OPINION

The Irony of Failure: Apple, Microsoft … and Google?

It is both interesting and ironic that three of the major companies in tech each defined something early in their lives they didn’t want to be and then became it.

In the cases of Apple and Microsoft, the top people in each company forgot about the epiphanies they had early in their careers — for Microsoft, a couple come to mind. Google’s case is perhaps the most tragic: Its top execs likely anticipated the one thing that would eventually destroy the company but now appear to have trivialized it. Perhaps they simply don’t understand, fundamentally, what evil is.

Apple Selling Colored Water

One of the events that defined Apple’s early years was Steve Jobs’ recruitment of John Scully. John clearly didn’t want to leave Pepsi to sell computers; he didn’t really understand the market, and his position at Pepsi was not only very influential, but also extremely lucrative. While there is certainly irony in the fact that it was John Scully who first fired Steve Jobs, given that Steve talked him into taking the Apple CEO job, the real irony may be the words Steve used to capture John Scully: “Do you want to spend the rest of your life selling colored water, or do you want a chance to change the world?” His goal wasn’t wealth — it was to make a real difference.

The irony is that upon returning, Steve Jobs’ greatest success was with the iPod — the technology equivalent of selling colored water. Yes, Apple dominates the MP3 player market — much like Pepsi and Coke dominate the soft drink market — but in terms of meaningful change-the-world things, Apple hasn’t achieved enough dominance anyplace else, not even with the iPhone, to effect the kind of change Steve himself clearly thought was important.

Last week, I wrote that Apple had the opportunity to make a difference with children, and it didn’t even try. The company has Al Gore on its board and could lead in efforts to prevent global warming, but there is no effort to take Apple to solar power on record — or any other global warming program that I can find — and when it comes to green products, Apple had to be dragged kicking and screaming to make changes. Granted, that was mostly Greenpeace using Apple as a lightning rod, but Apple should have been leading there.

Steve killed all of Apple’s philanthropic efforts shortly after he rejoined the company. Even though he promised to reverse that decision once Apple became profitable, it has been in the black for some time, and apparently he hasn’t reinstated the programs. How do any of these actions change the world? It actually seems as though Steve went out of his way not to do that.

In the end, when Steve leaves he will likely leave a company that is too dependent on him. While it has been very profitable during Steve’s tenure, the one thing it didn’t do is change the world — which is the one thing he thought someone who joined Apple should want to do. If that was truly his goal, he will leave Apple crippled by his departure, having never really made the meaningful difference he imagined.

Microsoft Becoming IBM

There are two things that defined Microsoft early on. The first was its relationship with IBM. Microsoft realized that the operating system was the razor in what could be — and later became — a razor/blade market. In short, as it structured the initial deal with IBM, Bill Gates understood that you could give the OS away at cost and make your money on the applications that ran on it. The rule that founded Microsoft was keep the OS cheap, keep it simple, make money on the applications, and keep the OEMs — who had basically outsourced the OS to Microsoft — happy.

The second development that made Microsoft the success it became came at the end of its relationship with IBM. It was a realization that came to Bill Gates during a visit to IBM, when he saw people using PCs as terminals for mainframes. He immediately understood that IBM simply did not fundamentally understand the new PC market that was moving into dominance and that Microsoft, which had been on a path that might eventually have led to a merger between the firms, had to very quickly run away from IBM in order to survive and prosper.

I would argue that the one thing Microsoft did not want to become was a company like IBM was at that time — yet that is what it has largely become.

Windows 95 started a process that led to Windows Vista. With Vista, Microsoft clearly forgot the razor/blade model that created its market and started marking up the razors and designing in the blades. It made the OS into an application and optimized it for profit. The end result was a market stall; increased sales of its predecessor (Windows XP); the decoupling of Office — which initially was supposed to be the revenue generator; a massive increase in complexity; and the OEMs aggressively looking first at Linux and now at Android as an alternative to Windows.

IBM made a similar mistake when it forgot the model created by its founders, who leased but didn’t sell the hardware. Those leases made IBM nearly invulnerable, but for short-term financial reasons, it sold the leases, and that played a significant role in breaking its market dominance.

One of the biggest mistakes IBM made in the ’80s was with the Peanut, or PCjr. This was a product that could have cornered the market for the inexpensive PCs that would follow. IBM, worried about cannibalizing its higher-priced professional lines, crippled the product. The market still moved to lower-cost hardware — it just didn’t belong to IBM. Eventually, IBM had to leave a market it helped create.

The next new world is the cloud, and it is defined on the desktop by netbooks. The product that Microsoft is positioning on netbooks is Windows 7 Starter Edition, which, to prevent cannibalization of Microsoft’s higher-priced offerings, is crippled. Microsoft is apparently mirroring IBM’s mistake, and Google is preparing to take advantage of it with a fully functional alternative.

Windows 7 is the best of the line that began with Windows 95, but it still breaks the model that Microsoft made famous, and the new market is defined by the cloud. You only have to look at Microsoft’s financial performance and its failed Yahoo bid to realize it probably doesn’t really get this new model anymore than IBM got the PC model that launched Microsoft. Coming full circle, Microsoft is apparently forgetting the very lessons it taught.

Google Becoming Evil

A few weeks ago, I wrote at length about Google’s trend toward becoming evil, an apparent contradiction of the mission statement that defined the company.

Last week, the Justice department jumped on Google for antitrust reasons. What Google appears to fail to realize is that you don’t define how you are viewed. Hitler, for instance, actually thought of himself as a hero; had he died a few years earlier, some argue, that he might have been remembered as one.

Power corrupts; absolute power corrupts absolutely. Google is getting more power than it can handle, and this won’t end well.

As I write this, Google is being investigated by the DoJ for antitrust violations that make Microsoft’s actions look trivial by comparison. It took Microsoft over a decade to exhibit the type of behavior that Google is now engaged in, which increasingly seems to favor cash over conscience. In terms of its non-economic goals, history may view Google as a failure.

Just as not making a difference is defining Apple and not getting the new market is defining Microsoft, being evil is likely to define Google. In all of these cases, I don’t expect a great outcome.

There are a lot of ways Apple could make a difference; it could start by aggressively protecting children and helping to prevent global warming.

It isn’t too late for Microsoft to understand that if it doesn’t embrace the new cloud market, understand it, and remember what gave it the market in the first place, that Google will move right around it.

As for Google, its leaders need to realize that evil is defined by others, that power corrupts, and that it’s corrupting them. The evil they need to worry about isn’t Microsoft’s — it is their own.


Rob Enderle is a TechNewsWorld columnist and the principal analyst for the Enderle Group, a consultancy that focuses on personal technology products and trends.


16 Comments

  • The departure of Mr Gates makes the subject of Microsoft’s being unable to adapt to the cloud very interesting. Over the last thirty years, Microsoft has continuously been able to reinvent itself, in spite of its size. At least a part of that ability was Bill’s status inside the organisation which enabled him to prevent internal politics from stopping the reinvention process.

    To my mind, a question that is at least as interesting as whether Microsoft understand the cloud is whether, if they do, they are in a position to change themselves enough to take advantage of it.

    • I doubt you are disagreeing with the facts; Apple does only dominate the MP3 space after all.

      But what does "making a difference" mean to you? When Bill Gates wanted to make a difference he left Microsoft to do it and he made sure there were folks to take his place when he left. Steve has the potential to make a real difference in the world and yet seems satisfied with less. Much of what Apple has done was actually reused and improve on the ideas of others. The UI and mouse came from Xerox, the iPhone from LG, the iPod from Portal Player etc. Taking someone else’s idea and making it better is Microsoft’s thing and currently Apple’s ad campaign seems to be largely PC envy based.

      I think Apple can be better than this. But, it is hard to respond when you aren’t very specific about what you are disagreeing with. I think Apple could actually change the world, right now they are setting up for another slide into oblivion. I’d rather not see that again.

      • I completely disagree with the premise of the article. Here’s first — Mr Enderle is hugging the potty of early years of Steve Jobs, Bill Gate and Googlers. What they thought when they started is a misnomer. Every company emerges when they face the reality. Think about companies who did not transform? Auto industry anyone?

        The second one is the hallucinating belief of "Author" in "changing the world". These three firms have actually changed the shape of the world — made it flatter, faster, beautiful, easier, search-able, etc. If I compare my life from the previous generation, I won’t complain about Apple, Microsoft or Google.

        Specifically to Apple, not being able to see what Apple changed is myopia here. Apple changed the mindset completely. Apple changed how music industry operated. Apple changed the way Telcos were screwing its OEM and consumers altogether and Google helped the cause. Apple changed the trends in movies (remember Pixar?). Apple changed the way others were subsidizing hardware for software. Apple created a new norm for "experience".

        Now if you want to believe in "changing the world" as changing the energy dependence, world hunger and bringing Africa on the world map, that’s completely different topic. But in that list Apple, Google, or Microsoft will surface at the very bottom.

        • Yes back in 1984, over two decades ago, Apple tried and failed to make a difference. The market went on to become dominated by Microsoft making Bill Gates the richest man in the world and the leading philanthropist. Even the concept of all-in-one computers which Apple later revisited never took on broadly and, according to the most recent consumer reports, Apple no longer even makes the best one of those.

          Currently Google is heavily involved in digitizing the world, smart grid, and energy independence. If they operate to plan they will shortly be one of the greenest companies that has ever existed. That too is changing the world.

          Products come and go. We are a fickle race. What was the hot phone before the iPhone? What was the hot music player before the iPod? The last consumer electronics company to truly make a difference was RCA and they gave us most of what Apple is now living on. But changing the world means making some kind of lasting impact. Google has done more to do that in the last several years than Apple has since its beginning and yet, with Steve Jobs, Apple has had a greater voice. What if it were used for selling something other than the digital equivalent of colored water?

          Now I agree the iPhone, which was largely a copy of the LG Prada (better copy but a copy none the less), changed the way people thought about the cell phone. But the Mac changed the way folks thought about the PC and yet Microsoft benefited from the change and with the smart phone Google is about to do a Microsoft repeat.

          Look at Apple, their ads look like a desperate case of PC entry. Their response to the Palm Pre is to threaten litigation. This isn’t a company making a difference it is a company trying desperately to hold on to markets that will eventually move on. I think Apple can be more than that. I think every company should strive to be more than that.

          You seem to be happy with the way things are, let’s chat again in a few years. I’d still like to see Apple, Microsoft and even Google become what they still could become.

          • You probably shouldn’t use comparisons you don’t understand. The car companies, for the most part, were started by people who loved cars. Over the decades they were taken over by unions and finance types. Take a look at the wonderful cars that came out in the 20s that are worth Millions today and ask yourself if there is anything Apple is building that will have that kind of lasting impression. What is an original Mac worth? How about an original iPod? Tech just doesn’t last like that and most cars don’t either anymore. I don’t think that was a change for the better. The History of William C. Durant http://en.wikipedia.org/wiki/William_C._Durant (founder of GM) is worth studying and it is to point. He was amazing at the start, got too involved with making money, and ended up running a bowling alley. But, without him there never would have been a GM.

            In this instance my premise is that every one of these firms anticipated and then either forgot, or (in the case of Google) is forgetting the one thing that could assure its continued success. In Apple’s case it is making a difference, in Microsoft’s it is remembering their model and not following IBM, and in Google’s it was dominance without being evil. That evil thing bit Microsoft and it will likely bite Google much harder.

            Pepsi and Coke changed the soft drink industry as well, but that wasn’t the change Steve Jobs was talking about otherwise John might as well have stayed with Pepsi. I’m pretty sure he didn’t mean, leave soda pop and come over and make MP3 players or even shiny new phones that are great game and TV players.

            I think every firm should, from time to time, look back and remember what they once intended to be. Probably good advice for people too.

          • You might want to think about leading by example. It is rare that a post embodies so many things that is appears to be complaining about.

  • This guy is the absolute worst when it comes to reporting on technology. He is so off base I am so sick and tired of his inaccurate information. Funny thing is he gets it wrong every single time. I have followed Apple and his demeaning comments over the years and nothing he states has any significant value to the reader other than how bias he really is. A total loser! Jack-ass, It’s sugared water not colored water! Apple did change the world. They mainstream the idea that individuals can have a personal computer in the home or business. Apple mainstream the idea of a Graphical User Interface. They brought music to the 21st century. Who makes CDS when you have an iPod? The iPhone, The AppStore it goes on and on. If they didn’t change anything then why is Microsoft and countless others trying to replicate it?

    Google is amazing as a company. They think outside the box and that comes within from individuals who push innovation at Google. They are not Evil?! Where the hell did you get that from? Cloud computing, improving search, GoogleTalk, YouTube, and the list goes on. Most use Google because they enjoy what they provide.

    Microsoft well they need to focus. They need to stop worrying about everyone else and focus on what they do well.

    You are so far gone you JUST DON’T GET IT! Please do us all a favor and STOP writing this crap. You are DUST under a rug. Dirty and forgettable!

  • Rob I think you’ve lost your bearings and possibly your mind.

    Apple’s iPhone is probably the most important game-changing device to have been introduced since the PC. The company is very clear that their mission it to develop great products and bring them to market. Steve Jobs is my hero. He’s surrounded himself with a great management team and they’ll carry the torch. Steve’s only major screwup was putting Al Gore on the Board of Directors. Why would he want that bozo on the board?

    Microsoft is not becoming IBM. That’s an insult to IBM. Microsoft is evil and has been for many years. Watch Larry Ellison as he tells it like it is http://www.youtube.com/watch?v=ssX4RL24HT4

    Google is bringing us the world’s information in searchable form. That’s a great public service. Google is not evil. Watch founder Larry Page’s commencement address at the University of Michigan (http://tinyurl.com/cjwd8b).

  • Who is this guy and does he get paid for writing this stuff? A little fact checking might be in order. I feel ashamed even responding to the drivel in this article …it, and most of what the author opines, is insignificant at best.(my being here has probably generated ad revenue, which is what this column in all about anyway. I’m so ashamed for contributing to that)

  • Mr.Enderle, so please can you clear what exactly is tectonic or create a difference in the world. One needs to create a tectonic shift to understand one. If you say apple has not created one you must be kidding. they have created some breakthrough products all along. Whether it was Mac,or the Ipod or the i Phone. If these are products which are not making a difference in the world?? what on the earth they are. also critics like you need to be objective. instead of plainly criticizing its important you appreciate each company for their contribution Apple for breakthrough technologies, Microsoft for democratizing GUI,google for search engine .

    Please look at yourself in the mirror before giving incisive views!!

  • I’ve been writing software and reading about computers and tech for over 25 years. I’ve never read anyone, over that entire period of time, who is/was as consistently clueless as Enderle. That’s saying something, because there are a half-dozen boobs out there vying for his slot. Some have given up, and some have died, but Enderle lives on and does what it takes to lead the pack of clueless morons.

  • Perhaps some optimism, enthusiasm and creativity of thought would be appropriate in the current climate, and not this depressing, trivial, mediocre drivel which you audaciously pass off as newsworthy commentary.

  • This is the first time that I’ve ever commented on an article like this.. Normally the pain of having to register in order to post a comment is not at all worth the effort. Today I feel entirely differently. After reading this article I do not think that Rob Enderle could be more incorrect regarding his comments on Apple. How many times does Apple need to change the world to shut you up exactly? How could you possibly say that the iPod was Apple’s only world changing product? Was the Macintosh not a world changing event in 1984? Is giving Microsoft a run for their money not a world changing event? How about OS X scaring the crap out of Microsoft? Was the iPhone not a world changing event? Breaking into the cell phone industry so late in the game is next to impossible for every other phone manufacturer, so of course when Apple knocks it out of the park with the iPhone and gains more market share than any newcomer to the industry and you call it a failure? Don’t believe I saw lines out the door weeks after RIMM introduced their last phone. And I don’t frankly understand why your article digresses towards helping children and Al Gore? Seriously – Don’t ding the company for not doing what isn’t in their business plan. Apple’s stock would probably tank anyway if they announced that they had partnered with Al Gore to make their product solar – dumb idea.. And your comments regarding being dragged kicking and screaming by Greenpeace – well granted Apple was trailing the industry in terms of making their products green, but is there any denying that they are now an industry leader? It’s not like Apple took some half-assed approach to getting Greenpeace to quiet down. Get your crap together Rob – Apple is one of the most successful companies in tech right now and has been for quite some time. They have changed the way that consumers think about what a tech product should be and how it should work. They are constantly changing the terms of the game and the rest of the industry is forced to follow where they go. Apple is changing the world everyday!

  • Mr. Enderle, how are you able to do it? Every time I read something "new" from you about Apple I am astonished and think it impossible you could be more wildly incorrect, but here you are again with this. Not only are your Apple comments preposterous, you do about as good a job at obscuring reality with your Microsoft and Google insights. Is it possible you can be so wrong you are "not even wrong" about everything in the tech industry? Amazing.

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