The Jobs Program

When Steve Jobs resigned from Apple yesterday, many writers pointed out that he was the archetypal Silicon Valley chief executive – a former hippie hacker who started a business in a garage and went on to change the world. But it’s also worth mentioning that he succeeded by ignoring the conventional wisdom of Silicon Valley. Indeed, if Jobs had followed the advice of technology pundits, Apple might have gone the way of Pets.com.

In 2003, when I was an editor at Wired, a colleague predicted that the success of Apple’s iPod would be short-lived. At the time, Apple was only beginning its remarkable comeback – it had less than 3 percent of the personal computer market, the iPod was still expensive enough to qualify as a luxury item, and the iTunes store had just launched. Like many others who followed the technology business, my fellow editor thought Apple was doomed because it wouldn’t open its systems so other companies could manufacture iPod-compatible MP3 players. The future was in open systems, and it belonged to those that prized efficiency above all things. Apple’s design prowess had nothing on Dell’s inventory control system!

It’s easy to make fun of this attitude, but it makes perfect sense to those with a certain worldview. Apple’s original sin was staying in the computer business when it should have licensed its operating system, like Microsoft did. And here it was, making the same mistake again! Once other manufacturers started making their own MP3 players, an established giant like Microsoft would provide software for them and the price would plummet. Who would pay a premium for Apple’s MP3 player – really just a hard drive, screen, and battery – just because it looked cool?

More than 200 million people, as it turned out.

Logically, my colleague was perfectly right. (His name has been withheld because failing to predict the future shouldn’t be seen as a flaw.) The iPod was really expensive for a bunch of commodity components in a white case. What he failed to realize – and what most people Silicon Valley executives still don’t realize – is that most people don’t make purchasing decisions according to logic. So the rigorous cost-benefit analysis that let the Wintel platform conquer the office market didn’t matter that much.

To understand the other editor’s point of view, look at this 2008 Wired story – “How Apple Got Everything Right By Doing Everything Wrong.” It points out that, in most ways, Apple is the exact opposite of Google, operating with a strict hierarchy, using a proprietary platform, and doing business with “a level of secrecy that makes Thomas Pynchon look like Paris Hilton.” To the readership of Wired, this was a smart, surprising story. But almost every business is run with a certain amount of secrecy – and, for that matter, so is Google. Just ask Eric Schmidt, who testified in a lawsuit that he deletes most of his email every day – presumably not because he can’t afford a larger hard drive.

As for Apple’s proprietary platform, it enables companies to innovate on quality instead of only efficiency. While Dell was sweating its manufacturing logistics to survive a brutal price war, Apple introduced FireWire, popularized at-home WiFi , and proved computers could be made in colors other than beige. This approach helps other companies innovate as well. Google’s open-source Android platform lets companies sell mobile phones for less, but it also enables the kind of piracy that makes it difficult for software companies to invest in original programs. Apple’s iPhone platform discourages piracy (but by no means makes it impossible), so it has become a hothouse for innovation. Would Bjork have been able to invest as much in her Biophilia apps if they were as easy to pirate as to pay for?

What Apple’s competitors still don’t get is that most consumers aren’t any more interested in the specs of their chipset than they are in the horsepower of their car. And while techies value the flexibility of open systems, most people prefer the simplicity of software that works seamlessly with hardware. (Hearing them talk about this is like listening to gearheads talk about the superiority of manual transmissions – you’re right, but please shut up already.) That’s why Apple products command a premium, which made it the most valuable technology company on the planet.

Think different, indeed.



One thought on “The Jobs Program

  1. It’s interesting to watch discussions like these from the sidelines, because they show us – time and time again – that men who forget history are doomed to repeat it.

    In a way, it is not unlike the Ford and General Motors conflict of philosophy, a long time ago. Henry Ford’s approach to automobile manufacturing is well-known: we could look at it as analogous to the PC-clone approach. For a while it made Ford the dominant player in the U.S. market. What Ford failed to realise – that GM’s Alfred Sloan did – was that consumer would want to pay a premium for extra features. Such as a car that isn’t black; which puts Apple’s “we don’t do beige” (or what was that slogan) campaign in a new light.

    Ford brought the automobile to the masses and the PC manufacturers did the same for computing. However, once you get people into the “I am going to get a computer” (or a car or an MP3 player or a smartphone or a tablet or whatever) mindset, the question becomes “which computer?” Apple’s biggest achievement was to turn computers (and other modern electronics items) into a status symbol.

    Posted by Faza (TCM) | August 26, 2011, 2:08 pm

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