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For six years, the Internet Nexus served as my technology blog, but I've since started blogging at the SuperSite Blog instead. If you're looking for the blog, please head there. --Paul

Monday, February 07, 2005

Key quotes and comments from the Fortunte Jobs interview

Reading through the Jobs interview in Fortune Magazine, a few points stand out:

Think back about just how irrelevant Apple seemed even two years ago. Its share of the personal-computing market had shrunk inexorably throughout the 1990s to a tiny 2%.

Ahem. Apple's marketshare is still less than 2 percent in the PC market.

Microsoft's stake in Apple is now worth well over $1 billion.

Interesting.

[In] a 1998 meeting, Jobs asked Adobe Systems executives to develop a Mac version of their consumer video-editing program changed his mind. "They said flat-out no," Jobs recalls. "We were shocked, because they had been a big supporter in the early days of the Mac. But we said, 'Okay, if nobody wants to help us, we're just going to have to do this ourselves.' "

Yikes. I find it somewhat ironic that Adobe's stupidity led to the some of the best software ever made, Apple's iLife and Final Cut products.

Today Apple gets people hooked with free online updates and then, every year or so, offers to sell them a full overhaul loaded with new features—and more and more users are willing to pay. OS X has already gone through four versions, named Cheetah, Puma, Jaguar, and Panther. It's a tactic that Microsoft and other software makers have tried with much less success—Windows users in particular have grown leery of the chronic computer crashes and conflicts between programs that its upgrades cause. Apple engineered ways to minimize such problems.

Well, not quite. Apple doesn't "engineer" ways to avoid problems. Microsoft has a much larger user base, which happens to be using a much wider range of software and hardware products. It's just harder to support all those configurations. It's not even comparable. To give Apple credit for having to support a minimal number of configurations is a bit much.

Apple's computer hardware business ... still accounts for 60% of annual sales

Hey, they are named Apple Computer for a reason. Still, one has to wonder how long that will last: I haven't checked, but I bet Apple's hardware business is making up less and less of the bottom line with each passing year. As with NeXT before it, I expect Apple to change its name as result.

Then there's a breathless and overly-long part of this article that focuses on the creation of iTunes and the iPod. I feel that this part of the article is inaccurate. Apple purchased a program called SoundJam and turned it into iTunes, but while the article mentions the purchase, the author then goes on to explain how iTunes was "created" in just 4 months. Eh. More problematic: The iPod was created by a third party, not Apple, and after IBM passed on it, Apple licensed the rights. This article describes an alternative history where Apple created the iPod in-house, and it doesn't mention the third party--PortalPlayer--that really created the iPod, nor the other companies, like Creative, that were innovating with MP3 players (both hard drive- and flash-based) before Apple entered the market. Curious.

Jobs ... estimates that this year Apple will generate $1 billion in revenue from selling applications and updates, plus other software-related revenue generated by the iTunes Music Store and its .Mac online subscription service, which has 600,000 members. That's almost double last year's take.

Good stuff, and further evidence that it's time to drop the "Computer" from Apple's name.

Owning a 62% market share of the online music market, for instance, augurs serious sales growth. Even though that market is still in its infancy—downloads accounted for less than 2% of U.S. music sales in 2004—the iPod platform, for example, kicked in revenues of $1.4 billion in Apple's first fiscal quarter, nearly as much as it did in the previous four quarters combined. Merrill Lynch analyst Steve Milunovich predicts that the iPod business alone will hit $6.2 billion in fiscal 2006, roughly as big as all of Apple when Jobs took over.

This is glossed over in the article, but it's a fact that all Apple fans should be clear on: Apple's success with the iPod is impressive, but it's also coming during the nascent stages of an industry that has yet to mature. It will be interesting to see what happens when competition makes this another commodity market. To it's credit, the author of the article actually does mention this:

(Of course, the iPod's growth will eventually flatten as the devices lose their fad status. Yet the gadgets are so useful that it's easy to imagine them becoming as ubiquitous as the Walkman—of which Sony has sold 340 million.)

When you look at the brief history of OS X...

... which dates back to the lately-1980's, actually, when NeXT called it NeXTStep.

... you begin to realize what a remarkable accomplishment it has been for Apple—not only to build it but also to migrate millions of users to something so radically different with relatively little pain, and to improve it so dramatically and with such regularity that it has turned the endless nuisance of software support into a profit machine.

I guess. Using Apple's own numbers, 14 million people are using OS X, and it's likely that most of them "migrated" from OS 9. Meanwhile, hundreds of millions of users--on billions of disparate systems--have migrated to Windows XP from Windows 9x, and they get to run 9x software natively, not in a slow virtual environment, as with OS X. I think that's more impresive. Maybe that's just me.

Most tantalizing of all is scuttlebutt that three of the biggest PC makers are wooing Jobs to let them license OS X and adapt it to computers built around standard Intel chips.

That is tantalizing. What? Rumor? Any comment from Jobs on that? No? Ah.

Apple's core strength is to bring very high technology to mere mortals in a way that surprises and delights them and that they can figure out how to use. Software is the key to that. In fact, software is the user experience.

Interesting theft of a favorite Bill Gates phrase.

Overall, this is a must-read article, despite the odd errors, for all people interested in technology.

[ Posted at 11:26 AM | Permalink ]