Dr. Jekyll and Mr. Jobs – Is Apple Becoming Arrogant?

Let’s keep this short; the answer is “Yes”. Why do I say that? It’s an attitude thing.
Back in primitive times (the 1970s and 80s) there was a common expression in the Information Technology business; “no one ever got fired for buying IBM”. IBM was the safe, dependable choice for IT needs. Most people have forgotten that the US Dept of Justice filed an antitrust lawsuit against IBM in 1969. By 1982, when it was settled, it was already becoming irrelevant. IBM was beginning to see cracks in its business model. By the early 1990s, it was fighting for it’s life against competition that it never saw coming; commodity PCs and networks. Lou Gerstner came aboard as CEO and transformed the company from a maker of big iron mainframes to a provider of software and services. The company was humbled and then saved by his leadership.
In the 1980s and 90s, Microsoft was so preeminent that every other software company’s strategic plan had to account for Microsoft’s response to their product. Would Microsoft copy their idea, produce a competitor, and destroy the market? Would they withhold critical technical information, making it difficult or impossible to support the product? Would they issue a press release stating that they “planned” on entering the market with a similar product at some future date (known in the industry as “vaporware”) and create so much FUD that the market would stall? Microsoft was so distrusted in the industry that it was terrifying to even partner with them. They might just steal your ideas, make a poor imitation, include it in Windows and kill the market. Like IBM, Microsoft was sued by the Dept. of Justice for antitrust violations. In fact, you can mark the beginning of the implosion of the dotcom bubble to the date that the lawsuit was decided, April 3, 2000. At that point, the Nasdaq index was 10% below its all-time high. One week later it was 34% below the peak. The party was over.
Microsoft is still around and still very powerful. In a future blog entry, I will make the case that Microsoft’s days as a dominant force in the market are numbered, but for now here are just a few general points;
1) Their stock was $36.50 in June of 2001. Today it is at $25. Not a good investment, even with dividends.
2) When you hear “Windows”, is your initial reaction positive or negative? “Windows” is Microsoft’s most valuable trademark. Do you associate it with solid, trouble free computing or has it become something of a cultural joke?
3) How has Microsoft’s foray into online computing panned out? They started 15 years ago in 1995. Are they a player? Would you trust Microsoft with your personal or corporate information?
4) If you were a graduating computer science student and you had a choice to work for Google, Apple, some exciting new startup, or Microsoft, would you pick Microsoft? In the software industry, we believe that talent is our future (credit to Whitney Houston)..
5) Microsoft has made attempts to diversify into a dizzying array of products. Aside from a modest success with the XBox, how has that worked out? They just killed their latest mobile phone attempt (“Kit”) after just two months due to a total lack of demand. Ask yourself, would you rather have a Windows mobile phone, an iPhone, an Android based phone, or a Blackberry? Would you rather have an iPod or a Microsoft Zune? The only reason that Microsoft is still powerful is because they have a cash cow in Office and Windows, but knowledgeable people are beginning to discover that other products (like the free OpenOffice suite) meet their needs just fine. How long will it be before corporations catch on and stop paying Microsoft billions of dollars when instead they can either use free software or an application on the Web? Linux and the Mac run indefinitely with nary a crash and with little worry about viruses and spy ware. How many times have you reinstalled Windows on the same PC? What’s Microsoft’s competitive position on the Internet? In the mobile device field? Unless Microsoft can change public perception and move into hot new markets, they have peaked and will begin to decline. 5 years is an eternity in tech. I look forward to reviewing their position in 2015.
Why review the history of IBM and Microsoft? Because today, there is a new dominant tech company. It’s always hard to imagine how such dominant companies can lose their position. Companies like IBM, Microsoft, AT&T, GM. And Apple.
You know Apple. The scrappy underdog. The company that the brilliant Steve Jobs brought back from the dead and turned into a media darling. The company that can do no wrong. I own a MacBook Pro and an iPhone 3GS. I love Apple products. But Apple is changing. They are morphing from an underdog to a bully. They are beginning to become downright Microsoftian in attitude. To wit:

  • How many modern smartphones don’t allow you to use removable memory cards? Answer: one, the iPhone. This allows Apple to sell models differentiated only by the amount of storage. It also forces users to use iTunes to transfer music, video, or applications. Either use iTunes or get a different phone.
  • If your iPhone battery won’t keep a charge any more, you can’t replace it yourself (like any other phone). You have to go to www.apple.com, find the closest Apple Retail Store, bring your phone to them, and pay a technician to install a new battery for you. The closest store to where I am typing this entry is an hour and a half away. Traveling and short on time? Tough luck. Of course, you could mail your iPhone to Apple and they will replace the battery and mail it back. That’s not too much time, expense, and hassle just to change a battery is it? “Apple; it’s all about the user experience.”
  • If you are a developer who has created an iPhone or iPad app, Apple may or may not approve your application. There are certain no-nos that are well publicized. On the other hand, there are a whole lot of things that can disqualify you that you don’t know about and can’t determine in advance. It’s on a case-by-case basis, you know, more like guidelines than rules. So spend what little cash that you have on R&D and roll the dice. Your app might get accepted. Then again, it may not. Steve Jobs insists that Apple must have complete control over the user experience. Remember Apple’s most famous commercial? How ironic. By contrast, the Android OS is completely open, so as a developer or a user, you can deliver software any way that you’d like and run anything that you want. There are a lot of very good Android phones out there . . .
  • On the product front, Apple is starting to show some cracks in its armor. Go ahead and Google “MacBook trackpad click”. My MacBook trackpad now requires me to push when I click or it doesn’t register. Of course all vendors have occasional hardware issues, but check out how long people have been complaining about this. What has Apple’s response been? “Apple Store”.
  • It looks to me like the iPhone OS 4 saga may be the beginning of a story akin to Microsoft Vista. The Internet is rife with stories like mine. I have a 1 year old 32GB iPhone 3GS. I upgraded to OS 4.0 and the phone became almost unusable. Many times it just wouldn’t respond, and when it did it was sloooooow. It couldn’t connect to Wifi networks that I had been using for a year without any problems. It would drop Wifi connections and refuse to reconnect. There were at best some mild benefits to the vaunted new “multitasking” features, but not nearly enough to offset the really major issues. In short, it was a disaster. Worse yet, Apple provides no downgrade mechanism. Once OS 4 is installed, you are stuck with it. Apple actually wrote specific code into iTunes to prevent you from downgrading. Finally, after 2 days of my phone not working correctly, I used a complex hack that I found on the Internet to downgrade to OS 3.12 and it is working perfectly again. The Internet is filled with complaints, and most users are not software engineers.
  • Apple’s response to the iPhone 4’s external antenna flap is instructive. Their response can be summed up as “quit your whining”. Their only solution is to offer a free iPhone condom so that the user’s skin will not touch the external antenna and cause reception problems. I don’t want to be too forward, but would you mind undressing your new iPhone 4 so I can take a look?

Apple hasn’t blown it by any means, but the direction they’re taking is making me uncomfortable. Hubris has a way of biting tech companies in the ass (see IBM and Microsoft). Am I predicting the decline of Apple? Absolutely not. They are still the preeminent design and marketing company in tech. Apple has always had four major advantages; beautiful designs, great marketing, flawless execution, and fanatically loyal users. I don’t expect their designs and marketing to fall off, but for the first time in a long time there are questions regarding their execution. It remains to be seen how loyal their users will remain now that Apple has morphed from a scrappy little underdog to a borderline arrogant giant.
Stay tuned, this could get interesting.

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