Apple's Disruption Lessons at the Bottom and at the Top

NY Times tech columnist David Pogue takes a critical look at media coverage of Apple Computer at its bottom in 1996 when profits crashed, the Mac was a declining niche product and the Newton was symbolic of Apple's foundering prior to Steve Jobs' return.

"Nowadays, Apple is a media darling. The critics like the company’s direction, and so does Wall Street. But it wasn’t always so. (In 1996) Not only was Apple NOT a media darling, it was the dog the media loved to kick. The analysts and columnists were amazingly confident that Apple would not live out the year, let alone the decade."

* Fortune, 2/19/1996: “By the time you read this story, the quirky cult company…will end its wild ride as an independent enterprise.”

Pogue, whom I trust as a sharp-eyed observer, says the lesson is that media should not prognosticate on what will happen in the business of technology. "It’s one thing to report what’s happening to a flailing company, and quite another to announce what’s *going* to happen. In the technology business, that’s a fool’s game."

In a way, I disagree. While no one has a lock on knowing the future, many are forced to play the fool's game of anticipating and predicting the evolution of the technology business, including investors, technology customers, suppliers and partners.  Yet as we know, many can get it so wrong.

I think with the right framework, important lessons can be learned from Apple's history, including the wilderness years around 1996 that Pogue writes about. If we look at Apple's history as a disruptive innovator, we can see a framework with some merit.

For example, with Apple's new wireless iTV video iPod device and the company's earlier successful innovations, the iPod and the Macintosh computer, some patterns can be observed:

• Limited-functionality: not the swiss-army-knife approach;
• Apple integrated standard hardware and controlled the software intitially to achieve superior performance;
• Apple innovated on the most important parts of the experience that were not good enough for users. In the case of iPod, it was simplifying and legitimizing what had been until then largely an illegal process of downloading. In the case of the Mac, Apple focused on simplifying the PC command system using a mouse and menus. For iTV, Apple is shielding consumers from all the hassles of PC (operating system, software, configuration, etc.) to allow them to do one thing: watch movies.

If we look at Apple's failures, such as the Newton PDA, the 10-year slump for the Macintosh, or the Pink operating system, some of the following warning signs consistent with disruption theory, can be observed:

• Bet the farm: With the Newton, Apple put itself in a situation where it could not afford to be wrong or to make early mistakes, by investing too heavily, $350M, in product development;
• Solution with no problem: Newton may have been interesting technology, but it didn't solve any real user's real problems very well;
• Changing customer behavior: Apple made the mistake of trying to change customer behavior, by forcing users to learn how to write on a screen using a system that didn't work very well;
• Sticking with closed proprietary systems too long: There is a time for closed, proprietary architecture (when overall system performance needs to be controlled and improved) and a time for open architecture (when overall system performance is good enough). Apple failed to jump to open system architecture for the Mac when overall performance was good enough and Microsoft's Windows was catching up on ease of use;
• Trying to improve performance in areas that have been commoditized and that customers no longer value;

Management fads come and go but some approaches endure.

**Other views **
Blast from the past: Gary Trudeau's Doonesbury comic ridiculed the Newton for its poor handwriting recognition.

MacSlash is looking for more crazy-wrong predictions about Apple from the past.

Another blast from the past: Steven Jobs, founder and CEO of NeXT Computer, in Wired Magazine, Feb 1996, 10 months before Apple paid $400M to acquire NeXT and Jobs: "The desktop computer industry is dead. Innovation has virtually ceased. Microsoft dominates with very little innovation. That's over. Apple lost. The desktop market has entered the dark ages, and it's going to be in the dark ages for the next 10 years, or certainly for the rest of this decade."

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