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Over the decades I've noticed how businesses need to recognize and focus on their core competencies - if they don't, they die. Everything must feed that core, a

Over the decades I've noticed how businesses need to recognize and focus on their core competencies - if they don't, they die. Everything must feed that core, and undue distractions are lethal. Occasionally there's a need to pivot, which is deliberately stepping from one competency to another, but that is rare and difficult. Apple's core is to build small computers; everything else they do (music, video, cloud services, Siri, AI, AR, operating systems, etc) are all built to draw customers deeper into the ecosystem for the sole purpose of buying more small computers. Electric self-driving cars, while very nifty, are decidedly not small computers (at best being a tiny part of a large product demanding other competencies); to compete in that market requires scale which Apple could certainly buy but would fiercely compete for the attention vs small computers.

plicense 9y ago
I definitely wouldn't call AWS, Echo from Amazon occasional. I think companies come in all shapes and sizes - some focus 90% on their core, some try to spend more time and diverge out to other business segments. Its upto Apple to figure out what to do and what would make it successful.
- ctdonath 9y ago
  AWS is an offshoot of building the massive system needed to process the "we sell absolutely everything" goal. Methinks they just got so good at it, cloud services just kinda took on a life of its own and grew from there - but still feeds the retailing monster. Echo is a consequence of exploring digital appliances as marketing tools. If you're going to build a device which can voice-interface someone ordering 6 bottles of Tide with extreme ease, doesn't take much more to turn it into a nice music speaker and tell you weather & sports & jokes on request. Echo, Fire, etc are just extensions to feeding the retailing monster. Do notice how Amazon's innovative foray into cell phones crashed & burned hard - despite being lauded as rather a well-built device. That shows how straying too far doesn't work, and that "far" isn't very.
  - traek 9y ago
    In what way is the billions of dollars Amazon is spending on original content "just an extention to feeding the retailing monster"? It's easy to point to one failed product as proof that "straying too far doesn't work", if you can do the mental gymnastics required to classify all their successful products as somehow more connected to their original goal.
    - m_mueller 9y ago
      IMO you do have a good point: Nothing about Prime seems to play particularly to Amazon's strengths, other than the wide reach of their sales channels (but if that's an argument, you could as well have Walmart doing the same). This is especially visible when you compare their software to Netflix. Still light years ahead of Apple though.
    - coredog64 9y ago
      Prime Video is a benefit of Prime. I have Amazon Prime for the shipping benefits. I appreciate the video side, but I wouldn't pay $99/year for it.
  - plicense 9y ago
    I worked at Amazon for a while and the point to note is that the Fire phone, despite being a public failure, led to a lot of things at Amazon. For ex: 1. The computer vision and machine learning stuff behind the 8 cameras on the Fire phone has been repacked and reused at multiple places. There's also a object recognition service in AWS if I remember correctly. 2. The FireOS, which powered the Fire phone, is being used on all Kindles except the older e-ink Kindles. While the hardware division was indeed shut down, Amazon did manage to salvage as much as they can. The cloud service didn't take a life on its own - in the very early days there was just EC2 and S3, nothing else. It took a lot of focused investment, commitment and trust from the management to give the AWS experiment more time so that it could succeed and eventually it did. Fire phone was one of Amazon's many experiments. It failed sure, but hey you miss 100% of the changes you don't take.
    - 9y ago
- colechristensen 9y ago
  I think it's more that most don't see Amazon's actual core competence. Amazon is a logistics business, both information and physical. They do logistics for themselves for various front-ends (amazon.com, echo, video, kindle, etc.) but you can view all of those as accessories to their AWS, warehousing, and shipping business which they provide both for their own front ends and for sale to anyone.
  - traek 9y ago
    If you define "core competence" sufficiently vaguely then sure, everything can be related to that core competence. "a logistics business, both information and physical"? Really? Calling their massive retail business, original content, and physical devices an "accessory" to their warehousing is an extremely myopic view of Amazon.
    - wan23 9y ago
      Remember that much of what is sold on Amazon.com is not actually sold by Amazon. Amazon provides warehousing and fulfillment and an online storefront for third party sellers as well as for itself. The tools that it uses to run that online storefront in the form of AWS are used by many non-Amazon websites as well. The Kindle ecosystem helps Amazon sell retail books but also provides a self-publishing platform. It's not unreasonable to say that logistics, warehousing and web services are the real business, and that Amazon's retail business is one of many customers.
  - artosispylon 9y ago
    Might as well call Apple an "electronics business, both small and large."
    - colechristensen 9y ago
      Amazon sells retail themed logistics. Apple sells consumer computing themed user experience.
      - 9y ago
c3534l 9y ago
Counter arguments: Walmart, Google and Amazon.
- amaranth 9y ago
  Google was a search engine that made money via ads then pivoted into an ad platform that also has a search engine. Android and Chrome are about ensuring they have a seat at the table and don't get pushed out by Apple or Microsoft. The first thing of significance they've done that doesn't fit this is their cloud platform.
  - euyyn 9y ago
    You could as well have said: That's right, Google's cloud platform is a counterargument.
  - oblio 9y ago
    Their cloud platform is the same thing: trying to not get pushed out by Amazon and Microsoft. Google Cloud is about ensuring that those two have competition and can't somehow pull an EEE. Extreme scenario: vast majority of world's online businesses are hosted on AWS and Amazon for whatever reason creates their own AWS ad service and forbids or undercuts Google AdWords for everything hosted on AWS.
    - thomasjudge 9y ago
      "EEE"?
      - syockit 9y ago
        Embrace, Extend, Extinguish This is the first time I've seen it shortened to an acronym.
        oblio 9y ago
        I'm pretty sure I'm not the first one to turn it into an acronym: https://en.m.wikipedia.org/wiki/EEE https://en.m.wikipedia.org/wiki/EEE :)
jejdjdj02928 9y ago
Warren Buffet would like a word... http://www.berkshirehathaway.com/letters/1989.html http://www.berkshirehathaway.com/letters/1989.html Apple doesn't build small computers. They design consumer technology. Someone else builds it. They need to avoid institutional imperative by finding something other than small computers, which is facing stiff competition from emerging markets. Before they just made laptops and desktops. Then handhelds. Now watches and tablets. That's three non-trivial pivots from what someone in 1999 might call Apple's "core" business. Sometimes something just seems too much and so you back down. But they necessarily have to keep looking.
trapperkeeper74 9y ago
When companies focus on just one thing in a vertical, they're incredibly vulnerable. Samsung does lots of things fairly well, with some hiccups, well beyond just personal electronics and home appliances. It's diversification. EDIT: Samsung does all sorts of things including ship-building, life insurance, construction and advertising. For example, Apple MacBook Pros have become uncool, expensive, unrepairable and impractical... a giant FU to customers. That business is tettering on failure because they've been hypnotized on elixir of utopian, aspirational design rather than technical, environmental and practical usability. iPhone is the lion's share of Apple's business, and they're losing ground to Android. That's a problem and most other products have plateaued and aren't anywhere near as dominant-capable or category-defining as the smartphone. That means Apple is a basically a banana republic (pun intended) unless they create or retake a category with a non-incrementalist product. Disclaimer: I own an A1278 13" from 2013 but refuse to buy a $3000 soldered on RAM and SSD laptop that can't be transfered without proprietary service tools and whose glued-on batteries are a PITA to change. Also the low-travel, flush keyboards are terrible. Looking at Lenovo and System76 machines instead.
- mcphage 9y ago
  > That business is tettering on failure They sold over 4 million Macs this past quarter, so I don't know what you're going on about here.
  - trapperkeeper74 9y ago
    Numbers today are all well and good, but goodwill and rate-of-change indicate future trends. People will tire of $3000 laptops with nonfunctional WiFi and Apple Authorized Service Centers voiding their AppleCare warranties.
    - mcphage 9y ago
      > Numbers today are all well and good, but goodwill and rate-of-change indicate future trends Well, they're down YoY, from 4.2 million to... 4.18 million. So in another 200 years, they'll have all disappeared.
admiralpumpkin 9y ago
Apple's forte, above anyone's, is merging software and hardware. Level 5 autonomous cars align perfectly with their core competency.
- TheOtherHobbes 9y ago
  No, Apple's strength is refining, polishing, blending, and packaging existing electronic and software technologies. Cars are more about mechanical engineering than electronics or software. Learning automotive design from scratch when you have no experience and barely any trained staff is not a trivial task. Worse, a Level 5 autonomous car is not an existing consumer technology. At this point there's nothing to refine, and barely anything that could be bought in to start the refinement process. Apple might as well go into house building, farming, or food products.
wellboy 9y ago
They have to focus on their competencies but they also have to completely reinvent themselves every decade or so or they will die. Once the iPhone is gone, Apple will be gone.
robotresearcher 9y ago
You are chooosing to ignore the many diversified companies and conglomerates that have done very well, some for more than a human lifetime. Besides, Apple doing the iPod and iPhone is a counter example to your argument, unless you stretch the definition of the core business of a Y2K computer company to be music players and phones.
crypticlizard 9y ago
Imo modern cars are basically small computers and everything else(seats,doors,wheels)is peripheral. I mean it is 2017 after all, don't you think it's about time we accept that cars are computers? Sure, we used to need humans to "complete" the computer part, seeing as we didn't have motherboards at first. But now computer is the core part of car and even humans aren't necessary. Why even bring your cell phone when your car is a cell phone? It's possible Apple needs the car to compete in a post cell phone world.

plicense 9y ago

I definitely wouldn't call AWS, Echo from Amazon occasional. I think companies come in all shapes and sizes - some focus 90% on their core, some try to spend more time and diverge out to other business segments. Its upto Apple to figure out what to do and what would make it successful.

ctdonath 9y ago
AWS is an offshoot of building the massive system needed to process the "we sell absolutely everything" goal. Methinks they just got so good at it, cloud services just kinda took on a life of its own and grew from there - but still feeds the retailing monster. Echo is a consequence of exploring digital appliances as marketing tools. If you're going to build a device which can voice-interface someone ordering 6 bottles of Tide with extreme ease, doesn't take much more to turn it into a nice music speaker and tell you weather & sports & jokes on request. Echo, Fire, etc are just extensions to feeding the retailing monster. Do notice how Amazon's innovative foray into cell phones crashed & burned hard - despite being lauded as rather a well-built device. That shows how straying too far doesn't work, and that "far" isn't very.
- traek 9y ago
  In what way is the billions of dollars Amazon is spending on original content "just an extention to feeding the retailing monster"? It's easy to point to one failed product as proof that "straying too far doesn't work", if you can do the mental gymnastics required to classify all their successful products as somehow more connected to their original goal.
  - m_mueller 9y ago
    IMO you do have a good point: Nothing about Prime seems to play particularly to Amazon's strengths, other than the wide reach of their sales channels (but if that's an argument, you could as well have Walmart doing the same). This is especially visible when you compare their software to Netflix. Still light years ahead of Apple though.
  - coredog64 9y ago
    Prime Video is a benefit of Prime. I have Amazon Prime for the shipping benefits. I appreciate the video side, but I wouldn't pay $99/year for it.
- plicense 9y ago
  I worked at Amazon for a while and the point to note is that the Fire phone, despite being a public failure, led to a lot of things at Amazon. For ex: 1. The computer vision and machine learning stuff behind the 8 cameras on the Fire phone has been repacked and reused at multiple places. There's also a object recognition service in AWS if I remember correctly. 2. The FireOS, which powered the Fire phone, is being used on all Kindles except the older e-ink Kindles. While the hardware division was indeed shut down, Amazon did manage to salvage as much as they can. The cloud service didn't take a life on its own - in the very early days there was just EC2 and S3, nothing else. It took a lot of focused investment, commitment and trust from the management to give the AWS experiment more time so that it could succeed and eventually it did. Fire phone was one of Amazon's many experiments. It failed sure, but hey you miss 100% of the changes you don't take.
  - 9y ago
colechristensen 9y ago
I think it's more that most don't see Amazon's actual core competence. Amazon is a logistics business, both information and physical. They do logistics for themselves for various front-ends (amazon.com, echo, video, kindle, etc.) but you can view all of those as accessories to their AWS, warehousing, and shipping business which they provide both for their own front ends and for sale to anyone.
- traek 9y ago
  If you define "core competence" sufficiently vaguely then sure, everything can be related to that core competence. "a logistics business, both information and physical"? Really? Calling their massive retail business, original content, and physical devices an "accessory" to their warehousing is an extremely myopic view of Amazon.
  - wan23 9y ago
    Remember that much of what is sold on Amazon.com is not actually sold by Amazon. Amazon provides warehousing and fulfillment and an online storefront for third party sellers as well as for itself. The tools that it uses to run that online storefront in the form of AWS are used by many non-Amazon websites as well. The Kindle ecosystem helps Amazon sell retail books but also provides a self-publishing platform. It's not unreasonable to say that logistics, warehousing and web services are the real business, and that Amazon's retail business is one of many customers.
- artosispylon 9y ago
  Might as well call Apple an "electronics business, both small and large."
  - colechristensen 9y ago
    Amazon sells retail themed logistics. Apple sells consumer computing themed user experience.
    - 9y ago

c3534l 9y ago

Counter arguments: Walmart, Google and Amazon.

amaranth 9y ago
Google was a search engine that made money via ads then pivoted into an ad platform that also has a search engine. Android and Chrome are about ensuring they have a seat at the table and don't get pushed out by Apple or Microsoft. The first thing of significance they've done that doesn't fit this is their cloud platform.
- euyyn 9y ago
  You could as well have said: That's right, Google's cloud platform is a counterargument.
- oblio 9y ago
  Their cloud platform is the same thing: trying to not get pushed out by Amazon and Microsoft. Google Cloud is about ensuring that those two have competition and can't somehow pull an EEE. Extreme scenario: vast majority of world's online businesses are hosted on AWS and Amazon for whatever reason creates their own AWS ad service and forbids or undercuts Google AdWords for everything hosted on AWS.
  - thomasjudge 9y ago
    "EEE"?
    - syockit 9y ago
      Embrace, Extend, Extinguish This is the first time I've seen it shortened to an acronym.
      - oblio 9y ago
        I'm pretty sure I'm not the first one to turn it into an acronym: https://en.m.wikipedia.org/wiki/EEE https://en.m.wikipedia.org/wiki/EEE :)

jejdjdj02928 9y ago

Warren Buffet would like a word... http://www.berkshirehathaway.com/letters/1989.html http://www.berkshirehathaway.com/letters/1989.html Apple doesn't build small computers. They design consumer technology. Someone else builds it. They need to avoid institutional imperative by finding something other than small computers, which is facing stiff competition from emerging markets. Before they just made laptops and desktops. Then handhelds. Now watches and tablets. That's three non-trivial pivots from what someone in 1999 might call Apple's "core" business. Sometimes something just seems too much and so you back down. But they necessarily have to keep looking.

trapperkeeper74 9y ago

When companies focus on just one thing in a vertical, they're incredibly vulnerable. Samsung does lots of things fairly well, with some hiccups, well beyond just personal electronics and home appliances. It's diversification. EDIT: Samsung does all sorts of things including ship-building, life insurance, construction and advertising. For example, Apple MacBook Pros have become uncool, expensive, unrepairable and impractical... a giant FU to customers. That business is tettering on failure because they've been hypnotized on elixir of utopian, aspirational design rather than technical, environmental and practical usability. iPhone is the lion's share of Apple's business, and they're losing ground to Android. That's a problem and most other products have plateaued and aren't anywhere near as dominant-capable or category-defining as the smartphone. That means Apple is a basically a banana republic (pun intended) unless they create or retake a category with a non-incrementalist product. Disclaimer: I own an A1278 13" from 2013 but refuse to buy a $3000 soldered on RAM and SSD laptop that can't be transfered without proprietary service tools and whose glued-on batteries are a PITA to change. Also the low-travel, flush keyboards are terrible. Looking at Lenovo and System76 machines instead.

mcphage 9y ago
> That business is tettering on failure They sold over 4 million Macs this past quarter, so I don't know what you're going on about here.
- trapperkeeper74 9y ago
  Numbers today are all well and good, but goodwill and rate-of-change indicate future trends. People will tire of $3000 laptops with nonfunctional WiFi and Apple Authorized Service Centers voiding their AppleCare warranties.
  - mcphage 9y ago
    > Numbers today are all well and good, but goodwill and rate-of-change indicate future trends Well, they're down YoY, from 4.2 million to... 4.18 million. So in another 200 years, they'll have all disappeared.

admiralpumpkin 9y ago

Apple's forte, above anyone's, is merging software and hardware. Level 5 autonomous cars align perfectly with their core competency.

TheOtherHobbes 9y ago
No, Apple's strength is refining, polishing, blending, and packaging existing electronic and software technologies. Cars are more about mechanical engineering than electronics or software. Learning automotive design from scratch when you have no experience and barely any trained staff is not a trivial task. Worse, a Level 5 autonomous car is not an existing consumer technology. At this point there's nothing to refine, and barely anything that could be bought in to start the refinement process. Apple might as well go into house building, farming, or food products.

wellboy 9y ago

They have to focus on their competencies but they also have to completely reinvent themselves every decade or so or they will die. Once the iPhone is gone, Apple will be gone.

robotresearcher 9y ago

You are chooosing to ignore the many diversified companies and conglomerates that have done very well, some for more than a human lifetime. Besides, Apple doing the iPod and iPhone is a counter example to your argument, unless you stretch the definition of the core business of a Y2K computer company to be music players and phones.

crypticlizard 9y ago

Imo modern cars are basically small computers and everything else(seats,doors,wheels)is peripheral. I mean it is 2017 after all, don't you think it's about time we accept that cars are computers? Sure, we used to need humans to "complete" the computer part, seeing as we didn't have motherboards at first. But now computer is the core part of car and even humans aren't necessary. Why even bring your cell phone when your car is a cell phone? It's possible Apple needs the car to compete in a post cell phone world.