Apple and the Case of the Conventional Computer
Apple’s strategies behind its iPad and MacBook business segments are often maligned by bloggers who question both the company’s engineering prowess and its creative, innovative spirit. The worn-out cliche that “Apple isn’t innovative anymore” is largely grounded in the idea that Apple’s modern computing offerings are established and practical, rather than radical amusements that excite the media. This is castigated as “evolutionary, not revolutionary” by people who have apparently never experienced the disruption of actual revolutions.
A considerable part of Apple’s modern success is rooted in the fact that it perfects products that have already proven successful, rather than spraying out an array of wild concepts in the hope that some might stick. Microsoft, Google and even Samsung lack any real, established success in hardware computing products comparable to the volumes of iPads and Macs that Apple sells every quarter.
Two decades ago, Apple’s hardware business was about as desperate as companies like Microsoft, Google and Samsung are today. That’s why Steve Jobs pushed his iMac team to create something whimsical enough to stand out. In fact, many of the entirely new and somewhat risky product introductions of that era were required because Apple didn’t have a solid and mature base of users anywhere close to what it has now.
Unrestrained experimentation resulted in some hit Apple products (like iMac), but also created a series of expensive failures. The PowerMac G4 Cube, Xserve and Mac mini all found fans but not enough buyers to sustain their continued advancement. More recently, the boldest PC jump Apple has attempted similarly turned out to be regarded as a flop: the cylindrical Mac Pro.
As it turned out, core Mac Pro buyers really wanted an evolution of the tower product they were already familiar with, not a flashy new revolution with the ability to excite media personalities—whose job is to be excited about feature-flash and specification sizzle, rather than to do actual productive work.
Apple and the Creative Duress of Extraordinary Scrutiny
At the same time, Apple also faces extraordinary media scrutiny that its peers simply do not. Microsoft Surface has suffered through major reliability issues since its release. Google has affixed its brand to generations of tablets that were effectively dysfunctional. Samsung recently struggled through the worst product disaster (and botched response) to ever hit a tech company. Yet all of these major issues were either ignored by the tech media or excused with elaborate explanations of why they wouldn’t really matter in the long run.
In stark contrast, when an obscure firmware bug caused new MacBook Pro models to overcompensate for rising processor temperatures, non-engineer YouTube personalities and random Internet bloggers weighed in with comments that instantly jumped to the conclusion that Apple had lazily slapped new Intel processors into an old MacBook chassis, resulting in a simplistic “defective by design” overheating issue. In reality, the problem was solved within a week with a software patch.
Nobody seemed to recall that virtually every Intel chip deals with various “errata” bugs, most of which can’t simply be fixed with a software update. Even more curiously, the entire planet seemed to have collectively forgot that Intel, AMD and ARM were all just hit by a huge wave of vulnerabilities within the last year due to the nature of speculative execution methods they employ.
Shouldn’t the sharpest silicon minds on earth “have known about these bugs” before they began trickling out back in 2011? Nobody asked that, but there are plenty of people insisting that Apple “should have known” about the recent flaw in MacBook Pro thermal management firmware.
And unlike Apple’s new MacBook Pro fix, there’s no simple patch for Meltdown and Spectre that restores things back to normal. The solution is only to turn off affected branch speculation features and perform “site isolation,” both of which can impact performance on PCs, servers and netbooks regardless of their operating system.
When the entire industry suffers from a mistake in a finished product or a component, it’s simply a matter of scrambling to fix it. When Apple discovers a flaw, it’s time to wag fingers and prattle on about how mistakes should never be made in the production of expensive, premium hardware. Unless its a super expensive Intel processor, or a Tesla, or Google Pixel, in which case it’s a sort of “locker room talk,” where privileged affluent people can’t be expected to answer for their actions or performance.
Why doesn’t Apple try new things, like Microsoft?
Apple’s computing hardware is frequently compared against Microsoft’s Surface segment. In 2012, Microsoft launched Surface as a two pronged mobile PC concept, one using a conventional Intel processor (Surface Pro), and one using ARM chips (Surface RT), somewhat similar to Apple’s approach with iPad. The latter turned out to be a huge mistake, as Microsoft marketed essentially a lower-powered ARM tablet as a Windows device, albeit one that couldn’t run most Windows software.
Microsoft doubled down on evolutionary enhancements to the Surface Pro until 2015, when it launched a more conventional Surface Book laptop and rebranded an acquired digital whiteboard as Surface Hub. It then launched Surface Studio (a mini PC attached to a large, pivoting touch screen) and last year an even more mundane Surface Laptop. It most recently launched Surface Go, a mini laptop, to round out its veritable explosion of creative PC innovation on the level of HP.
Microsoft now sells six different major computing device form factors; Apple only has ten different basic models of Macs and iPads, despite being in the computing game decades longer than Microsoft. Samsung actually sells more PC, netbook and tablet forms than Apple. Before giving up on tablets and Chromebook Pixel, Google basically matched Apple’s product lineup. HP, Lenovo and others have similarly wide ranges of products for sale. Yet all of these competitors have actual sales that are a fraction of Apple’s revenues.
Why isn’t Apple rapidly sprouting out new form factors? in part, Apple isn’t wildly experimenting because it already knows what people really want. That understand keeps evolving with Apple’s Mac and iPad product lineup.
Consider Macs. When Microsoft announced its intentions for Surface PCs, Apple was building a 13, 15 and 17 inch MacBook Pro, a 13 inch MacBook and an 11 inch MacBook Air. Rather than speculatively creating new products people ultimately wouldn’t buy, Apple refined its offerings based on what people were actually buying. That meant discontinuing the large, heavy 17 inch MacBook Pro and doubling down on light, thin portables that were.
Despite the braying donkeys that endlessly hee-haw about how stupid Apple is for making laptops that are light and thin rather than packed with intercoolers and video-gaming GPUs, the result has been that Apple now sells more laptops than it ever has.
If you ask engineers or marketing people or anyone else in the real world about important factors to consider in buying a laptop, they will pretty quickly get around to the point where they tell you that having a large display or desktop-class power is far less important than being able to carry it around without their back and neck hurting.
In 2016, when Apple “revolutionized” its MacBook Pro lineup to be nearly as light and thin overall as its extremely popular MacBook Air, tech media and related punditry honked disapprovingly like a field of angry Canadian Geese with nothing on their schedule apart from inhaling grass, pooping on everything and aggressively attacking anything that dare cross them. People don’t wan’t light and thin notebooks, they insisted, they want 32GB of RAM to virtualize multiple instances of Windows, in a large heavy frame that is neither light nor thin.
Many of the same voices have insisted that what people really want is a huge touch screen desktop (Surface Studio) or a laptop that detaches into thick tablet and a base with a GPU in it. Despite all this confident insistence on what people really want, we have the results from a democratic vote where people cast ballots in the form of dollars. Guess who people elected to build their portable computers? It wasn’t Microsoft.
In fact, across the last four years (2014-2017) and the first quarter of 2018, Apple’s sales of increasingly light and thin MacBooks and MacBook Pros, iPad and iPad Pros, and its desktop offerings centered around iMac have resulted in sales of over $196 billion. Over the same period of Microsoft’s entire pantheon of Surface-branded devices, it has collected just over $16 billion—at far lower operating margins due to its dramatically lower sales volumes and higher return rates.
The short answer to why Apple isn’t acting like Microsoft is that it doesn’t need to and wouldn’t want to. Apple isn’t desperately looking for a hardware hit. It’s perfecting a game it’s been winning for over a decade. Nobody else, from PC volume leaders Lenovo and HP, to mobile volume leaders like Samsung, experience anything comparable to the success Apple has had in perfecting and refining its tablets, notebooks and desktops.
Apple is trying new things, they’re just successful
While Apple hasn’t radically remixed its hit form factors, the company also isn’t just conservatively selling slightly polished versions of yesterday’s technology. Its iPads and Macs employ new innovations ranging from custom high performance SSD controllers to advanced displays with ambient-aware color management.
Apple pulled off porting its desktop OS to mobile, lightweight ARM hardware two years before Microsoft and managed to profitably sustain its iPad business across the five years since Microsoft gave up on RT, without destroying its conventional Mac business.
Outside the largely standardized form factors of mobile, laptop and desktop computing, there’s something else that Apple is experimenting in that is wildly more successful than anything Microsoft has done with its Surface brand
Yet outside the largely standardized form factors of mobile, laptop and desktop computing, there’s something else that Apple is experimenting in that is wildly more successful than anything Microsoft has done with its Surface brand.
This performance is hidden inside Apple’s Other Hardware segment, which includes HomePod, Apple TV, Apple Watch, AirPods and Beats. These specialized computers that drive personal entertainment, home audio and wearable technology have excelled in markets that other PC and mobile vendors (inclining Microsoft, Google and Samsung) have failed miserably.
Apple’s sales of Other Hardware have absolutely skyrocketed over the past four years, growing from $8.2 billion in 2014 to $14.3 billion last year. Over the same four years and a quarter noted above for Microsoft’s Surface and Apple computers, Other Hardware has sold $49 billion worth of “less conventional computing.” That’s three times the revenues of Microsoft’s entire Surface business over the same period.
And while Surface has stagnated around $1 billion in quarterly sales, Apple’s Other Hardware has surged into a $4 to $5 billion quarterly enterprise. Almost nobody talks about how successful Apple’s experimental computing form factors are in home and wearables. Instead, we have regular reports from sites like the Verge, where Tom Warren recently congratulated Microsoft for maintaining Surface as a “billion dollar business” quarterly.
Warren wrote, “Surface revenue has jumped 25 percent year over year this quarter to $1.1 billion, ‘driven by strong performance of the latest editions of Surface’ says Microsoft.”
Actually, what Microsoft stated in its earning reports was that “Surface revenue increased $237 million or 25 percent, driven by strong performance of the latest editions of Surface against a low prior year comparable.” It’s pretty solidly disingenuous to edit a corporate quote to make things look rosier than they really are, but that’s what Warren chose to do here.
The truth is that Surface sales aren’t really growing at all. They’ve been stranded as a “billion dollar business” over the last four years. New product releases and expanded availability isn’t creating a growing user base nor new revenues or profits. Surface is stagnant, and a “billion dollar business” is not a great place to be stranded, considering that it costs real money to develop, maintain and build those devices. That’s revenues, not profits. Surface was “a billion dollar business” when RT was losing a billion dollars.
It’s noteworthy that Apple’s iPad has been maligned for not growing despite being at least a “four billion dollar business” quarterly, while Macs hover around being a “six billion dollar business” quarterly. Why are Apple’s sales of ten billion dollars worth of conventional computers each quarter an unimpressive figure, while Microsoft’s stagnant single billion a cause for celebration and fawning approval?
And why are Microsoft’s experimental computing concepts involving new shapes of Windows PCs “innovative” despite not expanding actual sales across years, while Apple’s branches into home and wearables are considered barely worth mentioning despite huge new gains and regular sales volumes and revenues well beyond those of Microsoft Surface? It’s hard to say what these pundits are thinking.
But the bottom line is: if you want to see Apple doing creative, innovative computing form factors, look beyond the stagnant PC business and note that Apple is alone in successfully selling wearables, luxury-class home audio and other novel, futuristic shapes of applied computing devices. And it’s pretty clearly just getting started.