What will become of Apple?

Every year at this time I make my pilgrimage to Macworld Expo in San Francisco. It's been more than 20 years since I first set eyes on a Macintosh, as an editor at a new publication in stealth mode called Macworld. After several years of green screens and arcane keyboard commands, the Macintosh was a revelation. Flash forward to January 2004, and most people will acknowledge that Apple continues to sustain innovation despite heated competition in every sector and many imitators.

The Mac has grown up along with the rest of the industry. The revolution that began in 1984 as a "computer for the rest of us" has evolved into a lifestyle icon. Processor speed has gone from 8MHz to 2GHz, memory from 128K to 256MB, and storage from 400K floppy drives to 40GB drives. The much vaunted graphical user interface has continued to improve over the years, the handmade operating system replaced by a sturdy, enhanced Unix derivative, and fit and finish of the products touched by Apple CEO Steve Jobs continue to set the standard for design.

Unquestionably, Apple and the Macintosh have had a profound influence on computing in the last two decades. But leading with innovation doesn't necessarily translate into market leadership and survival in coming decades.

At this juncture, it's difficult to see how Apple can continue to out innovate and out market competitors enough to gain significant share of the desktop or laptop PC market. For every PowerMac G4 or iMac, there is a cheaper alternative that has just enough to satisfy the vast majority users.

For users who want the slick BMW or Lexus of computers for a slight premium over the more pedestrian models, the Mac clearly wins. But the basic guts and functionality aren't all that much different from Fords and Chevys. It's a smoother, more enjoyable ride, but most people and corporations don't mind a few bumps if they can pay less.

The Mac is not immune to behavioural problems. I have used a mix of Macintosh and Windows client systems, and both can crash and force me to make calls to my help desk at work or write checks to computer experts who make house calls to fix some obscure software problem that causes blue screens or eternally spinning rainbow pinwheels.

On the other hand, Apple has achieved extraordinary success with the iPod. During his keynote at Macworld Expo, Jobs said that the iPod had a 31 percent share of units and 55 percent of revenue today. With the new iPod mini, Jobs plans to take even more share, and target the high-end flash MP3 players.

Despite an overall share of market of less than 5 percent share today, Apple has a healthy bottom line and the Panther Mac OS sets the bar for today's personal computing experience.

Apple's legacy
But the more interesting topic than Apple's fate in 2004 is what will become of Apple in the next 20 years. Will Apple and the Macintosh end up as a prominent footnote in computing history or as a platform that sustained innovation with breakthrough technologies and emerged as a market leader across various consumer and business domains in 2024?

If Jobs were at the helm for the next 20 years, I would give Apple a good chance of succeeding with its digital hub strategy. He has the imagination, savvy and guts necessary become a 21st century digital media mogul.

As a business machine, the Macintosh is barely on the radar, however. It's partly because Jobs is most enthusiastic about Apple as the digital hub of the future. When Jobs started talking about Apple's new Xserve products during his keynote, he seemed bored compared to his exuberant demo of GarageBand. Granted, a digital recording studio makes a more compelling demo than a server, but Jobs' passion is not taking market share from IBM, Sun or HP in the datacentre.

Apple's new aggressively priced Xserve RAID storage system includes support for Windows and Linux-based environments, including support from companies such as Veritas, Microsoft, and Red Hat. The xServe G5 has impressive performance benchmarks and the Mac OS X comes with Samba 3, but overall it's difficult to understand what Apple's strategy is for approaching the enterprise.

Without a roadmap beyond saying you have the fastest chips in your server and desktops, CIO's won't consider Apple, despite the fact that the Mac OS has much of what Linux dreams of having when it grows up. Windows compatibility, such as with Microsoft's Exchange server, and improved support for standards used in Java and .Net development tools.

Jobs is placing his bets that Apple can win the hearts and minds of digital media and Internet consumers. If he is serious about serving up enterprise-class solutions beyond digital media, he should consider finding partners who are willing to do the heavy lifting. You have to wonder what kind of innovation Jobs could dream up if he focused more on the corporate back office rather than just on the digital living room. Unfortunately, it's a battle that the Finding Nemo, Mac iLife crusading Jobs isn't willing or ready to tackle.