What's also interesting about that chart is that software makes up such a small part of revenue. A bad CEO would see that and devote a similarly tiny amount of resources to software development because, you know, it doesn't make the company much money.
Not to say that Apple software is all awesome, but at least they don't treat it as a cost center that has to be trimmed.
We must not forget that each and every Apple device also comes preloaded with Apple software. They don't sell OSX for non-Mac computers. Therefore jumping to such a conlcusion is unwarranted as every single sale of a product of theirs involves a sale of their software. When one tallies up the percentages, a sale of an iPod or iPhone is classified as a hardware sale though Apple is also selling iOS in the transaction.
In other words, the only way to consume Apple's hardware is through Apple software. Therefore, every single sale of Apple's hardware also involves the sale of Apple's software. I find it a bit disturbing that the article does not mention this.
Steve's mantra is all about vertical integration. I don't think he sees a line between "iOS, the software" and "iPad, the product". That'd be a bit like looking at the chart and saying, "Hmm, they don't sell many CPUs, maybe they're not important." I think if there's one thing that Apple does get, it's that they're all a piece of the puzzle. For what it's worth, that's not new; pre-Microsoft, it was always understood that the OS was part of selling hardware.
Now, what they conceivably could do is to look at their aftermarket software and devote less resources to that -- especially in places where Apple's presence in the aftermarket doesn't make or break the platform (e.g. music sequencing -- there are half a dozen mature competitors to Logic that run on OS X). Also, I suspect some of those places Apple is in strategically because it funnels money away from companies they don't like -- Aperture cuts away from Adobe and iWorks pulls away from Microsoft, despite Photoshop and MS Office for Mac being platform-completing tools. Also their offerings there are important as leverage; Apple doesn't want to be back in the position of needing Microsoft or Adobe since they've been burned in the past.
You're absolutely right. Refer to his comments on Apple's Q3 quarterly earnings conference yesterday.
>>You’re looking at it wrong. You’re looking at it as a hardware person in a fragmented world. You’re looking at it as a hardware manufacturer that doesn’t really know much about software, who doesn’t think about an integrated product but assumes the software will somehow take care of itself. And you’re sitting around saying, well, how can we make this cheaper? Well, we can put a smaller screen on it, and a slower processor, and less memory, and you assume that the software will somehow just come alive on this product that you’re dreaming up, but it won’t. Because these app developers have taken advantage of the products that came before, with faster processors, with larger screens, with more capabilities that they can take advantage of to make better apps for customers. And they’re not… it’s a hard one, because it throws you right back into the beginning of that chicken-and-egg problem again, to change all the assumptions on these developers. Most of them will not follow you. Most of them will say, “I’m sorry, but I’m not going to write down a watered-down version of my app just because you’ve got this phone that you can sell for $50 less, and you’re begging me to write software for it.”<<
On the matter of Logic: disagree. Logic sells Macs. I know plenty of musicians who either have bought (my self included) or want to buy a Mac from the 'pro' lineup specifically for Logic. The only competitor that I see as truly being on the same level as Logic is Cubase/Nuendo, which seems to run better on Windows anyway.
As per GAAP accounting rules, Apple is likely to be doing this separation already. Hardware and Software sold together on a device are supposed to be revenue recognized differently.
3M institutionalised innovation by enforcing a ratio like this. I can't remember the exact figures but something like 30% of every division's revenues had to be from products released in the previous 5 years.
An "aged revenue" ratio might make a good performance predictor for a company: the proportion of revenues that comes from products designed in the last 5 years.
GOOG:MSFT:FBK:AMZN - you could get some powerful performance indicators from that simple stat.
Seems to confirm the subthesis of Carl Schramm's The Entrepreneurial Imperative. That is, established firms are having to become increasingly entrepreneurial in order to compete.
This is largely good news for those doing startups. Since the lifespan of profitability for any one business model is decreasing in the future, existing firms are going to be offering a lot of money to buy new ones or get pushed out of the marketplace.
What could they do next to keep it up? Dick Tracey watches? Augmented reality contact lenses? Brain implants? A flying robot personal assistant? None of these seems as plausible as a smart phone or a 'Dyna Pad'.
Oh wait, there's Mistry's "Sixth Sense" setup still to go. Where is that thing, anyway? He promised to open source it, by around this last January. Someone's bought him, for sure. It'd be more interesting if it was someone other than Apple. I'm just amazed that it hasn't been on the radar, one way or the other.
This is cool and all but the company has obviously gone through a significant shift the last three years, with the iPhone and iPad. Comparing 2008 with 2005 does not give the same ratio.
Apple is one of the best companies at cannibalizing it's own products, which is mandatory to stay ahead of the competition. Example: Apple crushed iPod sales by releasing the iPhone.
I'll guess that you're being down-voted because it's an odd question (seems obvious if you read the post), which by itself is no big deal, but one might think the answer is so obvious that perhaps you're just trying to make that tired "Apple didn't invent the phone/portable music player/touchscreen/etc" point.
One interpretation makes this a post about the success of an innovator.
One interpretation makes this post one giving false credit for the creation of entire industries. It is something I've seen from a minority of Apple users.
One interpretation is being charitable to the intelligence of the community who chose to upvote it; the other presumes they were either fooled, or that the minority you refer to has infiltrated HN and is on a mission to block-upvote Apple propaganda. A combination of the Principle of Charity and Occam's Razor makes the latter seem improbable.
That is a very good point. But with your original question, you brought it up in the form of a instigating, snarky question.
There is some inherent value of the iPhone and iPad in them being phones and tablets, respectively. A portion of their sales has nothing to do with innovation. I would agree.
He obviously meant that most of Apple's product line is less than 3 years old. The iPad, per se, did not exist three years ago, though of course the concept of a tablet computer is decades old.
True, but I think the people saying things like "Apple didn't invent..." are about spaces like the smartphone market, or the mp3 player market (or even selling mp3s online). While many might describe the iPad as "just a larger iPhone," I think that it's different enough from other tablet offerings to give Apple some amount of credit.
There were flying machines before the Wright brothers, i.e. balloons. Likewise there are modestly successful tablets which predate the iPad such as the Fujitsu Stylistic series.
Apple has in fact created entire industries. Apple created the modern smartphone. Previous to the iPhone, all phones were feature phones, though of course many were advertised as "smartphones" because they had simple PDA functionality. The android phone was a copy of the RIMM phone with the keyboard which was much like a treo. Now they are all making touch screen phones with appstores, and aping all of the other features of this product. Sure, things with CPUs in them have existed long before the digital phone and before the laptop, etc. But the iPhone did create a new industry-- the touch based phone.
The iPad also created the tablet industry. Sure, people had tried tablets before, even Apple did with the actually quite successful newton (though this was stylus based like the palm pilot, and other copies.) But the computer tablet industry that is taking share away from laptops didn't exist before this year.
Apple created two industries. I'm a fan of apple because they are always innovative, always honest, and they always try to ship quality products. They're about the only company I can say that about.
I don't know why people should diminish that. This is a gold standard we should all attempt to emulate (And I don't mean by copying their products, but by copying their methods and standards.)
You sound a lot like someone trying hard to make an inventor out of Apple. Making a hit product with some new features in an industry isn't the same as making the industry.
If we go by that reasoning, Microsoft created the word processor industry.
Innovator isn't a dirty word. Let Apple take credit for what they've accomplished.
To be fair, it was a bit of a snarky question. You knew whether phones existed before the iPhone, so it's not like you could have been asking that in good faith. Similar with touchscreen tablets.
So, what general product do you think the iPhone was based on? The Blackberry, or perhaps the Treo, since that had a touch screen?
In order to say that Apple didn't come up with the idea behind the iPod or the iPhone, you have to generalize the category to the point that it was painfully obvious to anybody even remotely aware of what's going on in the industry. MP3 players are an obvious idea to anybody who has heard of the Walkman and knows that computers can store and play music. The idea of using a tiny hard drive in one is similarly obvious. So is the idea of making a phone that can surf the web and also be an MP3 player.
When people praise Apple's ingenuity with the iPhone and iPod, they are referring to the fact that almost everything other than the most fundamental idea was revolutionary or at least clever. In other words, every aspect of the product that actually affects its success in the marketplace was invented or re-invented.
Almost every post I make in this thread ends up with 3-4 downvotes no matter what, so I'm hesitant to answer this with any kind of thoughtful response.
I want to, but I was looking forward to hitting 200, and now it's pretty far off.
Just wait a bit. The early votes here have become quite insane in the last year or so. The scores still tend to normalize to sane levels later on, though. I wonder how long that will last.
I've upvoted most of your comments in this thread: While they are not brilliant in my book, they are not bad either. And certainly not bad enough to deserve large negatives.
It seems a little more recent than that. I've only been posting for a few months, but I've been watching for about a year. It seems like the trend changed steeply only in the last month or so.
But you have a lot more posts and time in here, so you've got a clearer perspective.
The iPhone and iPad are products. Smartphones and tablets are product categories. There's a clear (if unconscious) distinction in the usage of the two terms, at least in press-release-speak.
I like how I've lost 40 points just for having a disagreement.
My tone and manner are no worse than anyone else who manages to stick around for more than a day without being downvoted in to oblivion. I haven't even called anyone names.
I've even had deeper, more protracted arguments than this without losing any points.
Not to say that Apple software is all awesome, but at least they don't treat it as a cost center that has to be trimmed.