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February 02, 2004
Where does Apple go from here?
Posted by Sandy
This interview with Harvard Business School professor David Yoffie has a number of very interesting observations about Apple Computer, including this one:
"Apple has always built its company historically on hit products, and the problem with a hit product strategy is that when it works, it's great, but because it's dependent on a big hit, when it fails it's miserable. It's a little bit like the movie business. In years when you have Lord of the Rings, life is wonderful. But in years when you have Hollywood Cop, it's miserable."
To use a baseball metaphor, Steve Jobs manages a team that is always swinging for the fences. This strategy relies on home runs to win. If the competition hits enough singles and doubles -- or Steve's team strikes out too often -- the memorable home runs won't matter much. (The game is fun to watch though.)
Comments (3)
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1. Suhit Anantula on February 2, 2004 08:05 PM writes...
That is right, it brings in unstability but a lot of innovation.
But is that because of this they make those fantastic pictures in Pixar.
Suhit
Permalink to Comment2. applefan on February 4, 2004 02:27 AM writes...
Ugh ... this kind of analysis drives me batty ... the implied "fix" then is that Apple should stop swinging for the home runs? That Apple should shed its corporate DNA and become another me-too commodity producer like Dell?
And saying "the memorable home runs won't matter much" is like saying Michaelangelo's "David" really doesn't matter much, because Chia pets ended up getting a much bigger market share of sculpted items. Of Beethoven's Symphony No. 9 is really irrelevant given Brittany Spears' recent record sales.
Apple is an "organic" phenomena -- the product of huge amounts of human ingenuity, talent, AND -- get this -- emotion. Were it not for Steve Job's coming back to Apple, it probably would have gone away in the late 90's. And when he leaves Apple, it will probably go away or become a very, very different company.
Apple's stock has always been fairly low -- one reason being the "market" doesn't know how to value a company who's products are the result of human passion. The market is much more comfortable with commodity items produced by generic companies staffed by mindless followers. I wouldn't say Microsoft fulfills all these criterion, but it comes close in many regards. Anyone who lives with daily virus and worm attacks probably recognizes the mindlessness with which Microsoft engineered their operating system. Anyone who has seen Microsoft's pale imitations of Apple's innovations knows that Microsoft is not an innovator. And anyone who has ever invested in Microsoft knows they have been rewarded richly by a market which values Microsofts values.
I file the whole "Apple relies on home runs" line of analysis in the same drawer as the "Apple is dying" analysis which seemed so prevalent for years. Now that it appears Apple is actually having some success -- and by some measures HUGE success with their clever trojan-horse takeover of the music industry (ok that statement is a little early, but wait a year and a half). Once again the pundits, professors and purveyors of doom are wringing their collective hands while downing huge quantities of Mylanta trying to suppress the gastric-reflux-induced esophageal burning as they try and figure out why their hyper rational world isn't panning out as planned.
Permalink to Comment3. Sandy McMurray on February 4, 2004 10:17 AM writes...
The baseball metaphor is my fault. Apple fans may prefer to stick to Yoffie's metaphor (the movie business) and compare Apple to Pixar, which has had five hits in a row.
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