Apple's post-PC strategy

Back when personal computers were the hot new thing, Microsoft and Apple took divergent business model paths. Microsoft was content to let others do the hardware manufacturing and run its OS. Apple, on the other hand, kept its system closed. It controlled hardware design and manufacturing. It wouldn't let its operating system run on other hardware.

The result? Microsoft grabbed a monopoly-level market share on the desktop while for some time Apple was largely confined to a few niches like graphics and education. Lack of application software became a serious strike against choosing a Mac.

You'd think there was an obvious lesson to be learned: Loosen up control over your software platform and allow it to propagate on many vendors' hardware.

Instead, Steve Jobs is opting for the same tactics that handed monopoly control to a competitor the last time round. Clever correction of strategy execution? Or that well-worn definition of insanity: doing the same thing over and over but expecting different results?

In an era when many expect open source and interoperability to reign supreme, Jobs still believes in a closed ecosystem, banking on the ability to control all facets of hardware and software ultimately offering a better, more exciting user experience.

Well, that and an unparalleled marketing machine.

It's a tough strategy to implement well. Your hardware/software offerings have to be viewed as superior in order to command pricing to keep margins up. It certainly helps to be both a technology and market leader -- or, more accurately, perceived to be -- as Apple has become in the smartphone and tablet space. But success attracts competitors -- often well-funded ones. And maintaining an edge is a challenge.

So far, though, I have to admit that Jobs has been spot on in execution.

While I'm still not buying an iPhone, Apple's share of the smartphone market rose another 2 points to 28% in the first quarter, according to Nielsen stats. Android rose the same 2% slice, to just 9%, while BlackBerery (35%) and Windows Mobile (19%) each declined a 2% share.

I retain a healthy skepticism on how this strategy will work in the long run, as Android catches up in the apps race on smartphones and competitors elbow into the tablet space. Interestingly, Android owners skew younger than iPhone: 55% of Android owners are 33 or younger vs. 47% of iPhone users.

I'm not sure any strategy works in the long run in the tech space, though, where whole categories of hardware become obsolete faster than sitcoms. As the personal computer market matured, Windows PCs evolved into low-margin commodities, and the whole ecosystem was seen as "nothing special." Dependable, but dull. Certainly not generating the kind of marketing buzz and technolust that help pump up a manufacturer's profit margins.

Where Apple has excelled most of all is brand loyalty. Eighty percent of iPhone users say they want their next device to run the iPhone OS, compared with 70% Android, 47% BlackBerry and 34% Windows Mobile users, Nielsen says. And even I've got to admit that's impressive.

What I find even more striking, though, is that Apple is now the most appealing mobile platform when it comes to availability of cool new applications. And that's quite an achievement when the only hardware running your OS is your own.

Sharon Machlis is online managing editor at Computerworld. Her e-mail address is You can follow her on Twitter @sharon000 or subscribe to her RSS feeds:
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