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Interview with Chosun Daily of Korea about Apple

The following interview took place by email on April 15th, 2013.

1. What are the truth and false about the ‘Apple shock’ currently? In what perspective should we see this?

First, I’d point out that during Steve Jobs’ time the company suffered many such shocks. The stock fell many times far further than it just did for trivial and irrational reasons. Recently Warren Buffett himself pointed out that his own company had 50% drops in value four times in the past. Share prices are not always good indicators of potential and markets are not always efficient. I catalogued the dramatic share price declines in Apple during the last decade here.

Second, I’d point out that the number of people watching and commenting on Apple has grown almost as fast as its sales and earnings. When Apple was small the people who studied Apple were few. (You could see this today for other, modest tech companies. There aren’t 50 analysts writing reports every day and 2000 bloggers tweeting about Lenovo even though it’s a successful and growing PC company.) Because of this growth, I would guess 80% of the observers have not observed Apple’s prior painful episodes first hand. For them this is the first time a “dominant” Apple has slowed. The amplification of so many voices raising alarm makes it seem truer, but it isn’t.

Third, the failures being cited are not significant. In terms of increased competition, before Samsung there was Nokia and Motorola and the mobile Operators and Microsoft and Dell and many others long forgotten. They were all about to “defeat” Apple. As a quick example when Apple was “the iPod company,” iTunes was considered vulnerable and fragile due to DRM concerns or the Beatles not being on it. Microsoft was launching “Plays for Sure” and Zune and Creative was suing Apple over patents. These battles are long forgotten. Before those there were concerns about the viability of the Mac that go back decades. At the time those were actually very valid concerns. At the time Apple did not have half a billion users. It depended on one product. But what saved them was a process of development of new products not the products themselves. iPod faded, Mac faded. What mattered is that they created new things to replace them.

Finally, what is not commonly understood is that the mechanism for creating things at Apple is unchanged. Its functional organization is inherently unstable and chaotic, sometimes looking like it will derail. But that’s the way it was designed to be. You just have to have faith that it’s a system that works. Those who did in the past were well rewarded.

2. What possibilities out of 1~10, do you think, Apple will suffer the same downfall as Steve jobs has left the company in the past in current?

The threat is negligible. During the first departure of Jobs, the intention of management was to make the company into “a proper company.” The plan was, essentially, to remove the chaotic model that Jobs had put in place and replace it with something more “rational” and “grown up.” After he returned he set about not just returning the company to the way it was but to also codifying and identifying exactly what that was so that it did not happen again. You have to appreciate that the greatest thing Jobs ever created was not a product but Apple itself.

Note that Apple managers stay in their roles the whole time they are there, sometimes for decades. There is no “general purpose” manager and the whole company has been organized along these functional lines. The way to think about it is that during his first departure the new management tried to undo what Jobs had built which is why it became dysfunctional: the DNA did not match the body it was operating. His return re-aligned the culture and operations to what was originally developed. As long as new management does not try to undo that, they’ll be all right.

3. Apple is now defined by some people, as ‘the company who modifies well’, not ‘the company who innovates’ well. What they made was ipad, ipod, iphone, apple tv and all the modifiers of the original products. Do you agree? If you do why?

Innovation is not invention. Innovation is the application of invention in ways that solve new needs. I’m always amazed at how misunderstood this term is even though the definition is easy to understand:

(“Innovation differs from invention in that innovation refers to the use of a better and, as a result, novel idea or method, whereas invention refers more directly to the creation of the idea or method itself.”)

Apple is an innovation machine. It does invent but that’s not valuable in itself. Not all inventions are applied and not all innovations depend on internal inventions. Innovation is applied invention just like engineering is applied science. A better way to think about Apple is to think about Pixar. It’s a blockbuster manufacturer. It makes blockbusters and nothing else. That means it does not make many of them and not always regularly and that the ideas may not be original, but the results are always very popular. Pixar is not like any other studio that makes some hits and some flops. Pixar is also a functional organization. It’s not an accident that they were both built by the same person and that they are both successful after he left.

4. Google is forecasted to release lots of products this year, but Apple isn’t really looking forward to so many innovations. Inside Apple, is the innovation team really making a new innovative product? what are their longterm plans to fight with Google, or Samsung and the rest of the competitors?

People outside of engineering organizations, especially large ones, don’t appreciate the time scales involved. Products you see today were designed, planned and developed many years ago. We see plenty of evidence of this but we tend to ignore it. Consider that some prototypes end up on ebay showing they were built years before launch. It is the same with evidence presented in trials proving work on the product 4 to 5 years before it was launched. This is not the case just for Apple but all other technology companies.

For this reason, what is happening in the market and what is happening inside the company are two completely different universes. The tendency is to assume a direct relationship between market momentum and current management decisions. These are connected but with many years in-between.

For example, globally accurate Maps require a minimum of five years of development. Decisions on what ended up being Apple Maps had to have been made by Jobs himself. Namely, he must have decided whether to buy or build Maps. Contrast with Nokia’s decision in 2007 to buy maps for a cost of $8 billion; instead Apple licensed and then decided to build later. In 2007 Jobs decided that it was more important to work on the product itself, meaning the iPhone (while Nokia didn’t prioritize product innovation.) The results are visible today: Apple is behind and needs to accelerate with Maps and Nokia with its great maps must find a way of staying in business.

Apple is not only working on the next product but probably 15 new products, of which 14 will be discarded. Again, I cite Pixar. Each movie is produced with multiple stories, multiple character decisions and different plots in parallel. Much ends up being thrown away. We don’t see any of that.

Apple is extremely “myopic” in that it is very concerned with execution and there is no visible “strategy plan”.  That’s by design. The product comes first and then comes the market and then comes strategy. To create great products you need to tune out almost everything else. However, they do have a “strategy” and that has to do with which problems they should attack and which they shouldn’t. Usually they are successful because what they can attack nobody else can. That is due to their integrated, functional approach.

5. Isn’t Apple, relying too much on semiconductor manufacturers? Meaning, isn’t Apple only try to be ‘stable company’ to supply their products on time? sometimes when companies have disruptive technologies, they have hard time supplying products.

You’re touching on the question of the problems of integration. Yes, there are vulnerabilities but that’s the way it has to be. To mitigate this Apple is increasing its integration of the value chains. For example developing its own chip design and owning a lot of capital equipment.

6. If you were Tim Cook, what would you do?

I’d buy Intel and turn them into Apple’s microprocessor design and manufacturing group. They won’t have much to do in a few years and they’ll be cheap.

7. what are the reasons that Apple try to make a ‘apple watch’, ‘apple bicycle’? How do you define these products, since, watchs and bicycles are a total different paradigm which is a totally different industries? Is Apple realizing that smartphone industry is hard for them to innovate?

Computers are becoming more personal, intimate. It’s a natural evolution from large to mini to micro to portable to handheld. I don’t see this slowing and Apple should re-define the user experience during every such shift. Here again integration is essential.

8. what are some of the stuff that we don’t know about Tim Cook?

I can’t help you there. Only thing I can say is that people who know him have told me he’s not soft and gentle as a manager. He’s tough.

9. How will Samsung and Apples patent fight come to conclusion?

Again, I can’t add much to this. Litigation is often a decision made outside of market conditions so it can be arbitrary.

10. how does employees or executives inside apple think about their company?

It’s hard to describe this without sounding soft, but the employees at Apple tend to love the brand. You can’t measure that but I can think of one proxy: the number of applicants to retail jobs are in the hundreds for each opening.

[Update: Bono made an important observation regarding Jony Ive which was published after this interview: What the competitors don’t seem to understand is you cannot get people this smart to work this hard just for money. Jony is Obi-Wan. His team are Jedi whose nobility depends on the pursuit of greatness over profit, believing the latter will always follow the former, stubbornly passing up near-term good opportunities to pursue great ones in the distance]

  • http://twitter.com/ValueMgmt Richard Ferrers

    Shakespeare was a 16th century blockbuster manufacturer…

    • http://www.asymco.com Horace Dediu

      As was Disney during most of last century. In a way Pixar is what Disney should have become if they could have made the transition.

      • Jeff G

        Horace, just my 2 cents on title (amateur writer that I am)… When interviewed I would say Interviewed by….(interviewers name) or Interview with Horace Dediu (by interviewers name).

        I often share these/your link with people who are not familiar with Asymco, and I think the branding, and instant clarity would be better communicated the way I described above. “Interview with Chosun” at first glance, (to my conditioned brain) could imply that he is the expert)

        Just my opinion. Might only be me…

        And just to clarify, I am a big fan of your work…

        Jeff

  • http://drrjv.wordpress.com/ drrjv

    This article goes along with your fine interview:

    http://tech.fortune.cnn.com/2013/04/21/apple-samsung-agent-provocateurs/

    • Jeff G

      Awesome article!

  • Panos

    It might seem irrelevant, but what are your thoughts regarding Valve as organization? Meaning as a “spontaneous order”,unhierarchical,flat management organization?

    And especially as opposed to the Apple’s organizational structure and culture?

    And some food for thoughts:

    http://varoufakis.files.wordpress.com/2013/02/econtalk-interview-on-valve-europe-by-libertarian-journalist.mp3

    Thanks

    • mjw149

      I like to look at Valve as the ‘Porsche’ of this industry. Incredibly focused and defined both in the market and in their leadership. They’re premium players with low end infrastructure. They have a chance to challenge Google, Apple and Amazon. MS doesn’t. But they aren’t there yet, and things might not pan out. Right now they’re incredibly reliant on the Wintel platform. I think there’s a plenty of opportunity here, given the market fluctuation and the number of desperate actors, they’re really in a fantastic position relative to most incumbents. For example, the best way to make Android/Chromium-based Intel netbooks popular is to have Steam running in notebook form and Android in tablet form. And Valve is starting to distribute regular software, which would really open up if they’re the default kbm interface on popular devices (which they are for consumers already).

      On a related topic, I think Sony is much better positioned than MS for the same reason. Once the PS4’s hardware and software get settled, they’ll expand the game streaming to PCs/other devices. First, locally as a home server, then, as broadband grows up in the civilized areas of the US (east and west coast), they can run that online. They can even pursue PC sales around built-in ps4 software, if OEMs and Intel/AMD are desperate enough (and probably will be). A success for the PS4 is more advantageous to AMD than a successful xbox because a Sony partnership gives AMD options that MS can’t (merger, acquisition, platform convergence).

      Sony and Valve have a freedom that MS doesn’t in terms of platforms. MS really stuck in a vise and after some back and forth it seems that Intel better positioned to survive the mobile tsunami.

      Really, all these companies should be wooing Gabe. Valve is the Cinderella of x86 in this scenario, the only platform successful enough to pull consumers away from Windows outside Cupertino.

      • capnbob67

        Then Porsche got greedy and was swallowed up by the company it tried to takeover. It’s just a brand now…
        Lets see what happens to Valve.

    • steamthoughts

      Valve can’t hit deadlines and their primary product, Steam, is of shoddy software quality (at least on OS X). They’re very dependent on Microsoft and building their own platform on top of Linux and getting large game developers to support it looks difficult. Not owning a platform has left them vulnerable to publishers starting their own stores, like EA with Origin, and while consumers grumble they seem very willing to go wherever the games are. They were definitely in the right place at the right time with Steam, and spent a long time without competent competition, but it will interesting to see how they can keep ahead of things from such a seemingly weak strategic position. Steam was a disruptive product, and that is worth emulating, but I don’t know that it is due to the organisational structure. They also aren’t a public company so nobody has any clear idea of how successful they are.

      • Neil Anderson

        Valve claims Steam is five times more stable on a Mac.

      • steamthoughts

        Wow, I can’t imagine how terrible it is on Windows then. I wasn’t particularly talking about crashing only (though there’s plenty of that), the non-native UI is constantly broken, most controls don’t behave like they should, etc. At some point they seem to have started compiling it with high-dpi screen support which is full of graphical glitches and the main store area, which is just a webkit browser, is still low resolution even though that seems like the easiest part to fix.

      • steamthoughts

        “One surprising result, however, is that the same version of Portal is five times more stable on Mac OS X than on Windows.”

        Looked it up and it was about Portal, not Steam. That makes more sense. They can make video games, if you give them a lot of time.

      • Panos

        For me, the major advantage of Valve is that it has an ecosystem that seem more advanced than Apple’s ecosystem. That is, an ecosystem that acts like (but it is not yet) infrastructure, upon which complex processes can take place. Like for example all these virtual economies, that are based on functions on top of the Steam itself (e.g. making hats on a game and trade/sell/use them as currency).

        Moreover Valve seems to curate and cultivate their ecosystem, gaining knowledge in multiple levels (economically,sociologically, psychologically, technologically etc.). And this affects them in multiple levels. It is like they have in their hands a new unknown technology, an artifact from the future and they try to understand the why’s and the how’s.

        In this aspect, the thought (by Gabe) of transforming Steam platform into a network API for everything, is indeed even more disruptive and revolutionary. Meaning to help their ecosystem truly evolve into an infrastructure, abandoning control and power in favor of the openness, heterogeneity, and simplicity (Hanseth/Monteiro dream). Or in other (Gabe) words, to suggest that Valve are a bottleneck for publishing on the platform, and that they should remove themselves from the equation entirely. That is innovative thinking and shows a really profound understanding of the ecosystems evolution.

        Implementation of course is another subject….

    • JohnDoey

      Don’t iPad and App Store obsolete Valve for most users, most of the time?

  • http://www.noisetech-software.com/Home.html Steven Noyes

    “6. If you were Tim Cook, what would you do?

    I’d buy Intel and turn them into Apple’s microprocessor design and manufacturing group. They won’t have much to do in a few years and they’ll be cheap.”

    Thanks. I really needed a good belly roll. Classic.

    • mjw149

      There’s a real crash coming. Let’s just look at what Intel is saying, instead of analysts. Intel is no longer discussing $1k ultrabooks. They’re discussing $300 touchscreen laptops. Why on Earth would they do that if everything is great?

      Where is the margin going to come from? TV boxes? Small potatoes. Consoles – too late! Do you really expect Samsung and Qualcomm to go away overnight? Intel is a powerhouse because of scale, and right now the scale is shrinking. The business market isn’t unassailable, even if it’s completely reliable for decades to come, the low end mobile stuff is going to disappear there, too, and MS is already discussing cheap 8″ tablets. You can’t sell $200 chips to OEMs selling $200 tablets running $35 windows.

      They’re in real trouble and what Intel needs is a strong partnership with a platform provider or content provider. Google might work, Apple would work (they wouldn’t do it on decent terms) or perhaps Intel can make something from nothing with Ubuntu+Valve.

    • JDSoCal

      Yes, that was brutal, LOL.

    • vincent_rice

      It’s a great idea and perfectly do-able; but Apple won’t. Apple is paranoid over any potential for loosing focus and would not attempt to swallow a company with a large employee base and such a strong culture. Be fun though wouldn’t it?

      • JohnDoey

        But you could make the argument that Intel is already focused on Apple. The Mac represents over 90% of high-end PC sales. That is why Intel has been trying to get other PC makers to be more Apple-like. Intel makes PC chips for Apple and then makes cheaper versions for Apple cloners. But now Apple is taking away the cheaper clone market with ARM-based iPad. So Intel gets even more Apple-focused every day. They might as well make high-end PC chips and low-end ARM chips for Apple.

        If Apple bought Intel, Tim Cook could also send Ballmer a throwing chair as a gift.

      • http://twitter.com/StelradPDoulton Stelrad P. Doulton

        “The Mac represents over 90% of high-end PC sales.”
        Source please.

      • http://www.asymco.com Horace Dediu

        It’s pretty old but not much has changed in the market.
        http://betanews.com/2009/07/22/apple-has-91-of-market-for-1-000-pcs-says-npd/

      • http://twitter.com/StelradPDoulton Stelrad P. Doulton

        Ah, so high-end means over $1000, not actual processing power – $999 buys a lot of processing power for a Linux, Hackintosh or Windows machine.
        I think the initial statement should have said “premium” PC sales rather than high-end.
        What has changed though is that the Mac Pro is no longer for sale in Europe, I wonder if that has changed any numbers.

  • GuruFlower

    Thank you for continuing to make the Pixar – Apple connection. If more people understood this there would be far less uncertainty about Apple. IMO, anyone with an interest in Apple who hasn’t watched “The Pixar Story” on Netflix (etc.) cannot have the complete picture of how Apple is designed to work.

  • http://www.facebook.com/markgoldmd Mark Gold

    Hoarce may I suggest a metaphor for cell phone sales. A new cell phone model is like fresh bread, the best. Unfortunately it goes stale over time. It’s value is preserved by quality of the hardware, and strength of its ecosystem (apps and accessories). The whole Verizin issue was another example of fear mongering.

    • Walt French

      Actually, I think of it as exactly the other way around: older phones continue to perform well (well, just as well) for the tasks they were bought for. We users get teased by all the neat real-time visualizations, beaming hi-res video to our TVs, instant access to our whole photo library and music collection…

      And we hand down, or sell off, our perfectly good phones to somebody with more modest economics and/or expectations.

  • http://twitter.com/bennomatic bennomatic

    Horace, as always, good insights. I particularly like the answer to #6 regarding Intel, as I recently suggested something nearly identical to a friend, who thought I was crazy.

    In addition to giving me some sense of justification, that answer is a data point in the proof of the 10,000 monkeys corollary. Of course, in this case, I’m one of the monkeys with a typewriter to your Shakespeare. ;)

  • Mark Jones

    I think the questions are fascinating, in that they reveal so much about the preconceived notions of the journalist, and the influence of the recent media onslaught in bringing about those notions. For example, this idea that Apple has never innovated or can no longer innovate permeates several questions.

    Anyway, Horace, thanks for sharing your thoughtful and crisp answers.

    • JohnDoey

      The same could be said about Ford. You can dismiss the car by pointing out there were cars (short for “carriages”) for thousands of years before the automobile.

      Apple’s marketing fits products into existing niches. That also enables a critic to say there were phones before the iPhone. The key thing is nobody cares about the pre-iPhone phones anymore. Nobody cares about the pre- Model T carriages. There is no legitimate way to diminish that.

  • capnbob67

    Nice work Horace.

    It’s almost as if the questions were written by Samsung to support its worldview? ;-)

    Luckily you trashed that perspective so you can be the crazy one denying the reality as it seems in Korea. The later questions then devolved in a business gossip column and you treated the responses as such.

    • simon

      “It’s almost as if the questions were written by Samsung to support its worldview?”

      That’s exactly what it is.But from their perspective, they’ll think Horace is the one from the Western world who wants to supports Apple’s world view.

  • def4

    Great answers to a disgustingly trollish set of questions.

    • simon

      If you have read the Korean media and the discussions going on Korean internet communities, the questions feel extremely common, for instance Apple being a “modifier” things instead of an “innovator”. It’s always interesting to see how different societies have different business buzzwords for framing successes and failures around them. Personally I feel a bit uncomfortable about a business culture that’s proud of being a “fast follower” but hey it works for them.

      Generally speaking, the Korean (or even Asian) businesses aren’t the ones who’ll open up a new market that require much soft skills or integration. Which is why they do not worry too much about the disruption theory in general. However as soon as they see the next big thing made by someone, you’ll be sure they’ll get hundreds of skilled engineers work endless nights to improve it with a big coffer full marketing and production budget. The nimbleness and the aggressiveness, combined with the relatively cheap and hard working engineering labor and shameless propensity to follow the new trend leader made them successful, IMHO.

  • http://twitter.com/Mangy_Dog Vicious Cur

    Was the interview published? I checked their site and didn’t see it.

    • Chaka10

      Great question

  • Walt French

    Horace, as a long-term analyst you have a much better feel for time-frames than most of us. So I wonder about the notion of buying Intel. Still the #1 player in the über-important server market and it’s hard to see a technological shift to hundreds of lower-capability chips as an asymmetric disruption.

    Likewise, we cubicle dwellers need compatibility with Windows; I suppose Microsoft could announce a subsequent Windows RT that’d run on 4 ARM chips, but actually porting legacy Enterprise code would take many years before it’d be viable.

    So I’d guess your prediction about Intel getting cheap is 3–5 years down the road (minimum) and by then, especially with Intel saying that their custom fab business isn’t for sale for products that compete with X86, why wouldn’t Apple have built its own capability organically?

    • http://www.asymco.com Horace Dediu

      Ok, I’ll admit it was an answer half in jest. I mean, how do you answer such a question without being at least partly facetious. I say partly because the issue of semiconductor production is going to need to be solved somehow. I think it makes perfect sense for Apple to build its own. Under what structure of ownership and control is above my pay grade.

      • Jim Zellmer

        Massive culture clash with intc. Far more headaches than benefits, IMHO. Perhaps the answer is to buy one of their fabs, or acquire a part of intc.

      • Walt French

        I’m sure you’re right. But that is also a warning about integrating a hardware operation into Apple Inc. The engineers have totally different timeframes/ethos/tools/priorities/etc, just by the nature of the job.

        That’s the reason why these companies exist as standalones, why you’re unlikely to see an e.g., Qualcomm tablet that is anything other than a concept or reference design. Time and energy spent on consumer products is for time and energy on something other than the ultra-competitive ARM CPU/GPU business where they have to be not just better than nVidia, Samsung and Intel, but also more price-competitive, forward-looking, customizable, etc.

        Keeping very different cultures under one roof is a challenge for many shops. I don’t know if Apple has special talents that way, but you can see signs of infighting or finger-pointing in failures such as Palm’s and want to stay far away from a challenge that you’re not sure you’re expert at.

      • JohnDoey

        The thing is, Intel has already been Apple-focused for decades. They are the supplier of chips to over 20 years of Mac cloners.

        In the 21st century, they became even more Apple-focused. In 2004, Intel made giant, power-hungry desktop Pentium4 chips. Then in 2005, the Apple-Intel announcement. Then came the Core line of tiny, low-power, notebook-focused Intel chips — exactly what the Mac lineup of majority-notebook and tiny all-in-ones needed, not what the majority-tower lines of Mac cloners needed. Today, Intel basically makes chips for Apple and then makes cheaper versions for everyone else.

        So Intel is already Apple-focused.

        And Apple is more engineering-focused than you think. They are led by designers, but those designers create new engineering challenges.

        Steve Jobs said at the Intel announcement that the great surprise of working with Intel was how similar their cultures were. And they are almost neighbors.

        And the Apple-Intel collaboration seemed totally impossible in 2005, yet today it looks as easy and as natural as can be.

      • Chaka10

        Have you considered that perhaps the challenge for Apple, in considering how to meet it’s semiconductor manufacturing needs, is not so much the capital equipment (obviously) or perhaps even the manufacturing technology, but the management bandwidth to run the manufacturing? Perhaps TSMC is a pretty good solution? My own supposition is that Samsung is heavily exposed to any slow down in its handset business — to the extent it’s semiconductor manufacturing capacity is increasingly absorbed internally. I would worry that, with the dynamic shifts in the smartphone business, building up internal manufacturing at this stage feels a little like fighting the last war?

      • Walt French

        You’re headed the right direction with this line of thinking, but no matter who Apple works with, the allure of Apple-level profits from just tossing a few more chips together is potentially a siren song for anybody they work with.

        Methinks the right answer is neither “outsource” nor “bring in-house,” but rather to find a structure that gives you both flexibility and control. Tough.

      • JohnDoey

        Bob Mansfield quit Apple and then essentially became CEO of Apple Semiconductor. It is Intel that is having management problems.

      • JBWales

        You don’t have to buy it to own it. Simply become a manufacturer’s largest customer and you call the shots whilst retaining total flexibility. Also, Apple hardly needs the profits of Intel or TSMC.

      • Chaka10

        You mean sort of like how Apple became Samsung’s largest customer and is now calling the shots in that relationship? …. There are clearly risks and drawbacks to outsourced manufacturing. But my point is, perhaps It remains the best alternative for Apple, given constraints on management.

      • JBWales

        I think Samsung has always been Samsung’s largest customer.

      • Mieswall

        So TI is the target. Great answers Horace!

      • Walt French

        Naw, he said “half in jest,” not “blatantly ridiculous bottom-fishing.”

      • Chaka10

        Since we’re half jesting, why not Sony? Just $16 bb ($20 at a 20% premium). Still has some brand value in consumer electronics. Comes with entertainment and game assets. Maybe use it to create a lower priced iOS phone under a separate brand? Perhaps just indulging in letting thoughts run wild, but perhaps interesting?

      • http://www.asymco.com Horace Dediu

        Because what Sony has Apple does not need. What Intel has Apple does need.

  • obarthelemy

    Funny partial quote about innovation. The next sentence reads:

    “Innovation differs from improvement in that innovation refers to the notion of doing something different rather than doing the same thing better.”

    Which does put a floor on what can be called innovation.

    • Chaka10

      I believe there’s fairly wide consensus that the iPhone was innovative, but what specifically about was “innovative”? Compare it to the HP iPaq, which had been around since 2003 — recognizable form factor, brushed aluminum casing, powered by ARM, color touch screen, … by 2007 it had GPS, 3G phone function, WiFi, bluetooth…. So what specifically was “different”, under your standard, about the iPhone that made it innovative? I believe it’s the whole package, and if all or at least certain crucial parts of it are sufficiently better, in the important ways, it magically “self-combusts” into “innovation”.

      [Edit: fixed typo "as" to "was"]

      • http://twitter.com/SteveFromHeaven Steve Jobs Soul

        “I believe there’s fairly wide consensus that the iPhone was innovative, but what specifically about it was “innovative”?”

        Before the iPhone, it was impossible to be in the stands of a High School football game at 8:30pm, cold and in the boonies, look for your nearest TGI Friday restaurant, call them to see at what time they close, and get accurate directions how to get there, in less than a minute.

      • http://twitter.com/WalterMilliken Walter Milliken

        A good point. “Innovation” doesn’t always result in a new bullet-point in the feature checklist.

      • JohnDoey

        All phones after iPhone look and function like iPhone. That is innovation: all competitor products were wholesale rendered obsolete by iPhone. Same is true of iPad, iPod, Mac. The same is not true of iPaq, which nobody cared about at the time or since.

      • Chaka10

        Perhaps I haven’t been clear. As I said in my post, there is broad consensus about the iPhone being clearly innovative. That’s beyond reasonable question, in my view. The point of my post, given the debate about the definition of what it means to be “innovative”, is to try to tease out exactly what was “different” about the iPhone that made it innovative. By comparing it to the iPaq, I was making the point that this “difference” was not necessarily any specific hardware feature or even necessarily the form factor, rather, as I said above, it’s the whole, representing perhaps many incremental improvements in many features, none of which by itself is necessarily different or new from what’s already in the market.

      • Walt French

        Let’s say it was the first pocket computer aimed at ordinary people, not computer geeks.

        As an almost-member of the latter group, I was looking at Nokia’s offering, wondering why somebody would put up with such a tiny screen — impossible to use for anything — and the slow EDGE connectivity that I extrapolated from having used my RAZR as a modem for my laptop. There just wasn’t anything there that would justify having it, versus my phone/laptop combo.

        Jobs intro’d the iPhone as a touchscreen iPod, a phone and a full-power internet communicator. But I think of it as a tap/pinch-zoom touchscreen with good connectivity and great OS/CPU horsepower; it’s my definition that made it such a killer platform for apps (as well as an easy iPod/phone/browser). Previous MP3 players, phones and computers, having neither the touchscreen nor a killer UI and media toolkit for programmers, could only afford to optimize for a single function, leaving devices much more isolated and limited.

        That was the innovation: building a flexible, sophisticated programming framework into a pocket device, on hardware sufficient to serve consumers’ needs.

  • JaneDoe12

    Horace, you hit it out of the park!

  • peto1

    Horace, it would be interesting to see how accurately the interview is translated into Korean …

    • Cogito

      It is not yet published. The latest article that mentions Asymco is about the marketing budget of Samsung. It is dated on Apr 15, 2013 while the original post at Asymco was April 2.

  • http://www.facebook.com/people/Shameer-Mulji/1685212657 Shameer Mulji

    I think Apple buying Intel would be a real ballsy move & probably a good one. My only question is, would this pass regulatory hurdles, considering that the vast majority of PC makers rely on Intel processors?

    • http://twitter.com/MacsFuture Lex McFarley

      I don’t think Apple will uby Intel for the following reasons: Intel’s market cap is over $100 billion, roughly more than 1/4 Apple’s size. Apple doesn’t ever make acquisitions that big. Apple likes much smaller acquisitions. Also, Intel’s operating margin is in the 20% range. This is way below Apple’s margin and Apple is getting hammered by the Street for its 40% margin slipping. Also, what is Apple going to do? Stop having Intel sell chips to other computer makers? Can Apple absorb all of Intel’s production? I doubt it. Apple is more likely to purchase foundry assets from Intel or some other chip maker or more likely fund another founder to make Apple’s chips.

      • http://www.asymco.com Horace Dediu

        I assume you know that far more “A series” processors are produced than all of Intel’s x86 production. (Also Apple has 50% more cash than Intel is worth).

      • http://www.facebook.com/people/Shameer-Mulji/1685212657 Shameer Mulji

        I realize history dictates that Apple has gone for “smaller” acquisitions but during many conference calls, they’ve stated they’re open to bigger acquisitions where it makes sense for them. Apple just hasn’t pulled the trigger on a major acquisition just yet.

  • http://alexandersmith.co/ Benjamin Alexander

    The reference to Apple’s “innovation team” is peculiar and slightly ambiguous. Are there such teams in Korean firms? Do they differ from design teams?

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  • Sofakinbd

    Horace you wrote:
    The product comes first and then comes the market and then comes strategy.

    How very existentialist, existence precedes essence. First the product then the strategy not a strategy (essence) followed by a physical product (existence). Just my own take on your wording.

    Very cool,

    – Sofa

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