In the last decade, Apple truly revolutionized client computing, moving it out of the boring Wintel PC space where nothing significant had happened for years. We got the iPhone and then the iPad, and with them very different ways to compute for work and pleasure, plus a break from the whole “IT owns everything” mentality that imprisoned users. We got Siri, a big step into the “Star Trek”/”2001: A Space Odyssey” computing future many of us grew up with. We got devices that interacted together as parts of something greater (aka liquid computing).
Then those all became normal, available from Google, Microsoft, and others. Sure, we get advances every year in iOS and, to a lesser extent, MacOS — but they’re typically incremental, and often pioneered by other platforms. Apple is now just as much a follower as a leader. That was crystal clear at this year’s Worldwide Developers Conference, a fairly minor affair — just like Google I/O and Microsoft Build before it.
Basically, Apple won the revolution and we now live in that world. In the new status quo, Apple is no longer the pioneer or insurgent but simply a leader in the new establishment.
That doesn’t mean Apple is doomed, as some pundits claim. Nor does it mean that Apple now drives the direction of technology, as other pundits claim. Both are extreme, reductionist positions. But Apple is navigating in new waters where its strengths may not be enough.
What the outsiders get wrong about Apple
Everyone has an opinion on Apple, it seems. I’ve been following the company since 1991, so I like to believe I understand it better than most pundits. Much of the commentary out there comes from a one-dimensional view of Apple and the markets in which it operates, or from a short-term “what have you done for me lately?” perspective that is a common corrosion in both finance and tech.
From the point of view of the financial markets — which are not very smart about technology — Apple’s heady growth days are over until it finds a new megahit to replace the iPhone, the once-revolutionary device that’s now a decade old.
The iPad seemed to be it in 2011, but it was clear by 2013 that wasn’t true. The Apple Watch certainly isn’t it. Nor is Apple TV. Nor is Apple Pay. Nor will Siri be.
Unrelenting growth is always a time-limited phenomenon, and Apple is settling into the same state that any large, successful company gets into: low growth spread out over a portfolio of products. The financial key for Apple is whether it can maintain its huge profit margins; if it can, Wall Street will finally get a clue that it’s a cash cow, and cash cows are good.
From the point of view of technologists — who tend to be blinded by their passions and confuse their personal realities with the world’s at large — Apple no longer does meaningful innovation. Its heady tech leadership days are over, and it needs to do something entirely new to matter again. An Apple car is the latest great hope for that crowd.
Whether or not that happens, the pattern will repeat: Where Apple does change the game, it’ll eventually become the new normal and Apple will again seem to have lost its innovation edge.
Apple, Google, and Microsoft are not that different from each other
Of course, what I describe here for Apple applies equally to Google, whose early innovations around search and data intelligence are now establishment, and whose other forays (all those Alphabet companies) have struggled to matter. If Apple weren’t such a darling of the punditocracy, all the angst around Apple would be directed at Google.
That low-growth state I describe for Apple is where Microsoft has been for years. It’s gone sideways several times with Windows, its once-pioneering browser is now in end-of-life care, its acquisitions such as Dynamics have just tooled along, and its Office 365 ecosystem is an uneven collection of tools that have seen a new surge of utility in the last year but generally use the same principles that Apple and Google have already pioneered.
For Microsoft, the issue has been to stop making Windows the center of its universe and find something else to grow from. Under CEO Satya Nadella, that something else being Office 365. (Apple may think its something else is Siri, but I am doubtful.)
Google still has its data intelligence core to grow from, and unlike Apple it’s not bound to a specific hardware ecosystem, so it can more easily redirect its implementation energies. That’s why it’s suddenly doing more stuff (like Microsoft) on Apple’s platforms. Google doesn’t have to be great, just good enough and ubiquitous.
That’s why I don’t see Siri being Apple’s new center, as its devices become, well, devices. First, no matter how good Siri gets as a virtual assistant, it’ll still be at best in the same ballpark as Google Now (as will Microsoft Cortana). Although I prefer Apple’s concern over my privacy, not enough people care to give Apple an overwhelming edge.
Second, Google Now and Cortana will play in other ballparks, not just the ones they own. The “only in Apple ecosystem” strategy will hurt Siri as much as help it. Apple may get a better Siri experience across all its devices, but that limits the market. Expanding Siri to other platforms risks a quality loss, at least to the other platforms’ native capabilities — as we see for Google’s services outside its platforms.
Apple’s biggest risk is its reduced quality
A key Apple strength has been to own the entire ecosystem so it works better as a whole than what Google, Microsoft, or someone else offers. That’s why Apple users stick with Apple and gladly pay more money for the privilege. That’s why Apple makes so much money despite its minority market share in almost every domain it serves.
But Apple’s had many quality missteps in recent years in its own platforms, diminishing that advantage. The quality advantage that leads to customer loyalty and high margins is the core Apple strength, because it keeps the company strong whether or not it’s got current megahits.
Apple’s had a series of hardware issues that it typically handles secretly, making public statements only when it must. I’ve personally had such issues with several Macs in the past five years, and I’m hardly alone. Apple still has better quality than any other PC maker, but it’s not what it used to be, and when you pay what you pay for a Mac, such issues make you think twice about replacing a Mac any time soon for the newest version.
Apple’s also had an unusual number of software issues, especially in iOS, and not just the Apple Maps fiasco a few years back. There are more bug fixes than ever for iOS, and often fixes for those fixes. Apple has had major issues in its user interface efforts, such as for Apple Music and iTunes, that undermine its reputation for user-centered design excellence. It’s also struggled with smaller UI issues, such as the hidden indicators to use Handoff in iOS and uneven capabilities across core apps such as Contacts, Photos, and iMovie.
Constant bug fixes and poor user interfaces are how Microsoft rolls, not what we expect from Apple.
Apple can be a strong member of the computing establishment without more revolutions like the iPhone. But if it loses its quality edge, it’ll become an empty shell like Dell or HP. Getting out of that hole is not impossible, but it is really hard — just ask Michael Dell and Meg Whitman. In fact, Apple has been there once before, and Steve Jobs turned it around just in time.
Apple is nowhere near there yet, so it doesn’t need a Jobsian effort to rebound. Its overall quality still is among the best and perhaps even still the best. But rust is starting to settle in.
Even if Apple invents new revolutions, without its quality advantage they won’t last as long or a new leader will be able to coopt the revolution by taking advantage of Apple’s missteps.
Revolutions aren’t easy, but neither is staying in power once you’ve got it — as Apple is discovering.