Steve Jobs return to Apple, and how Apple can survive against a swarm of Android devices

Tue, Nov 3, 2009

Apple History, News

Jean-Louis Gassee has an interesting piece up analyzing the current battle for smartphone supremacy.  Gassee, in case you’re unfamiliar, Gasse was a former Apple executive who occupied a number of high profile positions within the company during the 80’s.  Before he was ousted by the Apple board in 1990, he was in charge of Apple’s advanced product development and worldwide marketing efforts.  After leaving Apple, Gassee went on to help develop the BeOS operating system, which Apple considered buying in 1996 before they eventually decided to go with Steve Jobs and his team at NeXT.

In analyzing how Apple will respond to the tidal wave of upcoming Android devices, Gasse takes a look back at what Steve Jobs did immediately upon his return to the company he helped co-found.

When Steve Jobs came back at Apple, in 1997, he got rid of top managers, brought his own team in and put an end to the Mac OS licensing agreements. At the time, this was viewed as heresy. What critics conveniently forgot was that real strategic purity would have  taken Apple completely out of the hardware business, no more Macs, just Mac OS licenses, just like Microsoft doesn’t make PCs. Steve’s view was Mac clone makers were bleeding Apple’s hardware margins, taking away the financial resources it needed to invest in its future. Instead, Apple went on a campaign to more completely control the quality of the Macintosh customer experience: hardware, software, the buying experience at Apple stores, consultation, training, data migration when buying a new computer or switching from Windows, technical support and repair. Both JD Powers and Consumer Reports surveys attest to the success of such strategy, consistently placing Apple as the #1 in customer satisfaction.

Next, Gasse take a look at how Apple is poised to fight against a tidal wave of new and increasingly feature-rich Android phones.

Turning to the iPhone and Android: How will Apple deal with Android’s new 2.0 version running on a strong Motorola Droid — and with the legion of other handsets that are sure to follow?

Today, with close to 60 million devices in the market, with China distribution opening up, 100,000 applications by the time you finish reading this, Apple has momentum. Besides a good product, Apple enjoys a strong network of retail outlets, the Apple Stores, and iTunes, the King Kong of media distribution platforms with an integrated micro-payments system.

But, in a market that will eventually number billions of devices, as discussed last week, this isn’t an impregnable position.

For Apple, the temptation could be to keep rolling in cash while Android 2.0 is followed by version 3.0 and so on, garnering more and more support from handset makers and applications developers. Some pundits conclude: Eventually, Apple will be overwhelmed by a swarm of Android-based smartphones and applications. Further, just as Microsoft leveraged the OS-applications combination, the Windows-Office relationship, Google could, will use a synergistic relationship between the data in its 2 million servers and the new generation of mobile pocket computers. The power of Google data is already demonstrated by the new Android 2.0 navigation application.

Let’s address this question: will Google play its server farms and data against Apple or will it use the iPhone as well as any other smartphone to further its only cash-generating business: advertising. Or, if Google uses Google Docs to really go after Microsoft’s gold mine, Office, will it team-up with any and all devices or just use Android (and the Chrome OS) for this fight?

Gasse concludes,

Drawing on the Macintosh story, the iPhone can end up selling less units than the total of Android-based handsets and yet make a great deal more money for its shareholders, its employees and its future. The significant difference between the Macintosh adventure and the current iPhone situation is the iTunes + App Store weapon. Steve Jobs understood what almost happened when Apple didn’t have the means to boost the distribution of Macintosh applications. Never again.

Solid stuff, and for anyone who remembers a time when Windows users would attack the Mac for having no worthwhile applications, it’s kind of funny that Apple’s iTunes App Store is now the envy of every other mobile handset maker.  As Gasse writes, Steve Jobs is keenly aware of how important apps are to the battle for smartphone supremacy, and with the number of available iPhone apps currently closing in on 100,000, Android and co. certainly have an uphill battle ahead.

You can check out Jean-Louis Gassee’s entire article over here.  It’s highly recommended and he touches on a lot more that what we’ve covered here.


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