Monday, February 14, 2005


HatTip to Adam Herscher's Consumption Junction (power of Technorati since i came across his blog by finding him linking to one of my articles). Michael Malone writes about a dying Microsoft:

Great, healthy companies not only dominate the market, but share of mind. Look at Apple these days. But when was the last time you thought about Microsoft, except in frustration or anger? The company just announced a powerful new search engine, designed to take on Google -- but did anybody notice? Meanwhile, open systems world -- created largely in response to Microsoft's heavy-handed hegemony -- is slowly carving away market share from Gates & Co.: Linux and Firefox hold the world's imagination these days, not Windows and Explorer. The only thing Microsoft seems busy at these days is patching and plugging holes.

Speaking of Gates: if you remember, he was supposed to be going back into the lab to recreate the old MS alchemy. But lately it seems -- statesmanship being the final refuge of the successful entrepreneur -- that he's been devoting more time to philanthropy than capitalism. And though Steve Ballmer is legendary for his sound and fury, these days his leadership seems to be signifying nothing.
(full article)

I think Malone is wrong on this one as he was four years ago about Apple (tip to Adam again):

I was reminded of all that I knew about Apple. To wit:

*Steve Jobs can't run companies, but he has proven that he is a genius at motivating teams of people to produce extraordinary products. In fact, he may be the greatest project team leader in the history of high tech. That is no small achievement. But it does not translate to being the CEO of a giant corporation. Jobs failed the first time running Apple, failed at Next and only succeeded at Pixar because the company worked around him. He succeeded in the short term during this, his second, Apple tenure because he ran the whole company as a product team. That only works so long. Why is he a poor CEO? Because he's mercurial, insufficiently engaged by the more boring (but crucial) operations like distribution and, ultimately, because he's a pretty nasty piece of work. In the best of all scenarios, Jobs would hire a competent CEO and focus on product development, but his ego would soon lead him to undermine his replacement. Steve Jobs is Apple's Alcibiades: the company can't live without him, or with him.

*Apple is a small fish, and the pond is going dry. Like that other great marketer, Jerry Sanders of AMD, Jobs has a genius for making Apple seem more important than it is. Even after all the successes of the last two years, Apple is still where it was during the Spindler era. It is a niche player, with an anomalous operating system, trying to survive in a market dominated by giant corporations like Compaq, Dell and IBM. Apple gets a lot of attention by being cheeky, stylish and having a marginally better operating system, but it is up against a monolith nine times its size, with all the economies of scale, distribution and the marketing reach that comes with such size. Grandma may love her iMac, as does the ad agency down the street, but corporate America still buys Windows. Now that Apple has upgraded its customer base it has no place to go. And to make matters worse, the rise of personal digital assistants, palmtops, embedded controllers, etc. promises in the next few years to render the PC industry into a backwater business filled with commodity products--hardly the place to be a pricey innovator.

*Style isn't enough. In all the excitement over blueberry iMacs, what went unnoticed was that Steve Jobs and Apple had made a brilliant, but dangerous, bet. Nobody has a better eye for style in technology than Jobs. He showed that twenty years ago with the Apple II, and again a decade later with the Next computer. But Jobs' genius, in his Apple restoration, was to realize that his gift perfectly matched the endgame of the PC industry. He would make personal computers cool and stylish again--he would turn them into fashion. And he did just that, sparking a renaissance in product design throughout American industry. But he who lives by fashion dies by it as well. In making computers into couture, Jobs also made them more ephemeral than they already were. Cool people, Apple's market, are already bored with the iMac. Thus, Jobs created an insatiable hunger for novelty that now even Apple, even with its splendid new cube, can't satiate. In the process, he hastened the entire personal computer industry towards its end

Apple, of course, isn't dead yet. I still have a Mac on my office desk. My mother-in-law owns an iMac, and my oldest son wants one for Christmas (and he'll probably get it). Meanwhile, the company is preparing its next generation of computers. No doubt they'll be great looking.

But with falling profits and plummeting stock, and having hastened the end of the desktop PC era, Steve Jobs has put Apple again in a precarious position. When the end does come, the big companies will have the necessary capital to transition into the multitude of new industries that will evolve out of the PC. The products of these new markets will be, thanks to Apple, stylish and beautiful. What an irony it will be if Apple, cranking out ever-less profitable commodity iMacs, its stock depressed, cannot afford to follow.
(full article)

Malone looks foolish now, huh?

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