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Apple's Secret to Success
02 July 2010

Apple almost died in 1997. When Steve Jobs successfully staged a take-over coup, the company had just three months to live, and it took emergency surgery to enable the company to survive. The iMac, iPod, and Mac OS X are the products that helped Apple recover, but that near-death experience changed Apple forever. Far more profoundly than you'll ever know if all you see is megapixels, aluminum unibodies, and pinch-to-zoom.

The Meta Game

It's easy to say "I'm going to be a long-term winner in poker." It's hard to actually discipline yourself to constantly improve your play, track your progress, and work on your "meta game." Great poker players have learned to master the long-term meta game of reading their opponents, exploiting their weaknesses, calculating implied odds, and correctly applying the concepts of game theory.

The analogy in the technology and consumer electronics markets is that it's easy for a CEO to announce his or her ideas on what products he or she thinks consumers will want to buy in the future. But it takes enormous effort to transition a company's goals, plans, products, developers, and users toward that future. The meta game of consumer electronics companies is mastering the internal and external transitions required to keep the company moving forward.

Apple has managed all these transitions very well, keeping its products relevant and modern, and keeping customers coming back for more. It has successfully transitioned itself from a flashy yet minor player in the PC market to a powerhouse in consumer electronics. It has also shepherded its software developer community through steadily improving programming environments for its various platforms instead of driving them away with incompatibilities and frustration. And it has carefully managed and expanded its customer base as it transitioned them to ever-evolving hardware and software designs while maintaining that special and unique Apple user experience.

We would argue that Apple has improved its corporate meta game to the point where it has mastered all these transitions. And in doing so, Apple has set itself up for huge long-term wins.

Internal Transitions

If you're going to try to change the world, you might need to change yourself first. Steve immediately started changing Apple when he took the reins and yanked them hard. He cancelled badly conceived products and questionable projects, streamlined manufacturing, and bet Apple's future on the iMac. But those were just the obvious, public steps that most brand-new CEOs would have taken to stop the bleeding.

Steve had a much longer term goal. He began Apple's gradual, decade-long transition from computer company to consumer electronics company that also sells computers. The Bondi Blue shell of the first iMac was more than just a publicity stunt. It announced to the world that computers didn't need to be generic beige boxes under office workers' desks. Apple had taken its first steps toward consumer electronics while still focusing on its core competency: computers.

And a few years later, as the world was busy building colored-plastic-everything (from fountain pens to George Foreman Grilles to Dell PCs) Apple began the next phase of its transition. It started quietly in early 2001, with iTunes and "Rip. Mix. Burn." Fine. So it was easy to copy music from your CDs to your Mac and then burn mixes of your own. And it was reliable too. Remember - this was back when blank CDs cost around $3.00 USD each.

But Steve had big plans for iTunes. In the fall of 2001, Apple launched the first iPod into the chaotic portable MP3 player market. And iTunes became the foundation for the iPod's success. Initially, iPod sales were just barely lukewarm. But releasing iTunes on Windows as well as Mac OS was what put iPod over the top.

The end result of the iTunes plus iPod synergy is today's Apple. iTunes is the glue that holds the iPod + iPhone + iPad iOS ecosystem together. It links the "cloud" and your desktop Mac or PC to your iOS device. And it provides unmatched "stickiness" to Apple's products with its ease of use and instant access to paid content and apps.

Apple has smoothly transitioned itself from a cult favorite of computer geeks and media creatives to the world's most influential consumer electronics company. And to emphasize that fact, it changed its name from Apple Computer Inc. to Apple Inc. in 2007.

Developer Transitions

Developers are notoriously resistant to change. We know this because we're developers. We hate being forced to waste time re-coding our software because of arbitrary changes to the OS. And it's hard to imagine a bigger OS change than the Mac OS 9 to Mac OS X transition.

So how do you convince us developers to program for OS X? We will be forced to to learn a new programming language (Objective-C) and a new object framework (Cocoa). Well, first you need to show us some benefits of transitioning to the new OS. OK, so Mac OS X has a UNIX kernel for reliability, an Aqua interface that is far more modern than OS 9's. Great.

Next, you need to show us your development environment. See, we've been using CodeWarrior since the OS 7 days, and we're kinda used to it and... WOW. Xcode RULES!

Apple's Mac OS X development environment came along with NextStep, which came along with Steve Jobs when Apple purchased NeXT. And it was far better than anything from competing IDE (Interactive Development Environment) vendors. It vastly reduced the development time required to design and test a user interface, and although Objective-C is nearly impenetrable at first glance, it becomes natural over time. All that combined with the ease of use and power of the Cocoa frameworks and it was fun programming for the Mac again.

All of which is worthless if there's no market for your apps. This is where Apple needed to be very careful. If they had just replaced OS 9 with Mac OS X, in an attempt to force developers to program to the new OS, there would have been a riot. Many developers would have simply switched to Windows, which would have been only slightly more time consuming. And many users would have switched too, since there would be so few apps available for Mac OS X.

Instead, Apple designed Mac OS X to allow OS 9 apps to run, with only minor modifications, alongside updated OS X apps. And, over time, as those legacy OS 9 apps started to look increasingly old-fashioned and lacking in features when runnning next to slick Mac OS X apps, developers could port them over to the more modern technologies.

One of the last companies to move their apps over was Adobe. They staunchly refused to re-write their apps in Cocoa, many of which were and still are major moneymakers for Adobe and Apple. (Photoshop being one of the big ones.) This foot-dragging lasted nearly a decade, which no doubt slowed the adoption of Mac OS X among professional Adobe software users.

The Intel transition was far smoother for developers. In fact it was nearly transparent. Apple had learned from their earlier transition from the ancient 16-bit Motorola 68000 chips to the more advanced RISC chips in the early '90s. They allowed a single application to run on the old or new hardware by putting binaries for both chips into each application. Likewise, during the latest transition, developers could just click a switch in Xcode to make it produce "Universal Binary" apps that ran on both G4/G5 CPUs and on Intel CPUs.

Both the Mac OS X and Intel transitions could have been fatal if Apple had botched them badly. Instead, they drew on past experience and managed the transitions carefully and smoothly.

Customer Transitions

Longtime Mac loyalists have been through hell. And back again. Multiple times. Apple has repeatedly used and abused the "Apple faithful" over the years. Why? Because they knew we'd take the punishment and come right back for more.

We would pay far more for our Macs than the infidels paid for their DOS and Windows PCs. (Well, OK, my first Mac was a PowerPC clone, and it was cheaper than a real Apple Mac.) We lived without 3.5-inch floppies, SCSI, and parallel ports because Steve said we didn't need them. We were used as guinea pig early adopters for exotic technologies like USB and FireWire. We had to wait for third party companies to make USB CD writers and other peripherals. It was all for our own good, but it was painful. Those days of abuse are over, and good riddance.

Apple has far more mindshare, among much larger industries than they did in the bad old days of cruelty to the faithful. And to develop and keep that mindshare, they've needed to put the consumer, the end-user, front and center. The end-user experience is the focus of all Apple's hardware and software advances now. Everything from the brick and mortar Apple Stores to the online Apple Store to product packaging to initial setup to daily use to upgrading to recycling obsolete products has been made as easy and pleasant as possible.

Now, when Apple wants to transition users from old technology to new, they start very small. For example, today's App Store, with 200,000+ apps and 5 billion downloads, initially started as a game download service for the original iPod. Back in 2006. Months before the original iPhone was even announced, and nearly two years before the App Store opened in 2008.

Why go so slow? First, Apple simply isn't in any hurry. They're ahead of the game, and competitors scramble to catch up after every Apple product announcement. Second, gradually developing a technology produces a more polished product. If you take more time on a product, you can get it working perfectly, then polish it and polish it even more. When it's finally released, "It just works." Elegantly.

For example, look at iPhone 4's FaceTime feature. It could finally bring video calls to the masses with its ease of use and rock solid quality. Compare FaceTime with how Android on the HTC Evo uses its camera for video calling. Total disaster. This is because Apple supposedly took 18 months to get FaceTime to work properly. And because Google's attention is fragmented between several major Android phone makers and several minor ones.

Steve Jobs isn't a geek. He's not an industrial designer. But he is an extremely demanding user. And he knows that customers must be gradually trained over time to handle new products and features. The original iPod prepared customers for an Apple that was more than just a computer company. The original iPhone prepared consumers for the iPad with its more advanced multi-touch interface. Apple has successfully transitioned its users, new and old alike, from mice and keyboards to multi-touch.

The Final Transition

So what does Apple get for mastering internal, developer, and end-user transitions? It gets to transition entire industries. To re-invent them. Apple re-invented the music industry. And it has recently re-invented the smart phone and tablet computing industries as well. The benefit, of course, is that when you re-invent an industry, you tilt the playing field in your favor. You can make it over in your own image.

Apple has gained so much mindshare that they are on the verge of being investigated for anti-competitive practices. It feels like Apple is a monopoly even though it isn't. Not in the music, smart phone, or tablet computing markets. And certainly not in the traditional desktop and laptop computer market. That's how far Apple has come and how much its mindshare has increased in the last decade or so.

So say what you want about iPhone 4 Retina displays, unibody aluminum MacBook Pros, iLife's ease-of-use, and how iPad is "just right". Apple's real strength is its expertise in transitioning itself, its developers, and its users. It has mastered the meta game to the point where it can actually change the rules.

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