Five not-so-obvious reasons why Apple won't be Sony redux

Five not-so-obvious reasons why Apple won't be Sony redux

Summary: Forrester CEO George Colony argues that Apple will lose its way like Sony did. Colony's argument revolves around charisma, but he misses a few key competitive advantages.

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Forrester CEO George Colony argued that Apple is going to turn out a lot like Sony---a consumer electronics juggernaut that lost its way and turned out to be a complete mess.

Colony's argument, which raised a bit of a ruckus, has a familiar contrarian ring to it. You set up an argument, sound very rational and people buy into it. Bearish arguments always sound better. I've had my share of bearish arguments and bets only to find out you can sound pretty damn good and be extremely wrong.

The crux of Colony's case is that Apple was a charismatic organization that revolved around Steve Jobs. Colony said:

Apple's momentum will carry it for 24-48 months. But without the arrival of a new charismatic leader it will move from being a great company to being a good company, with a commensurate step down in revenue growth and product innovation. Like Sony (post Morita), Polaroid (post Land), Apple circa 1985 (post Jobs), and Disney (in the 20 years post Walt Disney), Apple will coast, and then decelerate.

Now this isn't a huge leap to make. Apple is at the top of the mountain in tech. That reality usually means there's only one place to go. Of course, Apple will slip somewhere. Every company does. But Colony argues Apple will be like Sony. Here are five reasons---that have nothing to do with charisma---why Apple won't become Sony 2.0.

Apple isn't a silo-ed conglomerate. One reason Apple won't be Sony is because the organizational structure is completely different. Sony's business units break down like this: Content (movies and music), games, TVs, consumer electronics, smartphones and financial services. Sony's problems largely stem from a lack of coordination between its units. Apple is vertically integrated. Colony's argument would have more merit to me if Apple suddenly started developing movies.

When Apple's annual report has a chart like (via Sony's annual report) this you can start the worrywart parade.

Connective tissue. Apple's products and services are all integrated and designed to couple hardware, software and design. Sony had no connective tissue. Even Apple's likely foray into television will have glue connecting the new product to other products like the iPad, iPhone and Mac. This connective tissue shouldn't be underestimated. Apple has spent decades with its integration approach.

Supply chain prowess. Apple dominates the technology supply chain like no other company in recent memory. Flash memory is dominated by Apple. Apple can use Foxconn as if it is its own manufacturing arm. Apple can dictate terms with suppliers, grab LCD screen supplies and procure parts like no other. Colony partially dismisses Cook's charisma and creativity. I'd argue he's just looking at the wrong part of the company. Apple's supply chain---largely created by Cook---is a work of art. Also see: Supply chain wars: Hon Hai's Sharp investment helps Apple vs. SamsungWith Apple’s new iPad, supply chain is the hero

Preparation and institutionalized culture. Apple's biggest advantage leading into the post Jobs era is that it saw everything coming. Jobs didn't die suddenly. The company created Apple University and is institutionalizing product design. On Apple's most recent earnings conference call, Cook was asked about the merger of tablets and laptops. He said:

Well, I think anything can be forced to merge. But the problem is that the products are about tradeoffs. And you begin to make tradeoffs to the point where what you have left at the end of the day doesn't please anyone. And you can converge a toaster and a refrigerator, but those things probably not going to be pleasing to the user.

It's unclear whether Apple has taken the Jobs culture and institutionalized it, but the company is more prepared than any comparison earlier. Also see: Tim Cook and a more likeable Apple

An obvious untapped market. Let's say Colony is correct and Apple simply coasts. Well guess what? Apple is encroaching on the enterprise market without really trying. Apple could theoretically slip in the consumer market and make up its profit and margins by dealing more directly with businesses. Sony had no obvious slam dunk ahead. Also don't forget Cook was a former IBMer. He knows the enterprise.  Also see: Apple earnings, 2Q12: 5 enterprise takeaways

Topics: Mobility, Apple, Enterprise Software, Hardware, Software

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  • Enterprise

    Apple's enterprise penetration is negligible and most likely ipads will be swept away by Win 8 tablets in enterprise...

    The iphone/ipad momentum may last another year and competition (Microsoft/google) will most likely sideline these consumer devices. Its at this point that apple will become vulnerable.

    For long term success, apple needs corporate locked in products.
    owllnet
    • Actually

      There's medical evidence that shows larger tablets are creating issues with muscle strain in the Neck and Shoulders, the more this happens, the more likely it is that people swing back to traditional mediums like the laptop or devices like the Transformer line of Tablets.
      slickjim
      • That's right. I mean just because people have been reading books

        for years and use tablets like books doesn't mean anything compared to the years of the carpal tunnel and repetitive stress of laptops and desktops.

        Where are those studies, by the way? When were they conducted? The iPad has only been out for two years and I would bet anything that no one of any chops conducted any tests before Apr 2010.

        Will those Transformers be with or without the dongle?
        dhmccoy
      • Laptops are much worse.

        Neck and shoulder strain? Seriously? It's 2 lbs. Some of my hardcover books weigh more. If a person has difficulty holding 2 lbs., carrying a much bulkier, heavier, laptop everywhere is going to kill them.

        This "medical evidence" must not be comparing tablets to laptops. I've yet to be sore from carrying an iPad for half an hour through large airports. Lugging a full laptop bag with all of the supporting hardware around was MUCH worse on my neck and shoulders, creating immediate discomfort, as well as residual soreness. Then, add the fact that I've had surgery on both wrists from 30+ years of using a keyboard/mouse all day every day. The medical detriment of using a tablet pales by comparison to any other alternative. Using a tablet has literally relieved a lot of pain for me. I'm sure I'm not the only one.

        People aren't going to "swing back to traditional mediums." We may move forward to some voice-controlled, wearable, holographic headset computer one day, but there is no going backward to heavy, clunky keyboard/screen clam shells.

        If you want an example, I have two laptops and a netbook sitting on a shelf gathering dust because they haven't been touched in almost two years. On top of that, I've only used my Bluetooth keyboard with my iPads maybe a dozen times during those two years. Living without a "real" keyboard has been much easier than I ever would have imagined. Using the on-screen keyboard is well worth the trade-off in bulk and weight versus a laptop.
        BillDem
      • Please!

        If there were ever a device that I expected to cause neck and muscle strain, it would have to be those small Netbooks. I've witness in years past many people seating on a table using those things like they're Charlie Brown playing his piano. Just bad posture.

        With my iPad, the way I use it is no different from the way I use a magazine or book.
        dave95.
      • Can you link to this alleged "medical evidence"?

        People have been reading books for a long, long time and books weigh no less on average than the iPad for the same size. It seems strange that such "evidence" would only show up only now that the iPad exists.
        Vulpinemac
      • As John Lennon didn't say

        I got carpal tunnel on my fingers!
        lschw1
      • true

        tablets are not very comfortable for long hours on end, as one needs to grip it with one hand and work with the other. i do not think tablets can go very far.
        augustus.rome
    • Enterprise is the key

      Any large company needs to make deals with enterprise to survive the ups and downs. Enterprise is stable. Apple has no enterprise support, and their walled garden approach will never work in the enterprise. Besides enterprise unix is dead and apple is based on Unix/FreeBSD. It really wont gain any traction in the long run. I believe you are right about windows 8 tablets in the enterprise, especially with exchange and other MS services running well deep in the enterprise, their instant integration with everything MS should allow them to gain traction quickly. Provided that they come in at the right price point that is.
      Jimster480
      • Unix and it's relatives are dead in the enterprise?

        The death of Unix in the enterprise might come as a bit of a surprise to some of my larger customers. Their backend database servers are Linux/Unix based. They do use many Microsoft products including Sharepoint and Exchange, 85% of the end user computers are Windows (still a majority of XP but Windows 7 will be the majority after the next refresh before year end) -- the remainder of the end user computers are Macintoshes.

        Hmmm... tablet count is about 50 Lenovo convertibles and about 450 iPads at this point in time plus a few odds and sods of Android tablets.
        DNSB
      • "Enterprise unix is dead"

        That one line destroyed your credibility.
        terry flores
      • iPad is currently all over the enterprise.

        "Nearly all of the top companies within major Fortune 500 markets including pharma, manufacturing, hospitality, consumer products, financial services, healthcare and retail are actively using iPad to improve workflows, business processes and customer engagements," - Oppenheimer.
        dave95.
      • Talk about a walled garden

        Your everything MS is exactly that. Wake up and smell the coffee!
        GoPower
      • Depends on the context.

        True, a lot of backend and database infrastructure is Unix. But it's not used for routine organizational computing. If we're talking about how Apple products work in the enterprise, it is on the organizational side not databases.
        Lester Young
    • Apple's enterprise penetration is negligible?

      iPad and iPhones are taking enterprise by storm.
      Boston Scientific, Lowe???s, Alaska Airlines, United and Continental
      Airlines, Siemens, Standard Chartered Bank, Benetton, Urgent Care in St.Louis, MO, Crescent Construction Services, Medtronic, GE, SAP, Hyatt, Rehab Care, USAF, USGS, etc. These companies are deploying iPads and iPhones by the thousands and seem to be looking to expand their uses as fast as possible.
      In HealthCare alone, there are 7 reference apps, 9 education apps, 9 EMR & Patient monitoring apps, 7 imaging apps, 10 point of care apps and 10 personal care apps. This is just a symptom of the huge business ecosystems that are being created around iOS.
      Synthmeister
      • All of your evidence is still not enough because ...

        ...the market is still in initiation in enterprise lifecycle times (which is over a 5 or 10 year period in the minimum).

        Remember we are talking about a mobile client device and not a fixed client device. So assume not all desktop side client apps have been moved yet to the mobile client side (across all vertical industries, companies, geographic regions etc). Further the entry price or barrier price to entry is negligible (as in OS devel license costs, deployment costs etc).

        The only reason Android apps do not exist in Enterprise side is because their hardware is inconsistent.

        Windows 8 devices will be consistent like WP8 devices and will have uniform app development costs and experience. Expect W8 mobile devices to pick up fast and consistent across all verticals and horizontals. Further like their desktop devices, apps on W8 devices on Intel platforms will share data with existing desktop devices. Never underestimate this integration ability.

        My estimate - 40 million W8 devices in Q4 2012 and 160 million in fiscal year 2013. For the simple reason that there are 11 million iPad devices in Q2 2012. That would be average of 45 million iPad devices per year which the W8 can meet or beat easily.

        Wanna bet on the numbers?

        Further iPad adoption in Enterprise is limited to USA. Not Europe. Not Asia. Not Latin America. Not Africa. Not Middle East.

        But iPad device adoption in consumer side will still beat W8 adoption handily. So I still expect iPad to sell *inspite* of W8 but with slightly lowered growth rates.

        What W8 will do will be to expand the market like they did in the PC market. Multiple devices existed and so did multiple OSes. Dos and Win came in to standardize apps across Intel platform relegating AmigaOS, MacOS, OS/2 or other platforms to the niche end.
        calahan
      • 40 million windows tablets by Q4 2012?

        @ calahan

        What you smoke must be very strong, man!

        Apple has sold 10 million iPads last quarter and they claim the hardly can manage producing them. This, while Apple is by far the largest manufacturer of such things. How could any other company make 40 million units by Q4 2012? Starting from 0 today? With unknown market and no real demand?

        I understand, you would like Windows to be more widespread, but fact it, it is shrinking. Nothing wrong -- this is normal. Especially with the business model that Microsoft has chosen.
        danbi
      • that is a myth

        may be iphones but not ipads, ipad is more of a curiocity or a novelty. let us try this thing how it works out type of logic. 50% of ipads purchased are gathering dust all over as the novelty factor is over.
        augustus.rome
    • Apple's enterprise penetration is negligible redux

      This just out:

      SUNNYVALE, Calif., April 26, 2012 /PRNewswire/ -- Good Technology (http://www.good.com), the leading provider of secure and managed enterprise mobility and collaboration tools for a range of mobile devices, today released its quarterly device activation report for the first quarter of 2012. The full report (www.good.com/resources/Good_Data_Q1_2012.pdf) provides a breakdown of smartphone and tablet devices activated amongst Good's enterprise customers, which include eight of the top 10 financial institutions, seven of the top 10 healthcare organizations, half of the Fortune 100, and companies from every major industry. The results demonstrate that companies continue to embrace the 'bring your own device' (BYOD) trend and accept new devices into the enterprise.
      (Photo: http://photos.prnewswire.com/prnh/20120426/AQ95410)
      (Logo: http://photos.prnewswire.com/prnh/20120125/AQ41496LOGO-b)
      The Q1 findings showed that Apple's iPhone 4S hit a record high, claiming the number one device spot overall, with 37 percent of all activations for the first quarter (four times that of any other device). The iPad??? 2 claimed the second spot overall, with 17.7 percent of activations for the quarter. With less than one month on the market, the new iPad???, released in March 2012, rocketed to the number four spot with 4.3 percent of all activations for the quarter, and an impressive 12.1 percent of activations in March alone.

      So, you were saying?
      Synthmeister
    • Apple has learned from their own mistakes and MS's success..

      Microsoft has one and only one reason why it had become popular in the enterprise - developers. Apple (and IBM - remember OS/2?) had largely abandoned developers in the 90's and tried to go it alone, while Microsoft worked very aggressively to woo developers onto the Windows platform. They continue to do so (esp. with the huge investment being put into the Dynamics product line, SQL Server, Sharepoint, and other enterprise offerings).

      Apple is already gaining traction where Microsoft was two decades ago in the enterprise. There are now enterprise systems (including the aforementioned Dynamics line) that are supporting the iOS platform.

      For servers and back-end systems; yes, Apple has proven they don't know what they're doing. But they have proven that they've learned their lessons of the past and know that the first people they have to impress are developers. The software will follow, and the users will follow the software.
      daftkey