Why No One Should Underestimate Apple

Apple

One of the big takeaways from following Apple for close to 40 years is that one cannot ever underestimate Apple when they enter new markets that, on appearance, seem out of their core competencies.

One reason for this is historically due to Steve Jobs’ incredible “gut” sense of what the market would want before they even knew they would want and need it.



A good example of this for me came in a meeting I had with Steve Jobs on the second day he came back to Apple in 1997. At that time Apple was a billion dollars in the red and, as we know now, less than six weeks away from potential bankruptcy.

I asked him what his plan was to rescue Apple from potential demise and he gave me two distinct answers.

The first thing he told me was that he was going back to meet the needs of his core customers. He felt that the prior CEOs had neglected Apple’s main buyers of the Mac, which included graphic designers, publishers, scientists, and the engineering community. To get there he integrated rich architectures from his NeXT OS into Mac’s new OS and made it even more capable of meeting the needs of those core customers.

The other thing he told me was that he was going to focus on industrial design. Jobs himself had an artist’s eye and felt the battle gray IBM PCs and clones were just boring.

I admit that my reaction to this idea to bring Apple back to health baffled me. Although Jobs did not give me any details on what he was planning to do in the way of industrial design, I had a hard time understanding how this would help Apple climb out of the hole his predecessors left him.

To his credit, at the beginning of his second year back at Apple, Jobs introduced the candy-colored iMacs and this catapulted Apple back into the green.

It did take a major deal that Jobs cut with Microsoft to get the company out of its immediate financial hole via a carte blanche license to the graphical user interface for use on Windows going forward and Jobs parleyed this to help develop the iMacs.

At the time the iMacs were introduced in 1998, I remember the traditional tech media panned it. Some thought the colors were too childish and not representative of a real PC. Others thought these candy-colored iMacs were a gimmick and could in no way save Apple.



However, as history has shown, Jobs was right and these iMacs laid out a roadmap for new directions in desktop computer designs.

The second time people underestimated Apple came with the introduction of the iPod. Apple did not invent the MP3 player but made the iPod the best-selling MP3 player ever made. It also supplanted Sony’s walkman as the premier portable music player and as they say, the rest is history.

However, when Apple introduced the iPod some people criticized Apple for creating a product way out of their technology prowess. Others said Apple knew nothing about the music business and this would fail.

I spent a lot of time with Sony in those days and asked a high-level Sony executive his views on the iPod. Like others, he felt Apple’s lack of knowledge of the music world, an area Sony was deeply invested in then with Sony Music, would make it hard for Apple to succeed. He basically wrote off the iPod as a threat to Sony.

The third time Apple was underestimated came with their introduction of the iPhone. Again, Apple drew great criticism for going into the phone/telecom business since it too, was out of their sphere of expertise.

Here are some other examples of critics who dismissed Apple’s launch of the iPhone:

“The iPhone isn’t the future. It isn’t a revolutionary mobile device ushering in a new era,” was the word from TheStreet.com on the day of the iPhone’s first on sale date.

“Windows Mobile has nothing to fear from either the iPhone or Google Android.” John Curran, Microsoft UK, 24 Oct 2008

“iPhone is nothing more than a luxury bauble that will appeal to a few gadget freaks.” Matthew Lynn, Bloomberg

“We’ve learned and struggled for a few years here figuring out how to make a decent phone. PC guys are not going to just figure this out. They’re not going to just walk in.Palm CEO Ed Colligan, commenting on the then-rumored Apple iPhone, 16 Nov 2006

 “We are not at all worried. We think we’ve got the one mobile platform you’ll use for the rest of your life. They are not going to catch up.” Scott Rockfeld, Microsoft Mobile Communications Group Product Manager, 1 April 2008

There is a low demand for converged, all-in-one devices. Only 31% of Americans surveyed said they wanted a device with multiple capabilities, and that dropped to 27% in Japan, according to research by Universal McCann.” —The Guardian

“I like our strategy. I like it a lot….Right now we’re selling millions and millions and millions of phones a year, Apple is selling zero phones a year. In six months, they’ll have the most expensive phone by far ever in the marketplace and let’s see… let’s see how the competition goes.” Steve Ballmer, Microsoft CEO, 17 January 2007



In 2017, on the ten year anniversary of Apple’s iPhone, I wrote for Time of the five industries the iPhone had impacted. True to its history, the iPhone continues this disruption.

Then came the Apple Watch. Again, Apple was criticized for getting into a market they had no background or expertise in.

I talked to a top Swiss watchmaker at the time of the Apple Watch launch and he believed Apple would have a hard time getting into this market successfully.

A recent piece in Fast Company, puts Apple success in smartwatches in perspective –

“It used to be that the most coveted wristwatch was one from a Swiss-made company. For more than a century, Swiss timepieces have been the pinnacle of status—and, as a result, the watches most popular with those in the market for a new timepiece. But that seems to be changing, and, if research firm Strategy Analytics’ latest report is accurate, Apple is finally killing the Swiss watch industry.

That’s because Apple reportedly sold more Apple Watches in 2019 than watches sold by all of the Swiss watchmakers—including Swatch, Tissot, TAG Heuer, and others—combined. Matter of fact, Strategy Analytics said Apple Watch sales not only beat Swiss watch sales last year, but they blew them away.”

As reports from multiple sources suggest that Apple is doing an Electric Vehicle, the first criticism from a high-level automotive executive has been voiced.

An interview with Volkswagen CEO Herbert Diess, as reported in Reuters, has said, “The car industry is not a typical tech-sector that you could take over at a single stroke,” Diess was quoted as saying in an interview with Frankfurter Allgemeine Sonntagszeitung.

“Apple will not manage that overnight,” he added.

While Apple’s plans are not public, Diess said its intentions as such were “logical” because the company had expertise in batteries, software and design, and that it had deep pockets to build on these competencies.

“Still, we are not afraid,” he said.

Given that Apple’s car project is still a mystery, he may be right. However, I would like to suggest to the CEO of Volkswagen, that given Apple’s history of proving people wrong, never underestimate Apple when they decide to get into new markets and put all of their energy and innovation behind it.

News source