iPod = Apple 2.0?

by Chris Seibold Oct 26, 2006

When Apple first became a legal partnership just over thirty years ago, few would have suspected that the next thirty years would end up being little more than a prelude to being the next big thing. Most surprised would be the founders, Steve Jobs, Steve Wozniak and Mike Markkula, they thought they were just going to be making a really profitable personal computer.

The personal computer they had in mind was, of course, the Apple II. The trio’s instincts were correct, the Apple II was a monster hit. For a time, until the IBM PC was introduced, Apple was the player in the personal market. Once the PC got around to being the PC, well, Apple took a quick backseat.

This seems confusing, how could Apple go from dominant computer maker with scads of software, software that included Oregon Trail, go from dominance to irrelevance? The chain of events seemingly defies rationality. If the Apple II was markedly inferior to the PC, why hadn’t some other computer maker made a machine demonstrably better than the Apple II? The truth is that plenty of people made better machines than the Apple II, and plenty of companies made equivalent computers that cost substantially less. Unfortunately, for the competitors, they got their product to market after Apple.

Thus, Apple had the huge advantage of being first to market. How big of an advantage is being first to market? Take pharmaceuticals, every so often some key piece of research will be suddenly uncovered and a drug will be pulled from the market. Usually the drug pulled is the first one in some supposedly new class. The interesting thing is that before the drug is pulled from the market, generally, it is still the best selling product in that segment of the market. This despite the fact that when drugs are pulled from the market it isn’t because of concerns over efficacy, it is because they tend to cause the adverse reaction known as death. It is easy to conclude at this point that being the first to market is of the utmost importance. The idea makes sense, a void for a product exists and the first company to fulfill said void naturally has a huge advantage.

Of course, the first to market advantage doesn’t last forever, Penicillin isn’t the world’s go to antibiotic anymore not because it is dangerous but because it has been outclassed by other drugs. Apple wasn’t stupid, it knew that the reign of the Apple II couldn’t last forever so they tried to be first to the market again with the Lisa and the Mac. The company might have had the edge in tech and usability but Apple lacked the legitimizing force of three important letters: IBM.

In truth, there was little Apple could do to actually compete with IBM and later the clones, short of giving up on the hardware side of things and start licensing the software. The move was suggested but by the time it was taken as a serious option it was far too late. Apple shouldn’t be seen as shortsighted, no one expected the eventual winner to be a software company and there was nothing in Apple’s previous experience that would indicate that massive profits and world shaking power would be found in something as fleeting as software.

By 1983 the days of Apple dominance were fading quickly and the long slide to “beleaguered” and “dying” had begun. The Mac only broke into double digit market share for a single year and most people, including the board of directors, saw Apple as a company that needed to be bought out by a company that could actually get something right.

While pundits, CEOs and the stock market all saw Apple with one foot in the grave Apple employees went about doing their jobs and trying to make some great stuff. Year after year, the company did crank out enticing, if not always successful, products. The Newton spawned the PDA market, Apple had one of the first digital cameras, and came out with a very early videoconferencing camera. These products and others kept Apple in the public mind as a company capable of making cool and cutting edge stuff.

When Steve Jobs returned to Apple he quickly realized that Apple couldn’t beat Microsoft Windows on features alone. The power of Apple wasn’t in their gizmos, the power off Apple was in the company name. The public did have a positive image of Apple, the average person would say (incorrectly) that Apple invented the personal computer. They would also likely opine that Macs were in some intangible way better than PCs but that they were also very, very expensive.

Apple’s reputation for ease of use, the perception that Apple made an inherently higher quality than other manufacturers spurred the adoption of the iPod. What started life as a Mac only, FireWire portable hard drive with a headphone jack and a few extra chips took the .mp3 player market by storm. Actually, saying the iPod took the digital audio player market “by storm” actually understates the influence. The iPod created a huge chunk of the market.

The iPod yearns to be much more than an .mp3 player. In the ideal world of Steve Jobs all your media will come to you through Apple branded products. The concept makes sense, is there something inherently better about watching a cable TV show via the cable? Is there something that makes a physical CD superior to an iTunes purchase? Is there a legitimate reason why a DVD is preferable to a download? While the answer to the questions may be “yes” for the moment, in the long term the answer is a resounding “no”.

Apple wants to be the company that manages all of the previously mentioned information and, what the heck, the company wouldn’t mind being the one to sell all of the digital goodness to the consumer as well. The iPod is the perfect way to achieve that goal, a perfect way to take Apple to the market dominating company Mac fans are so desirous of seeing. Can Apple pull it off, will Zunes “squirt”* feature derail Apple’s plans? The next six months will tell and it will be a very interesting half-year.

*Sometimes it is better to let the market come up with a name for a feature. The Zune’s wireless transfer feature has been dubbed “squirt” by Microsoft. As in “I’ll squirt you a video of my vacation.” The name sounds forced and incredibly lame. Below I present 20 better terms for “squirting.”

Ooze, push, transfer, WiFile, zip, jump, slap, slam, spurt, side load, slide, barf, splooge, spill, drive, zing, breathe, blow, charm, infect your Zune with a virus


  • Google paid $1.65 billion for You Tube, so MS probably don’t think what they paying for the games console market is really too expensive at all. -CH

    In comparative $$$ that’s true but digest the agreement shall we? YouTube was an ALL-STOCK deal. That means no CASH involved and depending on the detail of that deal is not exercizable in the immediate future. And for G to have enough shares to give YT’s founders/investors, they had to dilute their existing base and reallocate lots of them. What is diluting do to existing shares? If you’ve got options from your company, you know the answer.

    I’m not a securities market expert but that’s how these “all-stock” deals get done on the simplest terms.

    So, depends upon Wall Street’s admiration of Google’s stock payout, it may hurt or gain them going forward. I am still not convinced Google can monetize YT to their expectations. The jury is going to be taking a picnic on this one for many years to come.

    As for MS throwing REAL $$$ to their XBox experiment, that hurts $1 for $1 on their bottom line and the investors must be watching anxiously of the results - insofar, not in MS’s advantage.

    Quite to the contrary to the myth, MS don’t own their $48 billion and swirling cash and can do as they please. Their countless investors OWN that money and if MS is just throwing it away on lame experiments that doesn’t add to their core biz, those investors might become very vocal soon enough.

    Robomac had this to say on Nov 05, 2006 Posts: 846
  • The Windows halo effect is Windows is good, therefore Zunes might be good. -CH

    ROFLMAO on that, Chris! smile Oh, how MS must be wishing that’s true for the Zune’s sake.

    The only halo that XP or Vista will illuminate to the Zune is the swarm of viruses and trojans ready to “wirelessly” connect to the Zune’s half-a$$ed “squirting” capabilities.

    We have to remember that the Zune is a “regurgitated” Toshiba Gigabeat in its past glory. MS will not be able to CPR that loser in any shape or form. They were better off concocting their own device from scratch.

    Robomac had this to say on Nov 05, 2006 Posts: 846
  • A “loss leader” product sold and marketed as such is beneficial if it adds value to the existing core product.

    Windows: Internet Explorer, Windows Media, VS Express, Remote Desktop, etc.

    Apple: iLife suite, Dashboard, Spotlight, Quicktime,  iChat, Safari, BSD Unix, etc.

    Those are good examples of “loss leaders” that complement the core product and adds tremendous values to them.

    The Zune or the Xbox are not value-adding to MS’s core product - Windows - that you can’t qualify them as such. They are cash blackhole, more like, and no matter how much MS throws in them things will not become gold for Windows’ sake.

    They are mere experiments to find ways to expand MS’s brickwalled revenue growth. Their Windows cash-cow is now >90% total PC share and gaining even 0.1% additional growth is quite like pulling hair from your shin - doable but very painful.

    Robomac had this to say on Nov 05, 2006 Posts: 846
  • the Zune’s half-a$$ed “squirting” capabilities

    lmao… Oh this is going to be endless :D

    Benji had this to say on Nov 05, 2006 Posts: 927
  • Back to front Robo. Zune and XBox aren’t there to increase Windows market-share.

    Xbox is a “loss leader” (for want of a better term) in the games console market. It wouldn’t surprise if MS make healthy profits on the games themselves. And searching the net, it appears on MS’s first quarter results, that things are going the right way with the Xbox.

    We have to remember that the Zune is a “regurgitated” Toshiba Gigabeat in its past glory. MS will not be able to CPR that loser in any shape or form. They were better off concocting their own device from scratch.

    Sounds like the ROKR, eh? But we justify why Apple put their toe in the water first, before doing it properly (assuming the iPhone is more than myth)

    I remember when the first PocketPCs arrived. All the laughter and scoffing. No one’s scoffing now. Although MS are probably laughing.

    Chris Howard had this to say on Nov 05, 2006 Posts: 1209
  • Sounds like the ROKR…

    Steve knew it was a loser (and I firmly believe that he coerced Moto into designing the ROKR that way) which is why he came out swinging with the iPod nano right after. I agree it was a toe-dipping exercise to gauge the iPhone’s potential. Only this time Apple will make the design calls.

    I remember when the first PocketPCs arrived.

    Pocket PCs overcame the Palm for the latter’s ineptitudes and clueless competitive instincts.

    Let see, “I split myself into my two halves so my investors reap the rewards and MS will have to chase one or the other and, oh, our creativity and inventiveness are falling the wayside so we must buy Handspring - wait, weren’t they working with us with the Pilot?”

    Well, we know how that went. It was Palm’s ignorance and complete denial when they were the dominant in that market. Let me assure you Steve has honed his competitive skills since being ousted from the Apple board eons ago. He won’t make this mistake quite that easily with the Zune.

    Robomac had this to say on Nov 05, 2006 Posts: 846
  • No. It was Windows users wanting Windows and Office on their handhelds. And especially Outlook.

    I saw it all around me. Intelligent people brainwashed by MS.

    MS were able to change the market’s expectation of what a handheld should do. They stole Palm’s market by redefining the market. Palm’s market was the handheld organizer. MS convinced people they needed a handheld PC.

    That’s what Palm couldn’t compete with. That’s what spooked them into stupid decisions.

    What could Palm have done to fend off MS with it’s huge brainwashed user base behind them?

    Chris Howard had this to say on Nov 05, 2006 Posts: 1209
  • Ah! So now we see that the Xbox is more than just a games console, with MS announcing direct-to-television movie downloads through Xbox Live. Maybe Microsoft’s losses will pay off now (albeit, only Xbox 360 customers at this stage.)

    Nice bit of leveraging by MS.

    Chris Howard had this to say on Nov 08, 2006 Posts: 1209
  • My response in another thread regarding Microsoft’s announcement but appropriate here:

    Why is this bad for Apple?  Because the X-box costs $400, just $100 more than the iTV.  You get the same media streaming PLUS a great next-gen console.

    My hope is that both products find a market, but that the price of the iTV drops SUBSTANTIALLY.  I have an X-box 360 (or more specifically, my brother has one), but I’d prefer the iTV.  I just won’t pay $300 for it.

    Beeblebrox had this to say on Nov 08, 2006 Posts: 2220
  • A lot of people will, though.

    Benji had this to say on Nov 09, 2006 Posts: 927
  • Robo said: But did Windows lock-in help the Origami? The Tablet PC? The Pocket PC? OK, so the Pocket PC now leads the PDA market - a market rapidly imploding so it doesn’t matter.

    Latest figures suggest otherwise:

    Worldwide sales of PDAs, or personal digital assistants, rose to a record high of 3.7 million units in the second quarter of 2006, up 2.7 per cent compared to the second quarter of 2006.

    According to market research firm Gartner

    I’m in the market myself for a PDA. They are an extremely useful device.

    Chris Howard had this to say on Nov 30, 2006 Posts: 1209
  • That was very helpful, thank you!

    rozpusta had this to say on Mar 23, 2007 Posts: 6
  • Your right it was:) thanks!

    pozycjonowanie had this to say on Jul 16, 2007 Posts: 5
  • Argh, these 2.0 discussions… Web2.0 Ipod2.0 whats about World2.0 with some cool VacumBomb2.0 from Russia?

    zute strane had this to say on Oct 01, 2007 Posts: 4
  • Great job! Rock on dude!

    HenryLoops had this to say on Oct 23, 2007 Posts: 1
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