What would it take to cause Apple to fail? While Steve Jobs was alive, the prevalent belief was that it would take his removal from the company. That has happened, but Apple’s valuation and reserves are higher.
Although the foundational element was removed, no one really went after Apple hard until last week, when Google launched a comprehensive strategy that clearly targeted the company. It attacks Apple’s products directly and flanks it as well.
While this is the most impressive attack on Apple since Microsoft launched Windows 95, it doesn’t yet have all the elements it needs to be ensured success. That’s in spite of reports that iPhones 8s
have been breaking, iPhone Xs
allegedly have been delayed due to product shortages, and iOS 11
has been breaking badly (partially due to forced obsolescence).
Apple is hardly invulnerable at the moment, though, so it’s possible that Google’s efforts might be enough.
I’ll explore that possibility and, as always, end with my product of the week: the Lenovo 25th Anniversary Retro Mod ThinkPad.
Developing an Apple-Killer Strategy
Killing a successful company hasn’t happened often, but it has happened. Cisco took out 3Com by growing faster through acquisitions, being incredibly aggressive, acquiring key 3Com talent, and adopting a take-no-prisoners approach to competitive strategy.
Oracle took out PeopleSoft by executing a hostile takeover and shutting it down.
While Microsoft is credited with taking out Netscape, the antitrust trial against Microsoft largely showcased that Netscape committed suicide (which incidentally proved the saying “don’t kick a dying man,” because Microsoft was punished anyway).
Apple took out Palm, and it almost took out BlackBerry by getting the then-more-powerful smartphone companies to chase it, effectively flipping the market to one that gave Apple an unfair advantage.
It is interesting to note that Google effectively took out Yahoo the same way — but, in that case, it wasn’t even apparent that it was a goal. It seemed to happen more because of Yahoo’s suicidal strategy than Google’s competitive effort.
Over time, a company’s failure to create and execute successful strategies has been a more powerful driver of doom than a competitor’s efforts to remove it from the playing board. That said, Steve Jobs redesigned Apple to favor his unique set of skills, and the company’s current problems largely are connected to the fact that those skills just don’t exist there anymore.
It is my belief that a company in Apple’s position, with strong financial performance, can’t be hurt unless it first has been weakened from inside.
With an impressive number of product problems, Apple rolls into the end of the year obviously very exposed but still impressively protected by customer loyalty and a lock-in strategy that makes it very hard for unhappy customers to move. Hold that thought.
Google’s Inherent Advantage
To attack Apple from a product vector, there are three products that need to be badly hurt. Obviously, the iPhone is its greatest strength and its greatest weakness. Were it to fail, all the rest of the products combined couldn’t make up the difference. Apple is not well diversified.
Google — or more accurately, Alphabet — also is largely a single-product company, getting massive revenue and profits from Internet advertising. However, it also has Android, which currently is more dominant than iOS. Were it to shut down that business tomorrow, rather than dropping immediately to life support, like Apple would if it lost the iPhone, Google might become more profitable.
This means that while Google can hurt Apple, Apple is not in a good position to hurt Google, and Apple’s efforts to use litigation just seemed to run up legal fees, which is kind of surprising, given that Apple has one of the strongest legal teams in tech.
This gives Google a huge advantage. In a war to the death, Google could hit Apple hard, and Apple really couldn’t take the fight back to Google. Now I could argue this would be a stupid war for Google to be in, but wars are generally stupid, that apparently has not stopped anyone.
Back to the three products. I mentioned the iPhone — the two others are the iPad Pro (the only growth iPad) and the HomePod. The Apple Watch just isn’t trending well, and that entire segment seems to be in trouble now. The iPad Pro and HomePod are Apple’s diversification and growth products.
Were Google to hurt all three, it likely would crater Apple’s valuation, dropping employee shares and options sharply, which in turn would cause key employees to leave the company and others to become either desperate or massively distracted.
If you suddenly lose a large amount of your net worth and potential retirement funds, it is — trust me — hard to stay focused on the job. Of course, Apple would seem even more vulnerable then, leading to focused attacks by other competitors as well.
The Pixel 2 phones appears uniquely designed to address the iPhone’s shortcomings (apart from the missing headphone jack, which they lack as well). The Pixel 2 carries the full product set of options across the line, while Apple
gave customers a hard choice of trading off options with phone size or model. The Pixel 2s appear to be at least equivalent to the new iPhones, but they lack lock-in, which means customers who buy them still could switch to another Android phone painlessly, providing a level of choice that Apple refuses to provide.
Lock-in is a dual-edged sword. Yes, it locks folks into your platform, but it also effectively locks people off it as well, making migration in either direction harder than it should be. Given the more linear moves by Google, I expect the Pixel 2 phones to be more reliable and have better overall performance. Because Google’s back end is far stronger, they showcase a better path to the future than the iPhone has, without forced upgrades. Many of the advancements in areas like artificial intelligence and augmented reality will be cloud-based, not phone-based.
As for the iPad Pro, the new Pixelbook appears to be a closer realization of the desires of customers who initially wanted to use iPods as laptops. It is a sexy laptop with the battery life of a smartphone.
In addition, Google did what Apple should have done — created a hard connection between the Pixel 2 and Pixelbook, allowing the laptop to tether to the phone automatically. This means one data plan for two devices, and no tethering hassle for the user. Yes, it seems such a little thing, but it is something Jobs would have done and Apple didn’t do.
Finally, the Pixelbook arguably is a more attractive product, which never should happen, given that Google represents function over form, while Apple represents form over function. Any time Google has a prettier product than Apple, something is seriously broken at Apple.
Regarding the HomePod, Apple’s smart speaker offering is little more than pathetic. Running against Amazon with a line of offerings, Apple just presented one higher-cost product. Google announced a line topped with a premium product that appears better than Apple’s, and with other offerings at attractive lower prices.
Even Amazon, the segment leader, likely took notice — though neither Apple nor Google has a video product in its line, while Amazon has two. Contrasted with Amazon and Google, Apple’s single product offering looks pathetic and is unlikely to be attractive to anyone but true Apple loyalists.
Back to the Pixel 2 — Google created a limited migration path from iOS to Android, which likely will be enhanced over time, which gradually should weaken Apple’s customer lock-in.
Wrapping Up: 8/10ths
This is an impressive and unprecedented attack on Apple’s revenue and profit, and Apple is under massive margin pressure, as it is forced to raise prices to show profit growth. However, it still has massive reserves, and it still can, and generally does, outmarket any other firm.
Those reserves are being lusted after hungrily by both the EU and U.S. governments, though. Further, Google could eliminate Apple’s marketing advantage on paper, because its parent Alphabet pretty much controls much of the world’s advertising execution mechanism, particularly on the Internet.
On the other hand, were Google to fully use that power, it would hurt its primary revenues and increase the rise of domestic and foreign efforts to reduce that power by fining or breaking up the company, so it is very doubtful that the firm will use what would amount to a nuclear option.
As a result, while Google’s latest effort clearly will hurt Apple, it could hurt Android licensees like Samsung more, and force more moves like Google’s acquisition of much of HTC’s smartphone capability.
Finally, as Microsoft clearly realized in the late 1990s, when Bill Gates
made a massive investment in Apple, if Google should wipe out the company, its own
antitrust problems probably would explode, so driving out Apple could turn Alphabet into the next Standard Oil or RCA. So, taking out Apple could be suicidal for Alphabet — but firms rarely think that strategically.
When it comes to laptops, there always has been one truly gold standard, and that is the ThinkPad. It really was the line that created the laptop wave, and for those of us who just want a product to work, it has been our go-to box.
It boasts a highly consistent design, massive focus on usability, reliability, and near invulnerability. The product never has been cheap or flashy, but it generally has gotten the job done. Color choices, with some minor exceptions, typically have been any color you wanted as long, as it was black.
Well, last week Lenovo launched the
25th Anniversary ThinkPad.
configuration of this product reminds me of a recent effort by Jaguar to put new technology into an old iconic design. It currently is testing an all-electric
XK-E, and that is arguably one of the most iconic car designs ever created. However, you actually can buy the ThinkPad — a bunch of us are hoping we eventually may get to buy the Jaguar.
This 25th anniversary ThinkPad looks like an iconic ThinkPad: Color is black, keyboard is full seven rows and lighted, display is 14 inches. Under the hood, it has current-generation i7 processor, Nvidia GeForce 940MX graphics, an SSD drive, and the display is full HD and touch. It is a classic, with the power to match or exceed most every current-generation business notebook in the market.
Like most short-run products, there won’t be a lot of this model, but sometimes blending the iconic past with the technology of the future can create something amazing, like an electric E-Type or this 25th Anniversary ThinkPad, and so it is my product of the week.