6 ms·

How, and Why, Apple Overtook Microsoft

62 points by ojbyrne 12y ago

MarkMc 12y ago
Good article, but this part was a bit jarring: "Steve would never have made a bigger iPhone. He didn’t believe in it." He may not have believed in it in 2011, but he may have changed his mind.
- protomyth 12y ago
  Yep. If you watch all of the videos from the D conference, you see Steve Jobs say no to a lot of stuff he later did (e.g. Video on iPod).
deleted 12y ago
[deleted]
thewarrior 12y ago
>> But he noted that by many measures, Apple shares appeared to be a bargain. “The valuation is still inexpensive,” he said. “It’s less than 13 times next year’s earnings and less than 10 times cash flow,” both below the market average. “Those are very low multiples. They have $140 billion in cash on the balance sheet and they’re generating $60 billion in cash a year. All the numbers are just enormous, which is hard for people get their heads around.” So would it be a good idea to load up on AAPL stock ?
- harmegido 12y ago
  Are you really asking? I wouldn't buy any single stock, let alone a tech stock, with money I'm not prepared to lose.
- walru 12y ago
  Should you have bought a house at this time in 2008?
- capkutay 12y ago
  I don't know...I'm a relatively young investor. I started investing in 2009, bought a bunch of apple and google stock. Now I feel like the market is inflated like crazy and I'm afraid to touch anything. Am I being irrational or is it normal to see these types of cycles? Anyways, if you want my unsolicited stock advice, I think Tesla still has a lot of upside. The way I see it, it has a $25b market cap where as a lot of big name car companies are above $60b in market cap (BMW at $60b, Mercedes around $100b, Toyota around $220b). I think Tesla could easily catch up to them because of their potential for growth. So that's a somewhat likely 2x return on tesla stock if you want to look at it that way.
  - mahyarm 12y ago
    Until you can make signifcantly more money off the returns of a broad index fund vs. your near future salary, it's not worth the labor to try to beat the most well capitalized and skilled finance firms in the world in the stock market. So if you can make 250k/yr and you get a %5 net return from an index fund, it's not worth it to play stock investor until you have $5mm in the bank. So if you have $300k in the bank, the constant hours of life, labor and anxiety might get you +%5 more return than usual (doubtful) and you've spent a huge amount of hours to make an extra $15k that year. It usually ends up less than minimum wage and you were better off just doing contract programming work on the side. And the reason why the stock market is inflated like crazy is because central governments of the world have been printing money like crazy with QE everywhere, and it has to go somewhere... Just buy an index fund, your going to have a relatively large amount of apple stock indirectly as a result anyway.
- arandomafrican 12y ago
  Probably not. Because you'll only make money if the stock stops being undervalued. And there's no sign that the reasons it's undervalued will change any time soon.
- lurcio 12y ago
  Not in anyway financial advice, but maybe a good idea if you do so with position protection. If that makes no sense - then only invest based on your risk appetite.
dodyg 12y ago
Apple had the grit, conviction and endurance to see it all through. I mean everybody wrote them off in the mid 90's.
- rch 12y ago
  By the late 90's the tide had turned back in Apple's favor though. I was more into AltiVec than iMacs, but the G4 was really a nice box.
  - seanmcdirmid 12y ago
    The G4 era was actually kind of gut wrenching. I mean, when the G5 was announced (2004?), I was excited that I might actually get a decent replacement for my powerbook...but I had to wait a long time...until 2007 actually, for the x86 macbooks to come out (incidentally, the iPhone came out at the same time). I would say 2007 is where they really turned their trajectory way upwards.
Rapzid 12y ago
Is interesting but now Microsoft is the more open company and Apple is IBM from the 1984 commercial. Maybe I'm just older, but now at 30 I'm much more of into Microsoft than when I was a teenager(I never really got on the hate M$ bandwagon though). What they have been doing with Azure and .NET ecosystems is great. They have top engineering and research chops; just look at the new goggles and a lot of their labs projects. MSDN is a wealth of free knowledge. Etc. Apple is on top of the world right now, but so was Sony 2000. Somehow MS just feels more substantial to me than Apple in 2015. I realize this is entirely subjective.
- jkot 12y ago
  MS must be open to survive. It is being crushed by opensource. And they still put DRM where it maters (EFI).
  - yuhong 12y ago
    Secure Boot isn't really DRM.
  - YorkianTones 12y ago
    I think Microsoft was being squeezed out of new markets by Google and Apple. I'm not sure how accurate it is to say Microsoft "is being crushed by opensource (sic)". Also, despite being overshadowed by other tech companies, Microsoft's business lines are healthy and growing. Stacking up Microsoft versus Apple, their businesses are fundamentally different - see exhibit: https://visualign.files.wordpress.com/2012/02/applemicrosoftgoogleamazonnumbers1.png https://visualign.files.wordpress.com/2012/02/applemicrosoft... Interestingly Apple (Hardware), Google (Ads), and Microsoft (Software) are quite dominant in different business areas. While Microsoft needs to keep a close watch on Google and Apple encroaching, I think AWS is a bigger rival in terms of growth opportunity.
    - pmelendez 12y ago
      > Stacking up Microsoft versus Apple, their businesses are fundamentally different - see exhibit: https://visualign.files.wordpress.com/2012/02/applemicrosoft.. https://visualign.files.wordpress.com/2012/02/applemicrosoft.... It is very interesting how MS is the only one that have different basket of eggs. If Google ever lose relevance in the online Ads market then it's done. The same can be say of Apple (in a lesser degree) if the iphone becomes irrelevant.
DigitalSea 12y ago
The easiest explanation of what happened was Microsoft were a software company who had all of their eggs in one basket relying upon third parties to use their operating system and consumers/enterprise to use their products like Microsoft Office. Whereas Apple started out as both a hardware and software company, first computers and then portable music players (iPod), watches (iWatch) and phones (iPhone). This is where Microsoft went wrong. They focused on providing the software and let vendors like HP, etc use it on their machines. Apple was smart in seeing that there are advantages to controlling both the software and hardware (the iPhone is a perfect example of this). By the time Microsoft realised they should have been producing hardware that used their software, Apple had already overtaken it in the great tech race. Apple had the hardware and were providing the software thus locking out any competitors from their platform. Not to mention, they were focusing on the design aspect of the devices themselves which others were not. I think Microsoft have started clawing back. HoloLens looks like a seriously great product, I think the amount of time and effort they have been putting into hardware and infrastructure will undoubtedly catapult them back to the top. Not to mention Microsoft have cleverly changed their strategy to favour open source (something nobody would have predicted 7 years ago). The Xbox division also does pretty damn well too. The question is: can Apple sustain their current success? It seems the iPhone is their meal ticket, if the iPhone eventually fizzles out, where will that leave Apple?
- sliverstorm 12y ago
  Do remember that Microsoft became a breakout success thanks to IBM losing control of the IBM PC, upon which DOS ran. The origin of Microsoft (rampant clones, many hardware vendors) is literally the opposite of the origin of Apple's recent successes (vertically integrated, does their own hardware). Microsoft's original strength was its weakness this time around.
- Dwolb 12y ago
  I think you're not giving MS enough credit. The pieces of the story that are missing are IBM and Intel. IBM was the only firm in the world at the time that were able to integrate a working computer. To do so at a price that was appropriate for the home, IBM had to outsource large pieces of the project, both the CPU and OS. MS and Intel were brilliant to allow substitutes for the early IBM computers to rise to market by working with multiple customers. The first firm to fully copy IBMs system (allowing software purposed for the IBM computers to run on other machines) was Compaq. Henceforth, MS and Intel were able to commoditize the PC and extract tons of value from their portions of the value chain. MS, Intel, and Compaq were key in effectively capturing about 1/3rd of IBMs value in a short time span. The factors that led to their success can probably then be assessed in the context of Apple et al.
guelo 12y ago
An article about how and why Apple overtook Microsoft would be interesting but this was not it.
- peteretep 12y ago
  Actually, the answer is right there in the story, and it's one word: iPhone. > the iPhone accounted for 69 percent of its revenue Without the iPhone, Apple would still be huge, but they'd just be a luxury computer maker who dabbled in some portables, and there would be no talk at all of having passed Microsoft.
  - xorcist 12y ago
    That's the big challenge for Apple right there. It's a one trick pony, stock-wise, with an enormous valuation. It's not at all obvious where to go from there. They need to diversify even more but that means either back to their computer roots, which would be devastating to the stock price, or find even greener pastures than one of the most commercially successful products on Earth.
avelis 12y ago
I think in some ways Microsoft lost its dominance by focusing on the wrong competition. Microsoft Bing is a great example of Microsoft trying to become a company it wasn't. (i.e. Google) In my perspective, Apple dialed in it's focus, avoided the same pitfalls, and came out a dominant player in a market not many were focused to innovate on. (i.e. smartphones).
- PhoenixWright 12y ago
  I agree. Microsoft wasted great opportunities by trying to copy Google. I really think they've fixed that however. Microsoft seems to have its own identity as of late.
  - lurcio 12y ago
    I think they have always fought on too many fronts. Perhaps because of their dominance, they didnt know how to ignore opportunity, which of course was everywhere for them Still - as they say in Italy - a fish rots from its head. Thats where the buck lies.
Steko 12y ago
The problem for Microsoft isn't that they didn't see mobile coming and Apple did like as article suggests. The problem for Microsoft is that their previous strategy of ruthlessly copying Apple's innovations and taking the market for themselves with a highly profitable licensing model was coopted by Google doing the same thing except Google gave it away. If you're looking for the old MS it's alive and well at Google, Samsung and Xiaomi.
- SG- 12y ago
  Well MS lost mobile because quite frankly they didn't control the hardware, and for a time it seemed OK to simply provide software for them, but they couldn't push a specific idea out the door until it was too late. They were happy to provide an OS that did phone calls, text messages, emails and a few other small things. They didn't quite see the big picture, it's not that they didn't see it coming (they were already in it), they just didn't think you could do so many things so well and that people would want to do it.
  - Steko 12y ago
    Google didn't control the hardware either though so I think that's selling it short. MS lost because they weren't ruthless is copying iOS. Google won the licensed market because basically they dropped everything else they were doing in mobile (copying blackberry) and put it all behind copying iphone. Samsung did the same thing with their Galaxy line. These are the kind of moves 80's and 90's MS would do without blinking, they understood that "second place is a set of steak knives". But late 00's MS -- spoiled on decades of success and perhaps a bit cowed by EU antitrust -- couldn't pull the trigger.
    - SG- 12y ago
      True, but they also didn't need to control the hardware because Apple created a template and Google created partnerships with specific requirements.
  - CamperBob2 12y ago
    Remember that Apple didn't control the hardware, until one day they did. Nothing they did with the iPhone couldn't have been done by Microsoft... just not under Ballmer's Microsoft.
cwp 12y ago
Ugh. So annoying to see journalists ignore the obvious in their obsession with writing a "balanced" story. So yes, Apple's iPhone is like Microsoft's Windows. Both are hugely successful products that accounted for the bulk of their creator's profits. Microsoft was unwilling to threaten the enormous revenue it gets from Windows, and now that the focus of innovation has shifted away from PCs it has lost its dominance. Will Apple make the same mistake? No. Its first attempt to one-up the iPhone was the iPad. For a while, it looked like it might succeed: iPad sales took off even faster than iPhone sales had. But then they plateaued, while the iPhone kept growing. Nice try, but no dice. The iPad is nice little business, but it won't eclipse the iPhone. Next try: the Apple Watch. It's not out yet, so we don't know what will happen. But it's clear that this is Apple's next big move. This is not a hobby. They'll be putting all their weight behind the product line. It might flop or it might be another (multi-billion dollar) side business that lags behind the wild profitability of the iPhone. Mr. Stewart ends with a quote from analyst Robert Cihra: “The question investors have is, what’s the next iPhone? There’s no obvious answer. It’s almost impossible to think of anything that will create a $140 billion business out of nothing.” Well, maybe investors can't think of anything, but it's clear that Apple thinks the next iPhone will be wearables. And they sure as hell aren't killing promising products for fear of cannibalizing iPhone sales.
- mercer 12y ago
  It's also possible that Apple is doing what they say they're doing: create great products. Maybe the next iPhone is their 'next iPhone'. Maybe the Apple Watch will eclipse the iPhone. Maybe it will be just another lucrative product. My impression from Apple's behavior is that they're focused on creating products that bring 'computers' into the lives of consumers in ways that are desirable by consumers, regardless of form or specific functionality. They had a smash hit with the iPhone, but they're probably just as happy with the iPad and, to a lesser degree, with Apple TV. What interests me most is how they will react to a potential (and likely) breakthrough in VR, or AR. Apple doesn't seem to put much focus on that.
tim333 12y ago
I think quite a lot of why Apple overtook was focus as in the Jonny I've quotes below: "There is a clear goal and it isn't to make money. The goal is to desperately try to make the best products we can. We are not naive - if you trust it, people like it, they buy it and we make money. This is a consequence." "We won't be different for different's sake. Different is easy... make it pink and fluffy! Better is harder. Making something different often has a marketing and corporate agenda." Over a long time focus on the best products and user experience can be powerful. Meanwhile Microsoft were doing things like killing the start menu which not many users were keen on.
PhoenixWright 12y ago
The same argument could be mad about Google and search. I don't think Microsoft will ever come out with something as big as Windows. Nor do I believe Apple will top the iPhone. For the next great profit generating product I'd bet on existing companies that aren't bogged down by legacy products. Maybe Facebook with Oculus or Amazon with AWS?

62 points by ojbyrne 12y ago

Good article, but this part was a bit jarring: "Steve would never have made a bigger iPhone. He didn’t believe in it." He may not have believed in it in 2011, but he may have changed his mind.

protomyth 12y ago
Yep. If you watch all of the videos from the D conference, you see Steve Jobs say no to a lot of stuff he later did (e.g. Video on iPod).

deleted 12y ago

[deleted]

thewarrior 12y ago

>> But he noted that by many measures, Apple shares appeared to be a bargain. “The valuation is still inexpensive,” he said. “It’s less than 13 times next year’s earnings and less than 10 times cash flow,” both below the market average. “Those are very low multiples. They have $140 billion in cash on the balance sheet and they’re generating $60 billion in cash a year. All the numbers are just enormous, which is hard for people get their heads around.” So would it be a good idea to load up on AAPL stock ?

harmegido 12y ago
Are you really asking? I wouldn't buy any single stock, let alone a tech stock, with money I'm not prepared to lose.
walru 12y ago
Should you have bought a house at this time in 2008?
capkutay 12y ago
I don't know...I'm a relatively young investor. I started investing in 2009, bought a bunch of apple and google stock. Now I feel like the market is inflated like crazy and I'm afraid to touch anything. Am I being irrational or is it normal to see these types of cycles? Anyways, if you want my unsolicited stock advice, I think Tesla still has a lot of upside. The way I see it, it has a $25b market cap where as a lot of big name car companies are above $60b in market cap (BMW at $60b, Mercedes around $100b, Toyota around $220b). I think Tesla could easily catch up to them because of their potential for growth. So that's a somewhat likely 2x return on tesla stock if you want to look at it that way.
- mahyarm 12y ago
  Until you can make signifcantly more money off the returns of a broad index fund vs. your near future salary, it's not worth the labor to try to beat the most well capitalized and skilled finance firms in the world in the stock market. So if you can make 250k/yr and you get a %5 net return from an index fund, it's not worth it to play stock investor until you have $5mm in the bank. So if you have $300k in the bank, the constant hours of life, labor and anxiety might get you +%5 more return than usual (doubtful) and you've spent a huge amount of hours to make an extra $15k that year. It usually ends up less than minimum wage and you were better off just doing contract programming work on the side. And the reason why the stock market is inflated like crazy is because central governments of the world have been printing money like crazy with QE everywhere, and it has to go somewhere... Just buy an index fund, your going to have a relatively large amount of apple stock indirectly as a result anyway.
arandomafrican 12y ago
Probably not. Because you'll only make money if the stock stops being undervalued. And there's no sign that the reasons it's undervalued will change any time soon.
lurcio 12y ago
Not in anyway financial advice, but maybe a good idea if you do so with position protection. If that makes no sense - then only invest based on your risk appetite.

dodyg 12y ago

Apple had the grit, conviction and endurance to see it all through. I mean everybody wrote them off in the mid 90's.

rch 12y ago
By the late 90's the tide had turned back in Apple's favor though. I was more into AltiVec than iMacs, but the G4 was really a nice box.
- seanmcdirmid 12y ago
  The G4 era was actually kind of gut wrenching. I mean, when the G5 was announced (2004?), I was excited that I might actually get a decent replacement for my powerbook...but I had to wait a long time...until 2007 actually, for the x86 macbooks to come out (incidentally, the iPhone came out at the same time). I would say 2007 is where they really turned their trajectory way upwards.

Rapzid 12y ago

Is interesting but now Microsoft is the more open company and Apple is IBM from the 1984 commercial. Maybe I'm just older, but now at 30 I'm much more of into Microsoft than when I was a teenager(I never really got on the hate M$ bandwagon though). What they have been doing with Azure and .NET ecosystems is great. They have top engineering and research chops; just look at the new goggles and a lot of their labs projects. MSDN is a wealth of free knowledge. Etc. Apple is on top of the world right now, but so was Sony 2000. Somehow MS just feels more substantial to me than Apple in 2015. I realize this is entirely subjective.

jkot 12y ago
MS must be open to survive. It is being crushed by opensource. And they still put DRM where it maters (EFI).
- yuhong 12y ago
  Secure Boot isn't really DRM.
- YorkianTones 12y ago
  I think Microsoft was being squeezed out of new markets by Google and Apple. I'm not sure how accurate it is to say Microsoft "is being crushed by opensource (sic)". Also, despite being overshadowed by other tech companies, Microsoft's business lines are healthy and growing. Stacking up Microsoft versus Apple, their businesses are fundamentally different - see exhibit: https://visualign.files.wordpress.com/2012/02/applemicrosoftgoogleamazonnumbers1.png https://visualign.files.wordpress.com/2012/02/applemicrosoft... Interestingly Apple (Hardware), Google (Ads), and Microsoft (Software) are quite dominant in different business areas. While Microsoft needs to keep a close watch on Google and Apple encroaching, I think AWS is a bigger rival in terms of growth opportunity.
  - pmelendez 12y ago
    > Stacking up Microsoft versus Apple, their businesses are fundamentally different - see exhibit: https://visualign.files.wordpress.com/2012/02/applemicrosoft.. https://visualign.files.wordpress.com/2012/02/applemicrosoft.... It is very interesting how MS is the only one that have different basket of eggs. If Google ever lose relevance in the online Ads market then it's done. The same can be say of Apple (in a lesser degree) if the iphone becomes irrelevant.

DigitalSea 12y ago

The easiest explanation of what happened was Microsoft were a software company who had all of their eggs in one basket relying upon third parties to use their operating system and consumers/enterprise to use their products like Microsoft Office. Whereas Apple started out as both a hardware and software company, first computers and then portable music players (iPod), watches (iWatch) and phones (iPhone). This is where Microsoft went wrong. They focused on providing the software and let vendors like HP, etc use it on their machines. Apple was smart in seeing that there are advantages to controlling both the software and hardware (the iPhone is a perfect example of this). By the time Microsoft realised they should have been producing hardware that used their software, Apple had already overtaken it in the great tech race. Apple had the hardware and were providing the software thus locking out any competitors from their platform. Not to mention, they were focusing on the design aspect of the devices themselves which others were not. I think Microsoft have started clawing back. HoloLens looks like a seriously great product, I think the amount of time and effort they have been putting into hardware and infrastructure will undoubtedly catapult them back to the top. Not to mention Microsoft have cleverly changed their strategy to favour open source (something nobody would have predicted 7 years ago). The Xbox division also does pretty damn well too. The question is: can Apple sustain their current success? It seems the iPhone is their meal ticket, if the iPhone eventually fizzles out, where will that leave Apple?

sliverstorm 12y ago
Do remember that Microsoft became a breakout success thanks to IBM losing control of the IBM PC, upon which DOS ran. The origin of Microsoft (rampant clones, many hardware vendors) is literally the opposite of the origin of Apple's recent successes (vertically integrated, does their own hardware). Microsoft's original strength was its weakness this time around.
Dwolb 12y ago
I think you're not giving MS enough credit. The pieces of the story that are missing are IBM and Intel. IBM was the only firm in the world at the time that were able to integrate a working computer. To do so at a price that was appropriate for the home, IBM had to outsource large pieces of the project, both the CPU and OS. MS and Intel were brilliant to allow substitutes for the early IBM computers to rise to market by working with multiple customers. The first firm to fully copy IBMs system (allowing software purposed for the IBM computers to run on other machines) was Compaq. Henceforth, MS and Intel were able to commoditize the PC and extract tons of value from their portions of the value chain. MS, Intel, and Compaq were key in effectively capturing about 1/3rd of IBMs value in a short time span. The factors that led to their success can probably then be assessed in the context of Apple et al.

guelo 12y ago

An article about how and why Apple overtook Microsoft would be interesting but this was not it.

peteretep 12y ago
Actually, the answer is right there in the story, and it's one word: iPhone. > the iPhone accounted for 69 percent of its revenue Without the iPhone, Apple would still be huge, but they'd just be a luxury computer maker who dabbled in some portables, and there would be no talk at all of having passed Microsoft.
- xorcist 12y ago
  That's the big challenge for Apple right there. It's a one trick pony, stock-wise, with an enormous valuation. It's not at all obvious where to go from there. They need to diversify even more but that means either back to their computer roots, which would be devastating to the stock price, or find even greener pastures than one of the most commercially successful products on Earth.

avelis 12y ago

I think in some ways Microsoft lost its dominance by focusing on the wrong competition. Microsoft Bing is a great example of Microsoft trying to become a company it wasn't. (i.e. Google) In my perspective, Apple dialed in it's focus, avoided the same pitfalls, and came out a dominant player in a market not many were focused to innovate on. (i.e. smartphones).

PhoenixWright 12y ago
I agree. Microsoft wasted great opportunities by trying to copy Google. I really think they've fixed that however. Microsoft seems to have its own identity as of late.
- lurcio 12y ago
  I think they have always fought on too many fronts. Perhaps because of their dominance, they didnt know how to ignore opportunity, which of course was everywhere for them Still - as they say in Italy - a fish rots from its head. Thats where the buck lies.

Steko 12y ago

The problem for Microsoft isn't that they didn't see mobile coming and Apple did like as article suggests. The problem for Microsoft is that their previous strategy of ruthlessly copying Apple's innovations and taking the market for themselves with a highly profitable licensing model was coopted by Google doing the same thing except Google gave it away. If you're looking for the old MS it's alive and well at Google, Samsung and Xiaomi.

SG- 12y ago
Well MS lost mobile because quite frankly they didn't control the hardware, and for a time it seemed OK to simply provide software for them, but they couldn't push a specific idea out the door until it was too late. They were happy to provide an OS that did phone calls, text messages, emails and a few other small things. They didn't quite see the big picture, it's not that they didn't see it coming (they were already in it), they just didn't think you could do so many things so well and that people would want to do it.
- Steko 12y ago
  Google didn't control the hardware either though so I think that's selling it short. MS lost because they weren't ruthless is copying iOS. Google won the licensed market because basically they dropped everything else they were doing in mobile (copying blackberry) and put it all behind copying iphone. Samsung did the same thing with their Galaxy line. These are the kind of moves 80's and 90's MS would do without blinking, they understood that "second place is a set of steak knives". But late 00's MS -- spoiled on decades of success and perhaps a bit cowed by EU antitrust -- couldn't pull the trigger.
  - SG- 12y ago
    True, but they also didn't need to control the hardware because Apple created a template and Google created partnerships with specific requirements.
- CamperBob2 12y ago
  Remember that Apple didn't control the hardware, until one day they did. Nothing they did with the iPhone couldn't have been done by Microsoft... just not under Ballmer's Microsoft.

cwp 12y ago

Ugh. So annoying to see journalists ignore the obvious in their obsession with writing a "balanced" story. So yes, Apple's iPhone is like Microsoft's Windows. Both are hugely successful products that accounted for the bulk of their creator's profits. Microsoft was unwilling to threaten the enormous revenue it gets from Windows, and now that the focus of innovation has shifted away from PCs it has lost its dominance. Will Apple make the same mistake? No. Its first attempt to one-up the iPhone was the iPad. For a while, it looked like it might succeed: iPad sales took off even faster than iPhone sales had. But then they plateaued, while the iPhone kept growing. Nice try, but no dice. The iPad is nice little business, but it won't eclipse the iPhone. Next try: the Apple Watch. It's not out yet, so we don't know what will happen. But it's clear that this is Apple's next big move. This is not a hobby. They'll be putting all their weight behind the product line. It might flop or it might be another (multi-billion dollar) side business that lags behind the wild profitability of the iPhone. Mr. Stewart ends with a quote from analyst Robert Cihra: “The question investors have is, what’s the next iPhone? There’s no obvious answer. It’s almost impossible to think of anything that will create a $140 billion business out of nothing.” Well, maybe investors can't think of anything, but it's clear that Apple thinks the next iPhone will be wearables. And they sure as hell aren't killing promising products for fear of cannibalizing iPhone sales.

mercer 12y ago
It's also possible that Apple is doing what they say they're doing: create great products. Maybe the next iPhone is their 'next iPhone'. Maybe the Apple Watch will eclipse the iPhone. Maybe it will be just another lucrative product. My impression from Apple's behavior is that they're focused on creating products that bring 'computers' into the lives of consumers in ways that are desirable by consumers, regardless of form or specific functionality. They had a smash hit with the iPhone, but they're probably just as happy with the iPad and, to a lesser degree, with Apple TV. What interests me most is how they will react to a potential (and likely) breakthrough in VR, or AR. Apple doesn't seem to put much focus on that.

tim333 12y ago

I think quite a lot of why Apple overtook was focus as in the Jonny I've quotes below: "There is a clear goal and it isn't to make money. The goal is to desperately try to make the best products we can. We are not naive - if you trust it, people like it, they buy it and we make money. This is a consequence." "We won't be different for different's sake. Different is easy... make it pink and fluffy! Better is harder. Making something different often has a marketing and corporate agenda." Over a long time focus on the best products and user experience can be powerful. Meanwhile Microsoft were doing things like killing the start menu which not many users were keen on.

PhoenixWright 12y ago

The same argument could be mad about Google and search. I don't think Microsoft will ever come out with something as big as Windows. Nor do I believe Apple will top the iPhone. For the next great profit generating product I'd bet on existing companies that aren't bogged down by legacy products. Maybe Facebook with Oculus or Amazon with AWS?