software and internet services on par with the hardware. Having Ives get involved with the software has got to have some benefit, although he’s not the guy who’s gonna root out the bugs.

      • Sacto_Joe

        The only screw-up with Apple Maps was in not branding it a “beta” version, as they did with Siri. I suspect the person responsible for that mistake is no longer in a position of authority….

    • Walt French

      To riff on your “it costs too much” theme, Apple has seemingly adopted Jobs’s goal of making a ding in the universe. A limited number of phones sold, the limit to how much speed a CPU delivers, the limit of Siri not quite grokking your requests… these bottleneck the amount of impact Apple can have. Profits are more an imperfect measure of success — NOT the goal itself.

      And as Cook said, Apple’s not about limits; it’s about breadth and depth.

      That’s quite different from all the businesses I know. They exist to reward the owners financially. Quality, volume… these are means to the end of a successful business. And if a firm is oriented to financial results, rather than the karmic reward of helping consumers define their own futures, very likely they’ll want little to do with the Apple way. Even, the more successful they are, the less perceived need (and probably interest) they have in copying Apple.

      Individuals can have a “make a ding” objective while working for a profit-oriented company, and Apple may have lots of employees just in it for the paycheck so they can have a family/outside life. But by hearsay, most people come to work for Apple to achieve things, and leave when they think they can do better elsewhere, or when they’ve done what they want.

      • winstongator

        The difference between the goal of a great user experience vs. the endless pursuit of profit is an insightful and important point. I would add that it takes a long time to cultivate that value in an organization. Apple was neither a small nor new company when the original iPod came out. iOS did not appear out of nowhere, Apple had been designing OSs for a long time.

        I wondered how much of the iPhone design team were career Apple’rs. The first name on the patent (alphabetical) Bartley Andre has a patent with Apple from ’96. Apple’s institutional culture would have attracted a lot of talented designers – physical design, electronics, and software. – and it would have turned off the political, climb-the-ladder types. You could also say that Steve Jobs’s success could not have happened anywhere but Apple. Nowhere would he have had the freedom or control. However, the freedom was somewhat due to Apple’s being an out of fashion stock for so long – not much was expected of it. There are tech giants beaten down. Might they be ripe for similar turnarounds, or do they lack the culture that Apple had, even in its dark days?

        The iPhone will be studied as a business example for a long time. I think Apple got lucky in that their approach towards phones was the reverse of most. They started with the iPod and then added phone function. Mototola, Samsung, Nokia, started with phones. Think about what makes an iPhone special – it’s not the voice calls. The handset market has been the holy grail of tech for a long time. It is the largest volume market, and its turnover every couple years means constant new sales.

      • “They started with the iPod and then added phone function.”

        An iPhone doesn’t look or act much like a pre-iOS iPod. Nor, really, anything else that existed before the iPhone.

      • Sacto_Joe

        Close. They started with a handheld computer interface and then added phone function.

      • “To Apple, profits are more an admittedly imperfect measure of success — NOT the goal itself. That’s quite different from all the businesses I know. They exist to reward the owners financially”

        Yes. Here is where I think Apple sources much of it’s power and magic. The ethos that all decisions will be subordinate to designing and shipping “insanely great products” is something probably never seen before in the Fortune 50 (or even 500?).

        I think Jobs knew (and Cook knows) what a rare and fragile thing this is in a publicly traded company. I believe Jobs feared that stock splits, dividends, etc were a possible path to the dark side where most companies subordinate their decisions – “maximize shareholder value”. In the Apple Universe this is a side-effect not the mission.

      • smalM

        “maximize shareholder value” is the easiest way to kill the future of a company.

      • Walt French

        If you put it in scare quotes to highlight how it can be a mindless “gimmee” mantra, absolutely.

        But let me defend that you can run an ordinary business very well by considering what works for the people who own the company, many of whom will hold it for decades, and the rest of whom want a strong, thriving company when it comes time for them to pass their investment on to somebody else, and go play golf for their golden years.

        Shareholder value is the net value of the equity. You’d like the growth as high as possible, recognizing that the more you try to grow quickly, the more risk you take of going down a dead end and losing a bundle—say, burning up your PR credibility the way Sony did this week with its PS4 “announcement” that was widely ridiculed. Apple is ruthless about developing concepts that people might like, and (in my mind, perhaps excessively) work them until they seem perfectly tuned for a perceived need.

        So an Apple “next big thing” tends to be one, versus Google’s obvious penchant for taking a neat idea and productizing it, only then seeing whether it’s the world’s most unrealistic concept (paying $250 for a flashy Nexus Q), or something like Wave that nobody outside of Google (and few within) could figure out what it was good for. If you have a “throw it at the wall and see if it sticks” product strategy, you have to diversify quite a bit. But because it’s cheaper and faster to do so, you get market feedback and hopefully, make a better stab next time.

        Both approaches are good for shareholders. What’s bad is when managers are allowed to be self-indulgent, and go off on their own little campaigns or get attached to stuff that is just a hobby. That happens in business a lot, and I’d say harms a LOT more people than aggressive shareholders (or boards) keeping management focused on doing things that work.

      • InItForThemselves

        “To Apple, profits are more an admittedly imperfect measure of success — NOT the goal itself. That’s quite different from all the businesses I know. They exist to reward the owners financially.”

        If only that were true! Instead, not only do they fail to focus on simply doing or making the best they can, they also do not focus on rewarding shareholders. That’s just like a necessary evil. What they really focus on is rewarding the top management and board.

      • Dadsfolk

        Not at all – they focus on rewarding users. I don’t understand this preoccupation with “rewarding shareholders” – other than an IPO, where the bulk of the funds go to the company, buying stock is purely a speculative venture. The money you pay for the stock doesn’t go to the company, it goes to the current holder. You buy the stock with the expectation that you’ll be able to sell it at a higher price in the future. But the *actual* stock price is a Wall Street construct, and often has nothing to do with fundamentals – Apple posts the second highest quarterly profits in the history of American companies, and the market knocks the price down to zero future growth. The market is a professional speculator’s haven – the purview of professional traders, millisecond trades, analysts with little business acumen and “pundits” playing the game for hedge funds, who need short-term moves to make money.

        What you seem to mean by “rewarding shareholders” is *Wall Street’s* responsibility, not Apple’s – price the damn stock according to its fundamentals!

      • Sacto_Joe

        I call it the casino mentality. But that’s only half of the story. The other half is that ownership portion. Doesn’t matter that it can be sold on to another. “It” is ownership, period, no matter where that share ends up or who gets that dividend.

        Frankly, I’m a bit nervous about the market. I see a lot of “froth” in valuations, and extreme volatility. Something like this happened prior to the Great Crash leading up to the Great Depression. But there are also hopeful signs on the horizon. In a way, companies like Apple are helping keep it “real” out there, albeit at the expense of periods of vast undervaluation such as the present one. I suspect that Apple’s going to be puncturing a lot of balloons in the coming years. But in the long run that’s a very good thing!

  • Neil

    As you touched on in the Critical Path, there are processes and structures that Apple and Pixar have nailed (see the famous Ed Catmull Stanford talk), but I think a big element is cultural, and they were able to nail the processes because of this culture. This is what I think Tim is referring to when he says DNA. It’s organic and can’t just be copied. There’s a hippy, free thinking, element in there that’s the antipathy of the standard conformist culture of many large companies. Think about Woz and the original Mac team. Great podcast & blog btw!

  • Why doesn’t anybody copy Apple? Why doesn’t anybody copy Horace Dediu?

    All companies have access to the same components. Everyone has access to public data.

    The secret is in the art of asking the right questions and solving them.

    • ChKen

      That’s what keeps business consultants so busy!

    • HidingInPlainSight

      You’re dead on regarding Horace…and Apple.

      Common sense isn’t common. Genius is often a firm grasp of the obvious, which although it sounds easily, is quite rare. Greatness is often hiding in plain sight.

    • Ian Ollmann

      Re: Horace, I think he has chosen a difficult road. In many ways Horace behaves like a professor. He goes on tour, gives lectures, publishes papers / blog, etc. However, he doesn’t make it easy on himself. (I presume) He doesn’t have a salary coming in from a university. No secretary to organize things. No graduate students to do the hard work of turning insight into innovation. He’s a one man show.

      At some point, to continue to grow and make more of an impact, he may discover that he needs people to work for him to help organize events and collate data. This might be difficult or at least expensive without grants + overhead and / or an accredited educational program to provide cheap student labor.

      • Sacto_Joe

        But you know what? He’s far from alone!

  • Richard Hamilton

    Why is it hard to copy Apple?

    Taleb is pretty interesting on the importance of stressors to innovation. “Necessity is the mother of invention.” Or, “Stay hungry, stay foolish.”Much of Apple’s success was born out of periods where they had little to lose. The invention in the garage, the Mac, and the renaissance that led to the iPod and iTunes. Too many of their competitors, and especially HP, Google and Microsoft, have too much money from monopoly positions in printers, search, etc. to generate that kind of focus.

    Lately their success has come from being in a unique position to capitalize on mobile computing. Take RIM for example, a company that does or did have aspirations to be an Apple kind of company. They invented email over a radio device. Or so they thought. Actually they had begun to build handheld computers. Did they fail to see this? I think so, but it is moot because they didn’t have the experience, skills or resources to compete with Apple, who were in the first place, a vertically integrated computer company. Much easier for Apple to shrink the Mac into the iPhone, then for RIM or Palm or Nokia to scale their devices up. And they had built a unique platform, iTunes, that the iPod made relatively ubiquitous from which to launch it.

    This doesn’t explain Microsoft, of course, but the failures of Microsoft with Windows mobile could fill text books. In any case, it is a self-professed follower and until only recently stayed out of hardware.

    Apple still has the opportunity to disrupt because it has this unique position to continue shrinking computing and embedding it in devices (watches, TVs, cars) where their competition will be at a distinct disadvantage, either because they lack the industrial design, or the software chops to compete head-on.

    I would take Tim Cook at his word. Their uniqueness is in the intersection of industrial design and software, and it took decades to build. As others have pointed out, Cook has brought supply chain management to their game. And with first iTunes and now iCloud, they are trying to build that same kind of world-class services platform (which by the way, RIM had a decade ago but squandered). This kind of integration is critical to the disruption they cause, and it would take years and a lot of money and focus to emulate

    • deemery

      This reminds me of another observation about Apple and Google: Apple is a system/products company trying to move into cloud, and Google is a cloud company trying to move into system/products. It’s fair to say that Apple has a lot to learn about effective cloud systems beyond iTunes. The jury is still out on whether Google’s Android moves beyond the OS and into successful products/ecosystems.

      Samsung’s successes at the device level must have some impact on Google’s thinking; should Google follow the Microsoft model by owning the OS but letting others build the hardware?

      • Richard Hamilton

        Agree that Google is more of a cloud company, but learning on the hardware front. To your last point, as Horace has pointed out before, as a follower you can specialize on hardware or software, but if you want to move into new industries and disrupt, you will probably have better luck if you own as many of the pieces as possible, it being the nature of a disrupted market that the existing specialized suppliers are locked into the former paradigm and will be either unwilling or unable to adapt and support.

      • winstongator

        Google now owns Mototola mobility (or whatever they called the handset spin-off), so they have a significant hardware team and history. It might take a while to fully integrate it into Google, but the pieces are there.

      • Johnny

        I always find these comments interesting about Apple trying to be a cloud company.

        Apple had iDisk (Google Drive), address book syncing, and Safari bookmark syncing, years before Gmail or Chrome existed. While Apple’s scale was smaller they were offering this tech before Google or Microsoft.

        The iTunes music store would also be a cloud service, and it existed before Gmail.

  • jpkeisala
    • jawbroken

      The numbers for Notes in that article are relatively small, and the split-screen functionality didn’t work at all, even in the 20 apps deemed compatible.

  • I think other companies are trying to disrupt consumer industries all the time, but their products just don’t catch on most of the times.

  • Of course Apple is self-aware. That’s what the whole “Apple University” effort is about – get the best business school faculty, study Apple from the inside, teach the methods. I’m continually stunned that this part of Apple, something that Steve Jobs put together to make sure Apple stayed Apple, gets overlooked. Sure, every company has internal training and tries to imbue its mission and values in its employees. But how many companies build mini business schools with world class faculty to do it?

    • BoydWaters

      +1 for Apple University! I’m late to this discussion, but I think Apple University is not about navel-gazing. Apple recognizes the need to identify the cause of success and failure, using Apple as a lens to discover what it means to be great.

  • MarkSoFla

    3. The risk of doing what Apple does is quite high. Certainly much higher than simply jumping onto the bandwagon after a new paradigm has been introduced and proven.

    • MicrosoftFailed

      Maybe. That might account for why a financially fragile business might not go the route of Apple. Yet Microsoft’s creating the Surface and completely re-designing Windows around touch was more risky than Apple creating the iPhone or iPad. Microsoft just didn’t create a beautiful product.

      • r00fus

        No, Windows8 and Surface were not nearly risky enough. That they are salting their own fields with desktop users to shoehorn a touch-centric UI paradigm onto all desktops and tablets doesn’t mean they took risk. Just means they mishandled the opportunity.

        No, real risk would mean they price things aggressively even in enterprise, or consider offering Office365 in a basic fashion for free, or that they forge a new touch-centric Office that splits from their desktop offering in form, function and features.

        I see nothing but slow evolution, and possible missteps in product delivery.

      • Herding_sheep

        Riskier than the iPhone? They’re not introducing a new paradigm, they’ve simply forced a new direction into their existing business, Windows. Yes, they risk alienating dissatisfied users, but the Windows business will remain in tact for years regardless, due to lack of choice.

        Investing billions into an entirely new product category where you are currently shipping zero units, making zero revenue, into an already established and highly competitive market, with a product that completely deviates from the status quo. That is risk. Apple shipped a phone in 2007 that had no buttons, a virtual soft keyboard, a completely new interaction method, while having no experience or leverage in that industry. That right there takes some serious balls. I don’t think people truly understand how risky it was. They bet the entire company on it. And if that isn’t enough, they also in the process disrupted their then-current cash cow and successful product line, iPod.

  • Biscoto

    I like how no one is talking about Apple’s marketing. Their advertising and public manipulation campaigns have been very well done from a magicians/tricksters point of view. For example apple is not as innovative as it tells us. Where there no tablets before the iPad? Since 2000 we ve seen the flat screen tablet which apple went ahead and patterned (!) as if apple created the idea that you can have a flat screen on a device bigger than a phone but smaller than a notebook. Again apple software is great for the average user. Easy to use and not too much to worry about. But it’s so overpriced and luxurious looking when it’s hardware is sub par compared to the competition. If they are trying to make the best products in the world, how is it that the same intel processor you find in an $500 laptop you get in the MacBook Pro that costs $1500+ ??? It’s marketing.

    • FalKirk

      “For example apple is not as innovative as it tells us. Where there no tablets before the iPad?” – Biscoto

      I am always stunned by such shallow thinking. Comparing the tablets that preceeded the iPad to the iPad is like comparing propeller driven biplanes to jetliners. They’re technically both in the same category, but they’re not in the same class.

      You think Apple’s success is marketing? Have another think. The iPad sold more tablets in seven months than Microsoft sold in 10 years. iPad-like tablets are going to outsell notebooks and desktops within 4 years of their introduction. FOUR YEARS!

      What made the iPad successful was the insight that tablets needed a touch (finger) input and a whole new user operating system to implement it. That’s not marketing. And if you think it is, then you should be spending far more time reading and learning and far less time posting and pontificating.

      • handleym

        Not to mention that Apple spends a lot less than MS and PC HW companies on marketing, and VASTLY less than Samsung.
        If there is any secret to their marketing, it is how they manage to get such spectacular results with so little spend.

      • LetOthersAdvertise

        The best marketing is thrilled customers.

      • Walt French

        I know that “Sales” is a dirty word in many people’s mind, and we substitute the broader term, “Marketing,” of which Sales is only a subset, sometimes just an adjunct.

        Apple DOES have superb marketing, in knowing what will excite people before they know it themselves. Jobs, Cook, Dedieu (nice company, eh, Horace?) — they’ve all made the point that Apple tries to look past the visible horizon. The touch/pinch metaphors were merely the fine, inventive engineering that flowed from the question of what it would take to have a superb experience on a buttonless device, assuming voice wasn’t the M.O. Apple has been exceptionally skillful at coordinating their talents and the available technology with insights into customers’ needs, to make such supremely successful products. That’s just superb marketing and business planning.

        Yes, in praising Apple’s “Marketing,” most people are shaking their heads at how the company can get people to buy things sight-unseen. They’re just not interested in using Apple products for an imaginative trip, seeing only the chips and software that anybody can copy, cheaper. But let me celebrate Apple marketing as the embodiment of Apple’s success.

    • jawbroken

      If it’s just marketing then every one of their competitors must be incredibly incompetent to not just hire away their talent, hire the same external advertising firms they do, etc. They don’t even spend much money on this, comparatively, so why is everyone else getting such a poor return on their investment?

    • MarkSoFla

      It’s not “just” marketing, this is a huge misconception that many hold.

      Apple (and Google, and increasingly Samsung) insists on excellence being the standard among their people – in all fields, engineering, design, sourcing, marketing, etc. Getting accepted to a position at Apple and Google is not an easy task – even while they were/are growing rapidly (many companies loosen their hiring criteria while in fast growth mode, these examples do not).

      And as far as the “same processor” comment, that’s a somewhat immature view of looking at the situation. There’s a lot more than the Intel processor inside the box. If you added up ALL the stuff in the box, you will see that, while Apple does have premium pricing, it isn’t substantially higher than the competition might have for the equivalent item. In other words, you can’t compare a stripped-down Dell or HP laptop to a full-featured Apple MacBook. If you do a fair comparison (I’ve done it a few times over the years) between the competition, you will clearly see that.

      • AppleForDiscerningUsers

        All the people who make the ridiculous comments that Apple’s hardware is inferior and over-priced tend to only be able to judge based on specification data. So if a Samsung phone has a higher dpi display, then to them that’s superior. While the more discerning Apple consumer perceives that things like contrast and color accuracy are at least, if not more, important. Same thing about the form factors and feel of the whole device. There simply is no comparison.

      • MarkSoFla

        “There simply is no comparison.”

        While I like my Apple devices a lot, and while I believe that their overall “feel” is terrific, I would have to disagree with this statement. At this point, Samsung has been able to nearly catch up to (and in some areas even exceed) Apple with regards to “feel”. Their latest hardware is of good quality, has enough horsepower to enable smooth operation of almost everything, and is well polished (nice bright color accurate displays, etc). And the latest iteration of Android on their devices is quite slick. This wasn’t true until the latest [major] release of Android.

        So, today, there is some comparison.

        In addition, Samsung has been willing to fragment their product line and thus plays in segments of the market where Apple has no product at all – most notably in large-display phones (Note 1 and Note 2). All evidence shows that there is a substantial market for such devices, and I believe that Apple will enter that market within a year. It seems to me that folks who need a small tablet for display size, yet don’t want to carry a bulky tablet around, are the ones buying these kinds of devices.

    • RobDK

      What absolute rubbish – where does one start?! Take this article by Horace:

      Samsung spends 3-4 times the amount on marketing than Apple, and it is all spent by their smartphone division. Apple actually has a very restrained marketing and advertising budget.

      Instead of posting junk, maybe you should take time to read the many insightful articles and discussions on this site. And then you can try and come back later and comment at the same intellectual level…

    • “Where there no tablets before the iPad?”

      That were like the iPad? Nope. Not really. They were all big, heavy, bulky, laden with ports (USB, HDMI, RS-232, SD, …) and poor battery life.

      As for your patent comment, read up on design patents before using that line again.

    • One possible conclusion is that Apple has tricked the customer. Another is that you have misunderstood the transaction. All your example proves to me is that the CPU is not the source of value in a laptop.

      In general one should not prefer a theory which requires one to assume that great masses of people have been duped out of thousands of dollars and haven’t noticed! Extraordinary claims, etc.

      • PokerPatsy

        “One possible conclusion is that Apple has tricked the customer. Another is that you have misunderstood the transaction”

        Kind of like poker. Like they say, if you’ve been at the table for 30 minutes and don’t know who the patsy is, it’s you.

        If you think all the people who have had what it takes to succeed to the upper incomes of the world are a bunch of idiots, well…let’s play poker.

      • sy69

        Agreed. Those who think Windows and POSIX systems are interchangeable are both unfamiliar with the strengths of POSIX and likely living dangerously using Windows.

        Aside from the nifty cases, the hardware is commodity stuff. But OSes are the user experience, and with Apple the key differentiator on the desktop.

    • ChKen

      “public manipulation campaigns”

      I think we can guess where this comment is going to lead. Seriously, is there any advertiser that more consistently just shows what their product does than Apple? Haven’t you noticed that every other advertiser of technology, other than Apple, has to put the disclaimer, “screen images simulated” under their ad?

      “For example apple is not as innovative as it tells us”

      Where did Apple tell us that?

      “Since 2000 we ve seen the flat screen tablet”

      Only since 2000?!? What about the Newton?

      “But it’s so overpriced and luxurious looking when it’s hardware is sub par compared to the competition”

      Dear me, the overpriced and subpar hardware meme. You do realize this is NOT the forum to hash out comparisons between Apple and the competition, but to better understand the market.

    • koopapoopas

      You forgot the Apple Newton, which coined the term PDA. Ex Newton guys went on to form Palm, and Be Inc.

    • Dan Andersen

      Biscoto stated that, “…Since 2000 we’ve seen the flat screen tablet which apple went ahead and patterned (!) as if apple created the idea that you can have a flat screen on a device bigger than a phone but smaller than a notebook.”

      Yes, the nerve of Apple! Oh, wait…You may want to look up Newton, Biscoto…1993 and all that…

    • Space Gorilla

      Biscoto’s comment actually speaks to the larger point of why people don’t copy Apple’s processes. Because they don’t believe those processes led to the success Apple is experiencing. If that was true then many people in many companies would have to admit that they were wrong for many years in their approach to technology products. And humans *hate* being wrong. So instead Apple’s success is ‘excused’ or explained by saying it’s just marketing, or it’s the Apple faithful, or it’s just a fad, shiny toys, anything other than admitting that it is Apple’s approach/processes that have led to the company’s success. Until the tech industry as a whole admits that Apple has indeed earned their success, we will not see much copying of Apple’s processes.

    • If it’s marketing then why don’t companies copy the marketing. Better still, hire the marketers. If the marketing department created $400 billion of value, then surely paying each person $1 billion to move to another company would be a great investment and I’m sure for that much money they all will.

    • Walt French

      Thanks for the laugh, a trip down memory lane to the 1990’s meme that IT fashioned as a bulwark.

      Just one minor note about your perception of the relative price/performance of Apple products: you are being out-voted hugely by the hundreds of millions of people who are voting with their wallets. In 4Q12, approximately the same number of people bought Apple products as products from ALL manufacturers combined, that had a “Windows” OS. At this point, you have to let go of the idea that there is a small cadre of iCultists.

      Sorry if that leaves an intellectual vacuum. Try out some new perceptions.

      • sy69

        “you are being out-voted hugely by the hundreds of millions of people who are voting with their wallets”

        Have you been watching the stats over the last two years? 70% of smartphones are Android, Microsoft still has 85% of the desktop, and in tablets Apple holds onto only a very slender majority, having dropped from 90% to 70% and currently at 50.3%.

        Sure, we’ve all seen the chart about the alleged irrelevance of Microsoft, but I think Tufte would have more than a few things to say about such an unusual and highly selective portrayal.

      • jawbroken

        They’re not paying as much for the alternative in any of those cases, so maybe you need to look at a weighted vote.

    • I really don’t get the albeit too common ‘public manipulation’ sentiment. You really think we’re all that dumb? To be that manipulated by their marketing without having a well informed reason to buy a product other than it being well marketed?

    • Sander van der Wal

      AFAICT, the Apple marketing people are talking about, all those ads on TV and during the Superbowl and whatnot, are only shown in the USA. Never seen them in The Netherlands on TV. Samsung ads are everywhere, not just on TV.

      Still Apple sells a lot of iPhones over here. Not as many maybe as Samsung does, but compared to the amount of advertising, Samsung should be 100 times bigger than Apple.

    • Sander van der Wal

      AFAICT, the Apple marketing people are talking about, all those ads on TV and during the Superbowl and whatnot, are only shown in the USA. Never seen them in The Netherlands on TV. Samsung ads are everywhere, not just on TV.

      Still Apple sells a lot of iPhones over here. Not as many maybe as Samsung does, but compared to the amount of advertising, Samsung should be 100 times bigger than Apple.

  • “But what I wonder is why there isn’t a desire to copy Apple’s product creation process. ”

    …any monkey can copy the mechanics of a process.. the missing ingredient is, well, I don’t know what it is.. but i guess that’s ultimately the question.

    you could give me the same training, ingredients, and experience as a Michelin chef, but I’m not probably not going to get my 3 stars. the same goes for musical talent (Clapton, Johnson), athletic prowess (Montana, Bradshaw), or scientific brilliance (Sagan, Einstein).. all of those people are (arguably) prodigies in their respective fields.

    when you look at it in terms of individuals, maybe there is a little magic. there’s certainly an intangible, or something that can’t be quantified in play.

    • Kizedek

      Yes and no. There are certainly some intangibles somewhere, like culture or values. These are part of the discussion as evident from other comments. But Horace has identified a few rather concrete principles, such as “saying no”, or “being willing to disrupt/cannibalize your own product”, “striving to produce the best product”, etc.

      And it is this type of thing that I think Horace refers to in “product creation process”, not any mechanical process or means of production. And these are things that others could probably get hold of and emulate, quite successfully. (Though having said that, others would do well to copy at least the mechanics of the production process as well, and create something milled out of solid aluminium for example, instead of slapping some kind of metallic paint on plastic and calling it some kind of special new alloy.)

      Obviously, these others want to produce a similar product, without the introspection and reform that examines the creation and production processes that led to the birth, development and continued improvement of those products, and without which those products wouldn’t exist.

      One can only wish it were simply a case of getting the same ingredients and training as a master chef. That would be great! That would be a start. No, it’s like taking mass produced beef from a slaughterhouse, making it into patties with a stamping machine, crating them and freezing them, shipping them to McDonalds or CostCo’s; and after defrosting them and getting them to the table wondering why I don’t have something that tastes like a steak from a 3-star Michelin restaurant. Until there is some kind of fundamental shift in their thinking (elements of which are very concrete and documented), then there is no question that the task is impossible.

      You just have to decide and accept that there is no way on God’s green earth that a mass-produced, frozen patty is ever going to taste like a chef’s steak. You can market it as a McSteak all you want. You can even slather it with steak sauce in order to snag the undiscerning masses. But to “copy” the master (even poorly copy, given he has developed some real magic over time) you have to decide you are going to begin by picking a piece of fresh meat and grilling it by hand.

  • jeromw

    Apple’s success isn’t innovation. It is refinement. Unrefined versions of all their successful products have existed prior to an Apple release. MP3 players, touch-based smart phones, touch-based tablets. All existed prior to Apple’s attempts, it is just that Apple got waaaaaay closer to the mark with their first release than any previous non-Apple releases.

    • deemery

      Disagree in some respects. There’s the ability to recognize value in a basic technology. In some cases, all that’s needed is “refinement” to produce a product that is substantially better/different than before. In other cases, it’s the ability to further innovate. iPod is a good example of both. The basic idea of a music player wasn’t original with Apple, but the user interface design was an Apple innovation over previous devices.

    • I think there is invention, refinement and timing to Apple’s success.

      Let’s take your one statement on “touch-based smartphones”. It is true that LG showed the Prada shortly before Apple. The Prada used a capacitive based touch system but was, in no way, like an iPhone.

      The Prada had a simply horrid touch screen from an accuracy and precision standpoint. To text, you still 4423086660887777330668862233777_7777. So Apple had to invent much more accurate capacitive touch to refine the existing tech and time it correctly to market.

      If you don’t do all three, you end up with failures.

      • jmoskun

        I agree, I think all 3 aspects are critical. Most tech companies introduce innovations in crude products targeted at early adopters, then refine. Apple tends to wait, refine and only introduce when they have an innovation that is ready for the mass market. The timing usually depends on a key piece of the puzzle that competitors have not “waited: for. iPod: 1.8” micro drive. iPhone: capacitive touch, iPad: Capacitive touch at $499 price point.

        I have always thought that Jobs learned a key lesson from premature introductions of the Lisa & Mac. Lisa was introduced at too high a price point, but showed their hand. Mac was underpowered, no hard drive and not enough apps at introduction, which gave competitors (MS) plenty of time to copy.

        Could the rumored watch be waiting for an Intel manufactured blue-tooth based SOC using their 22nm process?, a lower power AMOLED display? I often wonder what tech the TV is waiting for?

      • claimchowder

        And that last sentence is exactly what Tim Cook meant when he talked about the intersection of hardware, software, and services.

  • not a fanboy like the rest of

    I think a lot of people fail to realize that apple was not the first company to be the “innovator” that ever copied. They were the top dog for a short period of time and now that they are in their way out another company will become the new apple.

    • Kizedek

      What a lot of people fail to realize is that they haven’t put a lot of thought into what “on their way out” means. Horace is putting the effort into thinking it through.

      The only way people can say Apple is “on their way out” with a straight face is to be incredibly myopic:

      –perhaps they look at only one metric like “marketshare” and fail to recognize how the market itself is growing, or where it is that Apple decides to compete through choice;

      –perhaps they look at published margins that in one quarter are slightly lower than some other quarter in Apple’s history, but don’t take into account a shortened quarter or how far into a quarter a new product was launched.

      –perhaps they look at the fact that Apple’s growth rate is not accelerating quite as fast as it has at different points in the past; that Apple’s growth is “only” an impressive 25-30% (or whatever) per year (instead of 100%), while failing to take into account that in a repressed economy the next best growth of any other company is about 6% — if not negative or contracting.

      Really, it takes quite a lot of denial, obfuscating, obtuseness or imbibing of competitors’ propaganda to come to any such conclusion as Apple are “on their way out.” In fact, Apple was declared “out” for most of its history; and it was only since the iPhone was seen as any kind of success (at least a year after it went on sale) that Apple was said to be “in with a chance”, or that Apple was any kind of force to reckon with. That’s only four and a half years ago. Now Apple’s iPhone business alone is larger than all of MS.

      Were it in any sense true, however, and Apple is indeed “on its way out”, this article is inviting discussion on the second part of your proposition: “another company will become the new Apple” (Oh? Thanks for the revelation). This article asked:

      –why has no other company ever become the new Apple? Yet?
      –what is it about Apple that another company needs to understand and emulate in order to become “the new Apple”?

      Any deeper thoughts or insights?

      • sy69

        “Really, it takes quite a lot of denial, obfuscating, obtuseness or
        imbibing of competitors’ propaganda to come to any such conclusion as
        Apple are ‘on their way out.'”

        Fully agreed, but in all fairness there’s a universe of possibilities between “on their way out” and the unprecedented growth we’ve seen in recent years.

        Apple is at no risk of death. Far more likely that they’ll just become like most other companies, reasonably profitable but no longer the single biggest growth story.

    • BMc

      How is your prediction that Apple is on the way out working for you now?

  • Isaac

    I think we’re about to see some effort from Google to be more Apple like. Their efforts with glasses and cars point towards them trying very different ideas, things that haven’t been there before. What is funny is that if they are successful, the press and the financial wizards will declare that Google has “won” even though Apple doesn’t participate in those markets. If there is going to be more than one Apple, it will have to be done with asymmetric competition. If we’re lucky, technology companies will stop being software and computer companies and become much more diverse. We don’t think of Ford and Google as competitors right now because they aren’t in the same “industry.” What happens when Google does come out with a car? Are they now a car company or a tech company? I think in the near future we will no longer consider computers synonymous with tech. Google could do cars, glasses, and who knows what else. Apple may branch out into materials science and commercialize industrial production methods. I hope and pray we get many more companies trying to copy Apple’s core innovation strategy.

    • What Google might be missing is an understanding of what they do after advertising and insuring that msft is corralled. Google really has one profitable product, AdWords. They then have many other pieces that moat that product to protect the monopoly. Outside of that they have a cacophony of stuff that really seems like a “throw it all against the wall and see what sticks” type approach. They are trying to find another thing to diversify away from advertising though. So far, Android is a money pit and has only helped Samsung. Who knows if cars or glasses will be a thing for them. The tech is cool to watch anyways.

    • stevesup

      Samsung wants to be the next Apple; Google wants Samsung to be no more than a Sony. Will a Samsung OS and search be long in coming? Should be interesting. My guess in the five year frame, profitability will leave Apple, Samsung, Google in that order.

  • poke

    I think Jobs and Cook have both been clear that it’s about values. Values cannot be copied, only cultivated. They cannot be reduced to a formula. Most of Jobs famous quips are about values. “Making great products” is both a particular focus and a blanket value-based rejection of traditional management. “Stay hungry” is a call for humility. “Willingness to self-disrupt” is unwillingness to compromise.

    Innovation isn’t about coming up with new ideas, on the model of brainstorming sessions, it’s about seeing clearly. iOS is what happens when you see the trends in computing and are unwilling to compromise them to save your existing market. It’s looking at capacitive touch, flash storage, mobile processors, battery technology, etc, and putting them together the way they should be put together. You put the team working on it in a silo so they can’t be touched by the worries of the OS X team.

    I think Apple’s core insight is the rejection of process. Obviously they do have processes; you have to quantify to quantifiable. But they reject the notion that everything can be reduced to a process; they reject quantifying what is not quantifiable. That’s why Jobs hated what he called “salesmen” running the company. That doesn’t make what they do magical. Steve Jobs was, in my opinion, a moralist. Cook’s self-declared mission has been to preserve Apple’s values.

    Other companies (and analysts) look at Apple and see magic because they don’t share its values. Their own (compromised, confused) values mean they have to dismiss it. I think both Jobs and Cook have actually been very open about what it takes. It’s just not something that can “copied.” It’s something that has to be realised. Steve Ballmer would have to wake up in the middle of the night, in a hot sweat, and declare how wrong he’d been. Not merely in error, but pursuing the wrong values! It’s not going to happen.

    • Dmitri

      We can all go home. Poke just won the Internet with his incredibly insightful comment.

      • David Ryder


      • I second and third that.

      • Artiste212

        I’ve never actually read a blog with such constructive comments on comments. And such good comments. What a pleasure.

    • Foris

      Very insightful. And an essential part of this is leadership, that rarest of all qualities. And the flip side of that of course is working as an integrated team. Without inspired leadership, teams become little more than gangs fighting with each other – the sort of situation that has reigned at Microsoft for so long where despite huge resources, so little has resulted (no values, no leadership).
      Google’s incredible success has also been built on leadership and values (don’t be evil), but in chasing quick returns they have corrupted the first (that corruption largely driven by Eric Schmidt) and abandoned the second – as a result I believe their long term success is threatened.

    • Very well said — I would put it a little differently, that Apple eschews accepted tech business processes (divide and conquer as a design strategy, and design by committee or focus group), and replaces it with a process that looks for genius in design, and has a (reasonably) consistent editorial oversight. The latter is probably the “magic” more than anything — the editorial oversight (system architect or designer) has to be right most of the time.

      Some of the stories I’ve seen about Apple’s internal design process sound a bit like DARPA’s old technology “bake-offs” when the Internet protocols and software were being designed — get several competing ideas built and then evaluate the result for a best-of-breed next step. (Needless to say this didn’t always work out, but it worked pretty well.) And DARPA tries (not always successfully) to be a technology disruptor. So the parallel is interesting.

      • JohnDoey

        I think the “magic” is the whole becoming more than the sum of its parts. iPad-nature emerges out of ARM/Wi-Fi/4G/SSD/xnu/Darwin/iOS-nature. The counter-intuitive notion is that everyone at Apple was probably at some point or another surprised by iPad, even though they made it. That is the delight that Jobs himself seemed to relish the most. It’s like, “where did this iPad come from?” iPad emerges not from the individual parts but from the synergy of the parts.

        I think that is also what some people mistake for arrogance from Apple. When Apple says, “iPad is magical,” they are not complimenting their own genius, they are complimenting magic. You hear this from songwriters who write a piano part, then a voice part, then a drum part, then a bass part, then a guitar part, and whoa, where did this song come from?

        The editorial oversight is not to be right all the time, but rather to recognize the magic when it happens, and don’t ship until the magic happens. You simply keep working and working until you end up right. Apple may seem to be right all the time, but only until you look at their prototypes, at the things that did not ship. The idea is that the most genius artist not only has the most successes, he or she also has the most failures, the most stuff in their wastebaskets. The editorial responsibility is to figure out what goes in the wastebasket, and what ships. If you do a good job, all the shipping work seems to be one long stream of genius. You look like you are right all the time, but when somebody asks you how you do it, the answer is there is a second giant stream of failure after failure that was edited out. For example, Bruce Springsteen wrote 200 songs for “Born in the U.S.A.” and only the 10 best appear on the album.

      • barryotoole

        Although there is editorial oversight (this this is crap; do it over again – SJ), I believe that one of the pillars of Apple’s success is that the committee about a product in evolution comprises of people from diverse backgrounds and departments. The iPod click-wheel was suggested by someone not from hardware or design.

        Also, it is the only tech company I know where the design department has a higher standing than engineering or hardware. It’s not like engineers come up with a product and than ask that the design be made around that.

    • It’s also the structure of the company. Companies are generally structured on cost centers.
      It’s distributed control, every cost center must obtain a profit in the general belief that optimizing every local cost the general cost will be minimum and the profit maximum.
      At Apple’s core there are values and what they do is the demonstration of their values, but Apple is also organized differently as a consequence of their first value: simplicity.
      Apple is maximizing only one cost center, the global Apple cost/revenue balance. They can cannibalize themselves because the general c/r increase and there not a division complaining about their c/r decreasing.
      Simplicity implies lesser control, less structure and the company is more flexible to adapt to the market.
      Steve Ballmer is trying to move Microsoft in new integrated directions with surface but all the high structured company is resisting causing compromise everywhere.
      Office is not touch, RT is not touch only, price is not competitive, brand are confusing, internal code are awful complicated and on and on.
      Innovating is a matter of values but of right values also, the ones that can keep a company light, less controlled and more flexible.
      Great article anyway and great post.

    • JohnDoey

      A related factor may be that Apple was founded by a Buddhist and most competitors were not. There are many traditional Buddhist values expressed in Apple’s products:

      • human equality — the same product sold the world over, the $329 PC buyer and $3299 PC buyer get just as much design and technology, everybody welcome at Apple Store, no need to be a computer scientist to use an Apple product

      • increasing joy for its own sake, reducing suffering for its own sake — the product should delight you when you use it, the product should not force you to take an I-T course to keep it running, the product should make your life better

      • respect for intuition and not just intellect — the products have to feel right as well as work right

      • recognition of the temporary nature of everything — product iterations, product categories, technologies, all in need of constant replacement

      • harmony with the natural world — rounded corners in the user interface because rounded corners exist in nature, recycling of aluminum and glass, getting rid of hazardous chemicals, the tiniest shipping boxes, aggressively moving to network-delivered software instead of plastic discs

      • making one thing out of many things — not many things out of one thing

      … these things are not necessarily top-of-mind for followers of Middle Eastern religions, and in some cases run counter to Middle Eastern dogma.

      There is this common myth that Jobs was the single source of all Apple products — Jobs as god-figure. In Buddhism, there is no single source for anything. Each individual thing descends from many things. If you are an Apple competitor you may fall into the trap of thinking you either need to copy what you think Jobs did all by himself, or you think you have to find your own Jobs god-figure (i.e. “Sinofsky will save Microsoft”) but what you probably really need to do is get everybody in your company working together towards one goal, so that the end result is an integrated expression of the entire organization (i.e. “only Microsoft can save Microsoft.”)

    • > Steve Jobs was, in my opinion, a moralist
      Now we’re getting somewhere.

      • Dadsfolk

        Steve’s basic goal was to change the world; to make technology available to the masses transparently – not requiring arcane learning rituals. Even the Apple II booted directly into whatever program was in the disk drive – no “a: >” prompt.

        This is fundamentally antithetical to business practices in this country, which – thanks not least to Wall Street – is short-term, bottom-line based. You’d have a hard time finding any CEO with Steve’s (or Tim’s) ethos, and there’s no way, short of years and major turnover, he could turn a company around to instill that value in the entire organization.

        And the institutional shareholders wouldn’t put up with it. Everybody thinks they can run Apple better than Apple does – including Einhorn, if he’s not just running a greenmail ploy to make back some of his losses. Everyone on Wall Street screams that Apple has to make cheaper products, move downscale in the market, etc. – i.e. be more like Samsung. Does no one remember the last time that happened, when the board fired Steve and brought in Scully? Apple lost its principle differentiating factor, and almost went bankrupt!

        Wall Street just doesn’t get Apple, and never has; Apple’s historic valuation shows that. Just look at the FPE if you think WS has confidence in Apple based on past (or even recent) performance.

        You can’t duplicate what you don’t understand. And if you play Wall Street’s game, you can’t duplicate Apple anyway.

      • Sacto_Joe


      • kibbles

        yup. see Steve Denning’s excellent series, “The Dumbest Idea In The World: Maximizing Shareholder Value”:

        …if you play the numbers game, you lose the delighting-customers game.

    • chano1

      Very well said.

    • stevesup

      “Stay hungry” is a call for humility … Hildegarde of Bingen said that humility is the queen of the virtues cus’ the other virtues cannot happen without genuine letting go at the heart of humility. That’s the kind of authentic risk taking that great leaders (and artists and persons) understand and that drives Wall Street nuts. Wall Street takes risks only to get, not to give.

    • Sacto_Joe

      Thanks, poke. And btw, those values are infections. In fact, everyone that has truly become part of the “Apple religion” has either been infected or already was infected. “Born again”, if you will….

  • stevesup

    Apple began saying that it created computers for the rest of us. I’d amend that mission statement today to say that Apple makes the best computers for the rest of us. Today’s best computers are iPods, iPads, and iPhones, which do simply and beautifully what ninety percent of us do ninety percent of the time. And as Horace says, Apple lives its mission.

  • As in all things in life, there is never just one reason. But I believe the most important reason is customer focus. I respond in more detail here:

  • Bruce_Mc

    “My own suspicion is that Apple is more aware of what makes it special than they are letting on.”

    There’s Apple University to consider. Apparently Apple thinks some of what makes it special is teachable to employees. I recently saw an article that said that Apple University was modeled on Pixar University, an internal education project started at Pixar.

  • sy69

    It’s not that deep: Steve Jobs was Apple; Apple was Steve Jobs. Anyone who doesn’t understand this hasn’t been watching either carefully enough.

    Jobs was one of a kind. He cannot be emulated by anyone, not even Apple themselves.

    • Dan Andersen

      Interesting. So Jobs, your hero, failed then?

      • sy69

        Jobs was neither my hero nor a failure. The latter should be obvious. If he appears a failure perhaps his goals were merely misunderstand.

        For all the articles since Jobs’ death claiming that abusing employees and taking credit for their work is the path to success because that’s how Steve made Apple, it’s neither productive to attempt nor particularly flattering to his legacy, however accurate those hundreds of first-hand accounts may be. Jobs was not a hero nor a demon, just a complicated man with a keen intelligence and an unusual charisma.

        But perhaps this article risks a similar hero worship – not of Steve, but of Apple.

        With all due respect to the author, this article’s focus on the nuts and bolts of running a company overlooks the uniquely compelling emotional component of Apple’s historic message, the underdog story, that brought them where they are.

        There are many great products, but those that experience growth like Apple’s don’t get there on nuts and bolts, but on brand appeal. This is an emotional thing, not an accounting exercise. Markets are people.

        And now Apple has gone from underdog to top dog, what in their history can guide them forward?

      • Dan Andersen

        @sy69: “But perhaps this article risks a similar hero worship – not of Steve, but of Apple.”

        No risk there, sy69. Apple has always been great, a quality corporation. Now it’s finally getting its due in the marketplace…

        “And now Apple has gone from underdog to top dog, what in their history can guide them forward?”

        The same thing that got them there: Apple’s overriding focus on excellence and customer experience.

    • I’ve heard this argument many times and in many contexts. It reduces to a bet on the man not the system. It’s a bet on Leonardo not the Renaissance. It’s a bet on Watt not the Industrial Revolution. It’s a bet on Patton not the US Army. It’s a bet on a president, not the institutions of a nation.

      Leadership is not magic. It’s not some mythical super-power. It’s guts. Most people have it. It’s released in spades when facing dire circumstances like war or famine. The trick is to unleash it in times of strength and comfort. It’s a simple lesson that can be taught to anyone. I can’t say whether Cook has learned it or not or whether he has learned it and is willing to betray it. All I know is that it’s not only Jobs who could have had it.

      • Its also important to note that some very talented people were attracted to Apple under Jobs. They would have left had they not been listened to and given a chance to grow. It may be the big achievement of Apple was the creation of a corporate culture that does innovation. This is nothing new and some companies have sustained it for decades (AT&T with Bell Labs, IBM with Watson and so on…) They had problems later on, but they managed runs that were much longer than Apple’s lifetime – particularly the “second coming” lifetime.

      • David Ryder

        Horace, I agree for the most part. But investors haven’t yet seen Cook fully demonstrate his bravado. It really hurt when Cook and Oppenheimer basically guided down, without putting the next (this) quarter into a longer term perspective. With $130 billion in the bank, it is hard to guide down without putting a better spin on things. I have been mildly concerned that Cook pushed through the unprecedented amount of product updates in Nov/Dec as an act of force. Let’s hope that wasn’t the only reason he did that.

      • Investors punished Apple far worse while Jobs was running it.

      • sy69

        Nice metaphors. Well crafted, even poetic. Yes, on paper it all looks good. They’ve done all the right things, hired all the right talent, put all the people and things into the right places. Yes, it _should_ work. And it will. But only somewhat, and only for a while.

        I take it you’ve never seen Jobs in person. There was a quality about him, one that’s been written about many times as the “RDF”, and it’s no joke. Only one in several million people possess such a gift. Like Kawasaki said, “Steve is the only guy who can change his mind and make you think he was right twice.”

        It’s difficult to define, but palpable. I’ve seen him spout complete BS and everyone in the room became increasingly excited about it the longer he spoke. It was odd, but taught me something about how people work. Whether engineers and designers working for him, third-party devs, or the press, all were affected when he spoke, all left the room more fired up about what they were doing than they thought possible before, and all went out to spread the gospel to the rest of the world – and that’s how a gift becomes an empire. We are complex creatures; never underestimate the subtleties that drive us. Markets are, after all, comprised of people.

        They say it takes about three years for a product to get from Steve’s head to your hands. So right now, it’s too early to tell. But come Q4 2014, let’s meet here again and see where the cards have fallen.

        In the meantime, note that since he left we’ve seen only minor incremental changes to the product line, and a growing number of me-too’s like the smaller tablet Steve rejected. Investors are beginning to lose the faith that previously seemed unstoppable, and Google and Samsung have begun to get the headlines.

        It may be uncomfortable to consider, it certainly is for me, but this simply isn’t Steve’s Apple. It will no doubt confound traditional biz school thinkers for years to come that the company will not be able to reproduce the growth it enjoyed under his last 10 years at the helm.

        I know, I know – this sounds like the ramblings of a crazy person. You know the type: the misfits, the rebels, the troublemakers, the square pegs in a round hole….

      • jawbroken

        Apple didn’t release a revolutionary new product every 3 years when Jobs was alive so I don’t understand what you think your test will prove. Apple has always had a steady program of incremental improvements that, as they accumulate, become as important or more than the first launch. It’s just harder for people to spot and appreciate than the flashy launch.

      • sy69

        “Apple didn’t release a revolutionary new product every 3 years when Jobs was alive so I don’t understand what you think your test will prove.”

        The interval I described was only the time-to-market for Steve’s ideas; of course some things can be done in parallel, which explains the variance in release dates. Even then, the pattern largely fits:

        iMac: 1998
        iPod: 2001
        Switch to Intel: 2005 (not revolutionary per se, but a key element in Apple becoming a plausible growth story; review the history of PPC)
        iPhone: 2007
        iPad: 2010

        There may or may not be a “Steve’s TV” in the works. Beyond that, we’ll have to meet back here in Q4 2014 to see how it all played out.

      • You sell Jobs short if you think he did not create something greater than a set of products.

      • sy69

        On the contrary, it seems to sell Jobs far shorter to suggest that he can be easily replicated by somehow reducing his contributions to a formula.

      • I did not say he can be replicated. Indeed I reject the notion that he needs to be replicated. I only suggest that he created something greater than himself.

      • sy69

        I agree on all three fronts, and am not surprised to learn here in the end that we share a similar criticism of this article’s premise.

      • Kyn

        Horace… you are wrong… leadership is magic.. and most are oblivious to the reason for Jobs success and why IT CANNOT BE DUPLICATED internally at the company… magic is required… if you want to begin to understand look at the work of Dr. John Sarno… read his latest book the Divided Mind. No one has ever examined Job’s in this way and it is the reason he was successful and also the reason he died at a young age.

        Essentially Jobs had incredible suppressed rage since a child… at his abandonment (witness his non acceptance of his biological father etc.). This rage fueled his subconscious mind… which… via Apple created not only a loyal family… but also and extended family around the globe that cherished him.

        Witness his second abandonment when he was ousted from Apple… usually this kind of suppressed rage will allow for the increased inheritance of former affronts later in life… i.e. 1st abandonment as a child… 2nd abandonment form his 2nd family.. Apple. However the univers rewards humility and this rage can often be harnessed and we see his 2nd coming success at Apple… unfortunately this rage had taken its toll on his body as well and was beyond the point of return in his final years.

        The subconscious mind is a magic mind… it creates reality in a godlike manner… Apple’s success was Job’s subconscious working magic… without this power the empire will decline.

        Ultimately personal success and physical longevity and health are intimately linked… until we begin to understand the whole human from the standpoint of consciousness and supression there is NO business school that can create leaders of enterprise…. they are NOT born.. they are shaped by their rage… and Steve happened to bear one of the largest crosses which haunted his subconscious from early on.

      • Thbf

        Psychoanalysts view the mind as a big pot with everything roiling around for better or worse. Buddhist view has a more dynamic view of the mind that is much more in keeping with our actual experience of life.

        Steve knew this and ultimately was not defined by his past!

        Psycoanalysis belongs to the early 20th century and does not have much of a future in my opinion. Initially fascinating but ultimately ’empty’.

      • Psychoanalysts and buddhists are not disjoint sets; far from it.

      • thbf

        Agreed. All I’m saying is that personal history in itself is not a sufficient cause when attempting to define a person.

    • Apparently you haven’t watched close enough to hear about Apple University.

      • sy69

        I think we all appreciate that Apple has diverse revenue streams, AU among them. Let me know when any of the graduates actually produces another Apple.

      • Apple Univrsity isn’t a revenue stream. It’s what other companies would call staff development function. Jobs hired the Dean of Yale’s Business School to study Apple as if it were a b-school business case and then teach Apple’s and Jobs methods to Apple, very specifically to make sure he was building a sustainable institution. See for example.

      • sy69

        Yes, the value of that investment is strategic rather than direct. But its ostensible aim is to further revenue growth, through the sorts of fresh thinking that characterized Jobs’ ability to create new revenue streams.

        While the company has been doing well with its quarterly reports we have yet to see AU produce anything in the way of groundbreaking achievements that define its goal. Aside from the long-overdue Forstall ouster, since AU there’s been no visible change in either management ranks or new product lines. Of course it’s still quite new, so I’m happy to say let’s see if this ever produces another Apple, the Apple of 2001-2012.

        AU is, ultimately, a headstone, a legacy item that plays well in the company’s founder-departure story, but only a little consideration is required to identify its irony: it is exactly the opposite of what created Steve Jobs.

    • BuiltToLast

      No doubt Steve Jobs was one-of-a-kind. Just like Warren Buffett.

      Where I believe most will be wrong is in the failure to see that much of the greatness of both was in building something that would survive beyond them.

      • sy69

        This assumes Steve was perhaps more generous than his friend Ive described to Isaacson. After all, what good is building a legacy that’s easily trumped? Steve was more than simple genius. He was shrewd, clever….

    • Relentlessfocus

      I watch both a lot and carefully and I don’t agree with you at all. In fact I question whether you have watched very long or very carefully.

  • Charles

    The reason Apple is undervalued is that its success demonstrates how pathetically most of corporate America is run. Nobody on Wall St. wants to explain to their investors why they suck. Apple makes them all look overpaid – which they are.

    • David Ryder

      The hedge funds bailed out. Could Apple have schmoozed them more? I don’t know how that works. But the hedge guys figured it was time to move on. As an investor, I’m hoping they come back soon!

      • Sacto_Joe

        The hedge funds are as susceptible as individuals to panic. The panic was uncalled for, but that will take time to become obvious. They’ll be back, because Apple is far from done growing. And I have no doubt that they’ll come back a bit chastened as well….

  • It’s a lot about remembering your goal and keeping focus on that, as doing so will help guide your decision about which data you can ignore.

    As I was reading this article, I suddenly recalled a Kevin Bacon film I saw last century called “The Big Picture”. It was about an idealistic young director who got his first job out of film school, and as he pitched his idea, the studio he was working for kept slicing and dicing his story to better fit their target demographic. It went from being a subtle story about the complexities of love to being a beach bimbo extravaganza. Each change was accompanied by a comment like, “You know what would be hot?” or, “That would test well!”

    The thing is, nobody every went broke catering to the lowest common denominator; it’s a pretty good bet. The question is, do you want your business to be defined as making great products or making great money. Ideally, of course, it’ll be both; but how you balance the two goals, and which one you put first will certainly impact your company’s legacy.

    • GreatestOrRichest?

      This has got to be one of the big ones: what is your summon bonum, your highest goal? Making the best products and services you can, or making the most money?

    • r00fus

      The really amusing part about your anecdote about the Bacon movie is that those folks doing the demographic slicing are losing sight of the fact that demographics aren’t reality – they are a model of reality that misses huge swathes of the possibly lucrative demographics.

      My 6 month old twins glom to the iPad and iPhone like nobody’s business. Perhaps Apple is targeting the 1-99 demo by making something so usable any of this age-group could use it?

      • Absolutely right; but they’re the demographics those folks knew how to cater to. I know it was just a movie, but some people get successful by taking risks, and others get successful by avoiding them, and I’m sure there are real studios who would rather make a thousand beach bimbo movies over one e.g. Cook/Thief/Wife/Lover.

  • Jon

    If you’re managing a big tech company that wants to compete with Apple, what’s easier to do? Copy Apple’s products quickly, or copy Apple?

    I think copying Apple itself is exponentially more difficult that copying the product. If you’re holding an iPad in your hand, you more or less know exactly what specifications you would need to meet to make something similar. But if you want to copy the company, where do you even start?

    There also might be a dynamic where copying the company it is simply impossible to do – if your company is big enough to compete with Apple, maybe it is too big to really make that kind of shift in culture and processes to be like them.

    Also, if you’re a manager at a big company, you rose to the top inside a culture that is by definition unlike Apple – so (A) do you even see a problem with your company at all? and (B) what would be your incentive to actually promote real change, which could take 5-10 years?

    • Should be a matter of money. Since Apple’s earnings are by the billions, why every manager is not starting to change his company to be more like Apple to increase their revenues?

      Usually they try everything they think will work, with big changes caused by faulty convinctions part of the history.

      For instance it is believed that Microsot stack ranking management technique has been the start of the fall.The strange here is that no one seems to think the Apple’s way is the way.

      Crazy idead, like stack ranking, are adopted, Apple’s way, even with billions of evidence, is not.

  • r.d

    Little bit of Mythmaking by Apple, Apple’s enemies and Horace
    just to try to validate his professor’s theory.
    80s were the time for innovation of model in the pc industry.
    Apple barely survived that.
    Apple has always been accused of being just a marketing company.
    Had to outsource their manufacturing just to compete.
    Apple outsourced their compiler, OS system, even WebKit.
    Swift CPU has tech from Imagination, ARM, etc.
    Apple was able to extend their ecosystem to other categories
    but throughout history companies have been successful threw
    monopoly action. Warren Buffett is successful because
    of monopoly power. Boeing was Integrated company until Govt.
    split them in three.
    Most of the time little guy has their stuff stolen by
    bigger companies.
    Apple got lucky in that computing industry was ready
    because jumping from Microsoft to Web to Web 2.0 didn’t really
    do anything for cellphone or handheld computing.
    Apps came just at the right moment.
    Xerox had bunch of Ph. d’s who didn’t know anything about engineering
    so it was always a science project.
    Apple has taken other companies work and called innovation.

    • jawbroken

      Thanks for the poorly formatted rant, but it isn’t very convincing to me.

  • Jurassic

    “The idea of Apple being successful is not something reflected in its stock price.”

    Exactly! I personally view the stock market and irrational price fluctuations as a game… NOT as a business.

    Apple has had a steady increase in profits and revenues, it has introduced truly “innovative” products that have changed our expectations (and those of competitors) of what that product category should be, and Apple has successfully entered new markets and services, boosting sales figures. But the absurd drop in the price of AAPL only proves one thing… that the stock market and Apple’s business are two entirely disconnected entities.

  • Morten

    Many companies are trying to be Apple, but they are probably not on your radar. They will be grow up to be the Apples of tomorrow. The current giant incumbents may want to be “more like Apple”, but they are entrenched in their own processes. I don’t think they can actually change. Or they will have to go through a “near-death” experience to be able to change.

  • How many company operates with one single P&L? I suspect not that many. Or one person takes responsibility for all products’ UI, be it hardware or software.

    And that’s only the very few things Jobs and Cook care to discuss or people from the outside can observe.

    Apple management style flies in the face of conventional business theory. And so MBA hires can point to standard textbooks to say that’s not the right way to do things. Corporate antibodies have the standard theory to back them up. Apple University is huge here. It signals Apple upper management find standard business schools to be so lacking they have to go out and create their own.

  • ChKen

    Mythologizing the Apple Way, is just another way to dismiss it, much like many people dismiss Apple products as being faddish or Apple product buyers as being in a cult.

  • handleym

    “Integration is something that can take a long time, but it is possible with a Herculean effort. A few companies are starting to make moves in that direction (e.g. Microsoft.)”

    Remember that a large part of success is saying NO.
    MS seems incapable of that part. They’re still at 12 different APIs for talking to databases, and they could never actually make a decision about whether the future was or was not .NET.

    I think, in a nutshell, the MS experience is typical. So much of Apple’s success has been a willingness to say no in all its forms, from abandoning floppy disks to OS9 to PPC to Carbon to replaceable batteries. Intel (as an HW exemplar) and MS (as an SW exemplar) are both unwilling to do this.

    You could say that they cannot do this, that it is impossible given the foundation of their business, that what they are selling is not just x86 and Windows, but a promise to more-or-less eternal compatibility. Perhaps, but both of them seem utterly unwilling to even experiment with the idea. As I’ve said many times, Intel would be vastly better off if they had sold Atom as an (essentially) clean slate — a clean x86-64 chip, but without ANY of the other x86 baggage — no 8086, 286 and 386 modes, no SMM, etc. And they could have done, given the clean new market with no compatibility requirements. Likewise MS could have used Win8RT as a way to indicate future direction very strongly, choosing one (and ONLY ONE) solution for every API and ditching the rest, but as far as I know this has not been aggressively done.

    We know the pattern from Apple — if you take things away, there is a massive amount of bitching in the first month, a whole lot of internet threats along the lines of “this is the last straw, I’m switching to Linux/Android” and then a whole lot shutting up as people (including the screamers and ranters) gradually realize that the change is not the end of the world, and actually improves life quite a bit.
    BUT every other company seems terrified of the idea of this intermediate stage, the one month of internet fury, and quite unwilling to note the benefits that go along with these cleanups. It is this mindset that then propagates outward to every other product, so nothing can ever be simplified.

  • Babak

    I believe it is all about timing and packaging. Apple is not innovative regarding its products, it never was. Everything was available before. There were touch display, tablets and of course mp3 players before Apple created multi billion businesses in each category. Apple doesn’t invent stuff. What they do is, they take an idea and execute on it just perfectly. They release stuff that actually works and is super simple to use at the right point in time regarding the Hype Cycle of a certain technology [Gartner]. Combine that with clever marketing and product bundling to serve customers and attract developers. Even Apple gets timing wrong from time to time.

    For example take Samsungs approach to digital cameras equipped with Android. Great idea. Ordinary digital cameras suck. Huge market. However, Samsung did not execute perfectly on that product (for various reason). It is an “ok” product, but lacks the “wow” factor and is thus not disrupting anything.

    To get timing right, you need patience and the packaging reaquires great passion for products, backed by the top management. For both you need a “product guy” in the management who passionately cares for great products. Who will wait until the product is perfect enough to be released to the market. Most C-level managers don’t care about products, they manage by business cases calculated by some smart consultants. You might run your business well that way, but you won’t create disrupting products.

    • Ted_T

      MP3 players before the iPod were absolutely pathetic — the Diamond Rio and the Nomad — the top MP3 players when the iPod was introduced, were abysmal failures as mass market products — the top portable music player at the time was the Sony Discman by a long, long shot.

      So far as tablets, I believe Apple commercialized them with the Newton, long before others got into the game.

    • Ted_T

      MP3 players before the iPod were absolutely pathetic — the Diamond Rio and the Nomad — the top MP3 players when the iPod was introduced, were abysmal failures as mass market products — the top portable music player at the time was the Sony Discman by a long, long shot.

      So far as tablets, I believe Apple commercialized them with the Newton, long before others got into the game.

    • Dadsfolk

      “Apple is not innovative regarding its products, it never was.” This old saw again. You clearly don’t understand innovation. Every innovation has its seeds in existing technologies – otherwise you couldn’t manufacture it, or the market wouldn’t accept it (c.f. the microwave). But seeing the Macintosh for the first time, or the iPhone, there was no question in my mind: “This is new, and it’s amazing!” The only timing question is, “Is it ready?” If the iPhone had been 2008 instead of 2007, it would have been just as successful – nobody would have created a viable competitor in the meantime.

  • I agree that Apple as an company, organizational entity, and synthesis of all of its talent is highly self aware of its mission, vision, and purpose, and it’s values system which is a set of priorities by which it makes decisions and executes them. Based on the company’s results in the marketplace and its financials, the company is operating in a congruent way, meaning it is more true to itself than its competitors and hence, has the leadership position in manifesting its destiny. Not everything Apple does in terms of operations and product execution pleases everyone, to do so is unrealistic, however, the company is operating by balancing support and challenge in a way that has sustained maximum growth.

    In short, the company knows who it is, knows why its here, knows what it’s true purpose is, and executes by its principles and values congruently and consistently and makes course corrections when needed and is constantly creating and innovating as if today were its last day by building and destroying simultaneously within its product lines. In order to be the leader, one also has to be the villain equally and Apple has managed to keep up that game so far.

  • tmay

    There’s this river in Alaska, the McNeil, and it’s famed for its brown bears during the salmon migration. The biggest and most aggressive males are able to defend and use the best spots on and in the river for feeding, and when they feed, the preferences are for the skin and the roe. The most nutritious and fattening parts of the fish.

    But the salmon migration is a limited affair, so the best strategy is to only consume the skin and the roe until the salmon numbers drop and then begin to consume the whole fish.

    The goal is to have excess energy for pursuit of females to mate with and enough stored fat to survive a winter’s hibernation and repeat the process. An old experienced bear probably has survived a number of harsh winters and has many offspring. The primary goal is to store energy.

    The goal isn’t to eat the most fish.

    • Nice allegory.

    • AppleBear

      Awesome. Whole new spin on being an Apple bear.

    • stevesup

      Or in the case of Google and Amazon, to promise to eat all the fish.

  • bdkennedy11

    Apple is the equivalent of the military. Strict and disciplined. Most people won’t join the military.

  • mikeinparis

    I know why Apple is Apple and other companies cannot even come close to matching it’s ability to grow and innovate. But I can’t tell you because I’m trying to market it. It is not formulaic but there is a formula. But I have felt since Steve went back that Apple’s number 1 core skill was hiring. Good enough is not good enough for Apple. I cannot imagine how else a company can grow this quickly and maintain its core values and its ability to change life. Only the right people can bring that to a company. It’s hard to get a job at Apple and those not cut out for it recognize that in themselves very quickly and leave. It’s a company of gold medal calibre people. The Apple C-suite is amazingly talented. Leadership isn’t a matter of one guy, it takes thousands of effective leaders to produce Apple’s amazing results.

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  • In my opinion, no one copies Apple because they misunderstand Apple’s basis of competition. If we drop our preconception and look beyond the “technology” label, Apple is more like a fashion brand, like Louis Vuitton and Tiffany. It works in Apple’s favour in mobile computing (as compared to the PC era) because the technological lock-in is weakened and, thus, the impact of disruption theory is also weakened.

    Others don’t copy because everything they see don’t make any sense to them in the technological domain. Steve Jobs said in his bio Gates had “no taste”. Ask a CEO of any technological firm whether they incorporate “taste” in their decision making?

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  • I have written about this several times over the past several years.

    Aug 2012: Copying Apple

    Aug 2012: Apple Had to Sue Samsung

    Aug 2011: Why Can’t Anyone Replicate Apple’s Success

    Aug 2011: Every other company looks like they’re playing

    Sept 2011: Here’s the thing about Apple’s “recent” success

  • the Ugly Truth

    “Culture” cannot be copied. It flourishes and can fade away over time…

  • It’s difficult to imitate Apple, not because they are special, but because they have fiercely loyal customers. The one thing I learned from Steve Jobs is to focus on KEEPING your customers.

  • James Katt

    Apple is also THE MOST HIGHLY FOCUSED company in the world. It has only a few products. Any company that wants to be like Apple will have to get rid of most of its products and focus only on a very few products. Think about Sony getting rid of multitudes of its products and developing only 3 televisions, 3 computers, 3 cameras, etc. That would be impossible for Sony or Samsung or HP or Microsoft to even contemplate.

    Apple also has the flattest management system of any large company. It works like a startup. Any company trying to copy the Apple way would have to get rid of a large number of political layers of management – each with their own warring kingdoms who don’t talk with each other. There is a huge reluctance on each division to do this at Microsoft, HP, Samsung, Sony, etc. At Apple, every team leader communicates with each other and Tim Cook each week so that everyone is on the same page.

    Apple also has the harshest responsibilities for its vice presidents. Each is completely responsible for the failures of their division. Failure is not an option. Only the best survive. Changing this harsh leadership environment is extremely difficult when the division leaders of other companies want to be fat and have perpetual jobs and teflon jackets to ward off failures. Look at how often people at Microsoft fail and aren’t fired.

    Apple also is not driven by profit – it is driven to make the absolute best products in the world. This is difficult to accomplish in other companies where the profit/loss statement is king – and mediocre products are shipped to attend to profit and loss.

    Apple is also drive by the customer experience. Other companies forget about the customer as soon as the customer buys product. Google’s customers are advertisers, not its users. Its users are products. Microsoft’s primary customer are large corporations, not individuals.

    Etc. Etc.

    • Sacto_Joe

      Apple’s stable of products will continue to grow, perhaps more quickly than people suspect. But it will always be focused tightly on their core competency, which is computer hardware and software.

  • To summarize, briefly, the reason nobody copies Apple is because it involves thinking. Thinking is hard.

  • I *really* wish I could find the reference (maybe someone else here will recognize it and know where it came from), but I remember reading a study sometime in the last year or so about a social computer simulation that included innovators/explorers (which tried new strategies) and copiers (which generally used whatever strategy they saw nearby that was apparently successful).

    The interesting result (as I remember it) was that the socially optimal mix was very few innovator/explorers, and many copiers, since the innovators failed frequently and thus wasted resources, so the most successful society as a whole benefited by having just enough innovators to eventually find new, more successful strategies, and every one else simply copied them. Perhaps subconsciously people understand this and thus most companies want to be copiers (both avoiding the risks and reaping the benefits). Samsung looks like a perfect example of this.

    Google, interestingly, seems to fall into the explorer category, but they don’t seem as good at picking and exploiting successful strategies as Apple — Google’s only done it once, really.

    Perhaps we’re talking about not just looking for genius and exploiting it, but combining it with a second kind of genius, in recognizing what is actually useful and workable, and not just cool — a failing I’ve seen many times in the tech world, and especially with highly innovative people. Google follows a familiar pattern to me here — they like cool toys, and thing everyone else should like them too. Somehow Apple gets past this barrier and picks out the cool toys that are also the useful ones for real people.

  • Observer

    “Why doesn’t anybody copy Apple?”

    While some industry players do copy parts of Apple’s business model, the hint to answer the title question is “why species have different strategies for survival?”

    Why Apple did not copy Microsoft in 1990s? Assumption that the best survival strategy is to analyze and to copy someone successful is an assumption of an analyst.

  • arnaud

    Apple seems very strong in C-K theory innovation : exploring
    technical frontiers while dreaming of impossible products

    which is similar to say they are stronger in Breakthrough
    innovation, others in Iterative innovation.

    Obviously they have an original relationship with money and
    with power inside the company
    I would compare them as the 2nd generation of a
    industrial-revolution family business :
    – They have the means of their freeedom : savings,
    knowlege of their business, technology, culture
    – Yet they still have strong will, identity

    Others, if big, are money driven. If small they lack
    ressources. And as for state of mind, how could one ‘decide’ to become like this ?

    I would also say, that others companies may see the bigger risk as failing
    financially, while apple may see the bigger risk as failing to have impact.
    (and, I could elaborate, I think one of the strongest thing
    putting people on opposite sides, is when they have a different view of what
    the bigger risk is, opposite ‘null hypothesis’)

    • smalM

      “They are going into all technologies”

      “I don’t know in which direction to go so I go to all directions at once” isn’t a strategy, it’s Google’s lack of strategy.

      • arnaud

        With the eye of C-K theory (link above), apple has enabled the once “crazy concept” of a mobile tablet great for web etc., by pushing the limits of glass, touch, UI / UX as a technology, power consumption (OS, chip)…

        Similarly, Google could create other breakthrough innovations than Search, that “define a category and disrupt an industry”. For example, taking “crazy concepts” (C) like network-based Word Processing”, “get rid of passwords” to mainstream, by pushing technologies, knowledge (K) in mobile & tablets (know/own android), in browsers (for example local caching), in mass-cloud-storage… Others would copy..

        In terms of “being integrated corp.”,
        wouldn’t this require mostly that the (C) guy can challenge and work in privileged manner with (K) guys ? Belonging to the same capitalistic group with some shared vision could be enough, especially when all affiliates have high R&D budgets ?

  • It is never possible to copy being Apple, it is the core of a company that will be developed by unknow circumstances throughout any companies history.. So it is impossible to ever copy apple, or any other company..

  • I believe Nalini and Poke already alluded to this, but when we admire someone or what they have, we usually don’t want to *become* them, only figure out a way to get what they have. We are not willing to change our underlying values and priorities. We only want to learn the methods or shortcuts to give us those same results. This approach detaches us from the internal creation process where the magic happens, and while we can copy a final product to a relatively high degree, it does not allow us visibility into the process how that final product originally came to exist or how to apply that process in new situations.

    • sy69

      There is a third way: figure out a way to get what they have but do so by employing different principles.

      That’s actually Apple’s way.

      Steve didn’t beat IBM by mimicking anything they did, nor will Apple one day be beaten by anyone mimicking Apple.

  • Jerome

    The answer is: “why bother?”. Copying is risk-free. Outsourcing innovation to Apple is not only highly profitable, but also without any risk whatsoever. Just position yourself as a fast follower, like Samsung. Wait for Apple to pave the road, let them do the hard work, let them have the risk of stumbling or even failing.

    Once Apple’s product has proven to be viable, profitable and successful – commoditise it. Make it cheaper. Reap profits. It’s like picking up money lying on the street.

    Who of the commodity PC manufacturers would have had the balls to carve a notebook case out of block of aluminium? Capacitive touch screens? Glass? That’s crazy! Expensive! People want cheap! You would have been laughed out of your job at Dell or HP with such a proposal.

    Let Apple do it. If successful, just copy. Reap where you haven’t sowed. That’s what investors love: risk-free tailgating.

    • SuperMatt

      Until we fix the legal system governing patents, this will be true. It’s a crying shame that Samsung was convicted of copying Apple and their penalty was only $1 billion, and they keep selling the infringing products. Justice delayed is justice denied.

  • Matthew S

    It seems you contradict yourself slightly:

    “Apple is not to be imitated because it’s not worth copying. I.e. Apple is not a successful company. Why should one bother copying Apple if it results in being punished with a low valuation”


    You hinted briefly in podcast #72 “bingewatch” about taking AAPL private because Wall Street can’t value AAPL properly and it makes too much money to not have someone else interested in owning their profits. I argue that its a question of when, not if, someone finally takes AAPL private simply because they are too profitable and massively undervalued.

    When they are taken private next week or next year, won’t that invalidate your first reason of why they are not copied?

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  • Sander van der Wal

    There could be a lot of companies much smaller than Apple that are working is very much the same way. The difference is that in a small company the owner can do most things himself, or with a few handpicked employees/business partners.

    To put a bit of flesh on these bones, look at the Televue company, a maker of astronomical eyepieces with huge fields of view without optical abberations. That was disruptive at the time they introduced them, eyepieces with big fields had lots of abberations, or they had small fields. These eyepieces are also setting the standard in the field.

    Granted, astronomical eyepieces are very much a niche market.

  • Beyond all the cultural/philosophical reasons, Apple has one very real, nearly insurmountable advantage that gets overlooked all the time: OS X.

    Let’s just say that, I dunno, Dell decided to run itself like Apple. Well, Apple benefited from NeXT, which had been in development for over ten years by the time Apple inherited it. Does Dell have ten years to create an alternative to NeXT? And XCode and [etc]?

    There was a window where someone could have picked up the BeOS ball and tried to go somewhere, but that opportunity has long passed. *Perhaps* someone could fork Ubuntu (harkening to KHTML -> Webkit, actually), but I have trouble imagining it.

    Without a wholly-owned, OS X caliber operating system and frameworks, that can fit desktop and mobile OS’s, an Apple-style vertically-oriented ecosystem is impossible.

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  • Donnybrook

    I have often thought that some of Apple’s success stems from
    its failures. I am guessing that Steve Jobs
    experienced a certain amount of pain in losing the company he created. If you have the strength to endure that pain
    and come back to run the company again, it can focus your vision, strengthen
    your determination and hone your skill. Is
    a reaction to attempt to avoid the future pain of failure, or no longer being
    afraid of failure?

    • chano1

      Yes! It might be called The Lessons of Failure. After licking his wounds perhaps, after gaining a little focus and enlightenment too, and studying (or taking advice) about the true criteria for business success, he certainly returned with a quiver full of killer business strategies.
      His success cannot be measured by the winning product pipeline alone. It can be no incidental accident that Apple has one of the cleanest, strongest Balance Sheets of any corporation, in any sector – especially after 5 years of economic collapse and austerity around the world.

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  • StefanC

    From an interview from The Verge with HTC CEO Peter Chou:
    “At HTC, we don’t try and define things, we just make a few and see how the market will like it.”

    This he answered regarding screen sizes. But I think this pretty much sums up what the soul of HTC is, and their strategy.

    • stevesup

      How’s that working out?

    • Walt French

      Well, obviously the few things they try are ones that they think people will like. That said, it otherwise sounds like the exact opposite of Charlie Kindel (IMO very perspicaciously) writes on this post.

  • geekpondering

    It’s also been proven that companies can still make a ton of money copying Apple’s innovations without themselves being able to innovate, so why bother?

  • Randy Davis

    No one can create the “Enlightened” cultural element like Apple has. This is the “Truth” that lies within the uniqueness of Apple’s innovation.

  • “…the real magic happens at the intersection of these…”
    –Tim Cook

    intersection of hardware and software, software and services, software and chip design, hardware and peripherals, specialized CNC machines and hardware, System on a Chip and Software, Software and firmware, Datacenters and APIs, APIs and Software, Material Science and Hardware, Content and Software, Sensors and Software, and on and on..

    Apple does so many things itself that it has higher probability to find magic at all these interfaces compared to say a software only or hardware only company.

  • prak

    “They became farmers in the fields of stars; they sowed, and sometimes they reaped. And sometimes, dispassionately, they had to weed.” -Arthur C. Clarke. Different context. Same idea.

  • af

    Google just tried – I mean if that isn’t a MacBook… 2nd point – has anyone here read the comments on this same piece by Horace on LinkedIn? An “interesting” contrast of the quality of the commenters on the two sites.

  • chano1

    I believe the whole of the ‘magical’ attributes, the maverick nature, the engagement with the customer and all the myriad strands that make up Apple’s so-called DNA; all derive from a single, emphatic mission statement written by Mike Markkula – the original Apple angel financier and mentor to the two Steves.

    It was called The Apple Marketing Philosophy, and it goes like this:

    Point No. 1: Empathy
    Apple should strive for an intimate connection with customers’ feelings. We will truly understand their needs better than any other company.

    Point No. 2: Focus
    To be successful, Apple should center its efforts on accomplishing its main goals, and eliminate all the unimportant opportunities.

    Point No. 3: Impute
    Apple should be constantly aware that companies and their products will be judged by the signals they convey. People DO judge a book by its cover. We may have the best product, the highest quality, the most useful software etc. but if we present them in a slipshod manner, they will be perceived as slipshod; if we present them in a creative, professional manner, we will impute the desired qualities.
    I believe that all of the supposedly uncopyable attributes that underlie Apple’s success and customer loyalty, evolved out of these simple but defining aims.

    • These are the principles put forward by Aristotle as the basis of rhetoric (and hence of being a respectable member of society, a foundation of western education until the late 19th century): Ethos, Pathos and Logos. Ethos corresponds to Impute or credibility, Pathos to Empathy and the psychology or the audience and Logos to Focus or patterns of reasoning that are clear.

      • The basics of “The Apple Marketing Philosophy” were first promulgated about 2300 years ago.

      • chano1

        That is very good to know Horace, thank you. However, the suggestion of the adoption of these principles at the very beginning of Apple, by Mike Markkula, and the care with which the company has adhered to these principles ever since is, to me, the difference that makes the difference with Apple. It isn’t that these principles cannot be copied by others. It is simply that, in Apple’s market sectors, the others don’t have the integrity, the morality of purpose, or the enlightenment to understand and commit to the fact that the essential relationship is the one with the customer. Everything else, shareholders included, comes second.

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  • mutek

    Apple is a package design company and it’s design driven to the top of management so that engineering are not the stars…
    They need to package a very good product and not build the best techno geek amenities or serve the whole world of flavors…

  • Aditya Andhalikar

    Excellent post to start a discussion . Isn’t it down to integrated vs modular approach? Eventually playing field becomes such that modular players will do well. Hence there is not much incentive to change their existing operations to become vertically integrated. Also I want to point out that this is still early in the game. There is no evidence that modular players have “lost out” . It is too early to make that prediction. It would much make much sense for a new company to take apple’s approach if rather than an established on.

  • Calahan

    Well, actually too many factors among which not the least important one is timing and continued focus on verticalized hardware/software system/application product delivery. But other than the above two, the only two additional things that they did have are control over hardware supply chain at the supply side and ability to change it based on demand and last and most importantly Steve Jobs or Jobsian marketing. Well, the last one – Jobsian marketing – can be attributed to Steve Jobs alone. So Apple’s real differentiating factor was Steve Jobs. Apple without Steve Jobs is not and will never be Apple. It is like Microsoft without Bill Gates lost their product timing and product management abilities.
    The 2nd factor – continued focus on verticalized hardware/software system/application delivery – is what they still have. But other than the TV, wristwatch and wearable computer domains, they actually have no more ability to replicate the ixx success chain. TV looks possibly to be one more hit. But without ground up R&D built to solve NLP, ASP, gesture computing problems etc which are themselves not solved fully yet in the theoritical realm, they have hit the ceiling in the past one year.
    This lack of new profound, disruptive hits is giving time to competitors to match their product feature set and delivery and timing along with Apple. Which is why Apple’s share of the mobile device market has only marginally increased in the last one year. Would Apple have doubled its iOS device market share if Steve Jobs was alive? I think his marketing brilliance will definitely have done this.
    Lastly, one company dominating tech client computing landscape for more than 10 years is way too much. Business history shows this was not possible. Microsoft from 1992 till 2001, Sony from 1989 till 1999 (based on important products only) and IBM from 1965 till 1978 (again the Mainframe line only) shows this really happens, atleast observationally. The geeks will ultimately get tired of Apple much like they got tired of Microsoft and now Google. That is a group psychological dynamic which no single person or organization can control and grow on for ever. Simply put, there are no Cinderella like fairy tale stories in technology.
    Horace Dediu is relatively wrong – innovation is not present only in one organization’s culture. He can call it DNA etc. But ultimately it is a lot more complicated to create coming in from the chaotic and dynamical system dynamics of some xxxxx # of psychological minds present and working in an organization. Organizations rise and fal. That is the nature of human institutions. America rose. Now America has stagnated atleast since 2005. Can we blame the White House or the Government for all of it and ignore the complex dynamics of a 300 million society institutionally along with those of other states in the world which is the real reason that America is now both on absolute, relative terms and possibly real world statistics wise economically stagnated?

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  • some_dude

    There is a danger or heuristic error in this analysis as the conclusions are anchored to relatively recent events in the history of Apple: the consolidation of the MP3 device market, and, the smart phone market (the tablet play is less revolutionary and more iterative).

    Assuming that Apple owns encapsulation of competitive feature sets based on two recent events is risky.

    This “integration” analysis seems better grounded and on point. Apple likely enjoys a competitive advantage per Porter’s Value Chain model. To my mind, the revolutionary decision that Apple made was to kill the Apple clone market. With that decision they essentially told the market that the value that Apple delivered was something greater than the obvious outputs.

    • I Suggest abandoning the Porter model as it assumes static value chains. It has been shown that value chains evolve.

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    Apple can´t be copy because they absorb most of the worldwide capacity of strategic parts, is not only a price / volume fact, is also a availability / price fact for the rest of competitors.

    That´s why only Samsung has been able to present itself as an alternative..because there were suppliers of Apple, still the last is getting 70% of the worldwide profits of the industry.

    I´m sure that even Samsung is losing money (they are not because charge zero or below price for themselves, and subsidies with the rest of products) which is not the case for Nokia, HTC etc.

    So if you want to call that a magical process…it is!! because how do you explain that a “NO hardware producer” is able to create a product which is unbeatable even for other that produce and owns factories.

    That is the real value of the mountain of money of Apple and that is the real ability of Mr. Cooks.

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  • Butch

    It’s like asking “Why Doesn’t Anybody Copy Spielberg?”.
    Got it?!

    • That is not the question. The question is why doesn’t anybody try to copy Spielberg?

    • Rory

      Jackson, Del Toro, many do

  • Not a fanboy.

    Holy Applefanboy circle jerk ! Nobody copies Apple because they don’t need to. Apple’s not this magical company . Why waste resources innovating when you can just improve on a competitor’s product . That’s what smart companies with limited resources do.

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  • Pingback: It’s complex, it’s subtle, it defies explanation but it’s not magic. It’s a process that requires a degree of faith and fortitude. It’s collecting but ignoring data and trusting judgement when data tells you to move in a()

  • Merckel

    Microsoft is trying to but lacks the talent to do it.

  • airmanchairman


    Like great dramatists and thespians say, it is not enough to don blackface (paint one’s face dark) or even to be black in order to play the lead part in (the Shakespearean play) Othello;

    One must strive to think like a Moorish general…

  • Emily Gray

    “My own suspicion is that Apple is more aware of what makes it special than they are letting on” – Wow, congratulations on this groundbreaking insight my friend. What did you think was happening before? They were just groundbreaking innovators by fluke?