As the largest tech companies get larger and increasingly find themselves competing with each other on multiple products or services, a question arises about whether it makes financial and operational sense - and whether it is even possible - to try to be great at everything they think they have to do. And if you can't be great, given how excellence infuses and uplifts their brand aura, then at some point enterprises should begin to think about focusing their efforts on those initiatives that produce the greatest profits and strategic advantage.
For Apple, as the following article explains, when it comes to the Macintosh computer line, that moment might be now. There is a lot of history, emotion and customer allegiance tied up in the Mac line. But tech is an iterative and evolutionary business. And for those who succeed, progress is neither sentimental nor patient. JL
Christopher Mims comments in the Wall Street Journal:
The world’s best tech companies can be best at two things, maybe three. In the (last)quarter the Mac accounted for the lowest-ever proportion of revenue, just 9%. The company needs to focus on brands that represent the future. How competitive could Apple make its other efforts if the designers, engineers and executives behind Mac are redirected?
Apple Inc. has the kind of “problems” few companies in history could dream of.
It’s riding a suite of best-selling, high-margin goods that throw off so much cash the company has room to try pretty much anything. I honestly hope Apple is, as rumor holds, attempting to upend transportation by working on a car. How else would you, as chief executive, spend Apple’s mind-boggling $195 billion in cash on hand?
But Apple is still people, and its leaders have only so much time. The recent promotion of design chief Jonathan Ive and the division of many of his previous duties among a pair of deputies testifies to the fact that Apple’s remit has vastly expanded since he designed the iconic Bondi Blue iMac in 1997.
Which is precisely why Apple should kill off what is perhaps its most-refined brand: The Mac.I realize this is heresy, but if you’ll indulge me, I think you’ll find it a useful exercise in thinking about both what makes Apple such an exceptional company and how hubris is the ultimate downfall of all empires.
At last week’s Worldwide Developer Conference, Apple’s annual confab for the faithful, it was hard not to get the impression that the company is stretched thin. Early presenters blew through lists of new features for Apple’s major platforms, starting with Mac, then iOS (Apple’s mobile operating system) and finally the Apple Watch. The keynote wrapped with a somewhat incoherent introduction of Apple Music, Apple’s new streaming service.
The world’s best tech companies can be the best at two things at once, maybe three. Google Inc. is search, Android and ad platforms, plus a long tail of commitments that sometimes feel like someone’s pet project. Amazon.com Inc. is Web services, retail and grand failures like the Amazon Fire Phone. I could go on—Microsoft Corp., Samsung Electronics Co. and Facebook Inc. are also prime examples—but my point is that no matter how many resources a company has, there is only so much it can do better than anyone else on Earth.
In the first interview he granted after taking the reins at Apple, CEO Tim Cook said the DNA of Apple is a “maniacal” focus on making the best products in the world. “Not good products, or a lot of products, but the absolute best products in the world,” he told Bloomberg Businessweek.
To fulfill that promise, Apple is soon going to have to make the best PC, smartphone, tablet and wearable in the world. And if analyses by developers are correct, the best set-top box that also runs apps, when it releases a new Apple TV. Plus, you know, a car.
On top of that, in our connected world, making the experience of these products the best means Apple has to overcome its traditional weakness, which is cloud services. Apple is still hard at work on its own Maps software, plus enhancements to iCloud, for storing documents. And at some point it will have to clean up the mess that early reviews have declared Apple Music to be.
Something’s got to give. Showpieces like iMacs with screens that have more pixels than any PC ever (and four times the average selling price of a PC) are impressive, but what is Apple trying to prove? Is it really a good idea for Apple to continue to put resources against being king of a last-century technology?
I realize there is money at stake, of course. Apple doesn’t release its margins on Macs, but in 2013 analyst Horace Dediu calculated that Apple was making more profit on Macs than the top five PC vendors combined.
But let’s put that in perspective. In the quarter ending in January of this year, a funny thing happened at Apple. The company took in the highest revenue for its Mac line ever, yet the Mac accounted for the lowest-ever proportion of overall revenue. Apple raked in $6.9 billion on 5.5 million Macs, just 9% of overall revenue. This would be a crazy thing to say for any other company, but Apple doesn’t need this revenue.
What the company does need, and like all ambitious companies occasionally strays from, is focus. If the iPhone is just coming into its prime, the iPad is an immature platform and the Watch is in its infancy. Yet Apple continues to invest in one-of-a-kind feats of engineering like the Mac Pro, which ships in volumes that are a rounding error on pretty much everything else Apple makes.
How much more competitive could Apple make its other efforts if the designers, engineers and executives behind Mac are redirected? And just as important, what if the developers who create for OS X had no choice but to move to things that actually represent the future? Even a company as mighty as Apple gets to be the best at only a handful of things. So is it going to be PCs, phones and their operating systems? Or will it be phones and the rest of the dematerialized post-PC computing infrastructure—wearables, cloud services and all manner of screens as thin clients—to which the company has already committed itself?
Apple is an exceptional company, and it is at a crossroads. Is Apple a tech company, or an experience company? Does Apple make computers, or does it make consumer goods? In a world in which the cloud is increasingly the hub of everything individuals and businesses do, and our mobile devices its primary avatar, what on Earth is Apple doing running victory laps around a dying PC industry? Personally, I’d rather see Apple push the envelope on what’s next.
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