[Note for incoming readers: this post was written before the actual iPad annoucement, but the predictions were basically solid, so the analysis holds up perfectly well.]
Market share is, of course, the perennial issue in platform wars generally, and has been for a couple of decades now. The new IDC and Gartner reports released in the last couple of days have generated a lot of discussion about this again, but of course the issue never really goes away.
As one might expect after so long, most of the discourse with respect to market share has become formulaic and extremely boring. Windows advocates (those who actually have an argument, rather than just being mindless trolls, anyway) claim that low market share validates their criticism of Apple’s design and business decisions, while Mac advocates reply that quantity is not quality and that they have no reason to personally care.
But it’s worth occasionally giving the issue a serious look. I think it’s particularly worth it now, with the imminent announcement of an Apple tablet likely, for reasons that I’ll get to a bit later.
Desktop Intransigence
Apple, over the last few years, has been making the best products it has ever made and has built itself into one of the most valuable consumer brands in the world. These are not really disputable claims. On top of this, Microsoft’s OS development efforts have gone completely off the rails in the last decade.
Meanwhile, the usual Windows advocate and tech industry pundit explanations for Apple’s failure to gain market share in the computer industry (single-source hardware, no cheap low-end products, limited expansion options, etc.) completely fall apart in light of the fact that Apple does virtually the same things “wrong” in the phone and music player markets, and yet is extremely successful there.
So if all of this is true, why can’t Apple seem to get anywhere in the computer market?
A Brief History of the OS Wars
The only serious reading of the last 20 years of industry history, I think, is that Microsoft, by the mid-90s at the latest, had become completely entrenched in the desktop operating systems market. Windows reached a critical mass in terms of unit sales at precisely the right moment in history. Extremely strong value networks built up around the platform. Windows had the most software and peripheral support. Knowledge, both institutional and personal, started accumulating everywhere about how to use it in many different contexts. Before too long, everyone decided to run Windows because everyone else was running Windows.
Because of natural platform lock-in effects (helped along by Microsoft’s deliberate action, but that probably made little difference in the overall scheme of thing), other platforms have never, despite many attempts, been able to quite situate themselves in such a way as to benefit from those existing value networks. They’ve been on the outside ever since, and will continue to be. Windows is the standard.
There isn’t going to be some huge breakthrough for Apple in the desktop operating systems market. Ever. Regardless of what they do. They could license OS X to Dell and HP. They could make a $400 tower with six PCI-E slots and 8 drive bays. It might get them a few more points of market share, maybe — at a huge cost to revenue and profits.
Apple, of course, realizes this. This realization is the single best explanation for why Apple chooses to offer the specific computer models that it does, why Apple will never license OS X, why Apple just generally seems so much more aggressive with the iPod and the iPhone than with the Mac. Their strategy is designed to provide the most useful (and most profitable) products to a minority of the market, because they know they have no real shot at dislodging Microsoft. That door closed at least 15 years ago.
Core vs. Periphery
Now, about this time all of you Windows advocate types are getting really excited. “Ha!” you’re thinking, “We’ve finally got one of these Mac advocates to admit that Microsoft won!”
Well, not so fast. Microsoft is firmly entrenched in the desktop operating systems market, and will not be dislodged. But at the same time… well, look. Despite controlling more than 90% of the desktop computing market, Microsoft still somehow manages to be irrelevant to the future of computing. Microsoft holds the desktop OS market, which is still the center of the computing universe. But all of the innovation happens at the periphery, and Microsoft is like China has been for much of its history: a powerful empire perennially incapable of projecting power beyond its borders.
The companies defining the future of personal computing today, more than any others, are, in fact, Apple and Google. There are two frontiers here so far: the Web, and mobile devices. Apple is leading, with Google closely following, in the mobile device category. Google and Apple are both making heavy investments in the Web as a platform, Apple by pushing Web standards via WebKit and various other things still mostly below the radar (their massive new datacenter, various things they’re doing around client-side JavaScript libraries), and Google through its own WebKit derived platform, through its cloud apps, and soon through ChromeOS.
And then, of course, there’s the rumored tablet. Now, I’m about to head off into some wild speculation here. And it all might turn out to be wrong. I don’t pretend to have any special knowledge about what Apple is planning to do. And it’s possible the tablet is just going to be a media player and e-book reader, and not really all that interesting.
But I’ve watched Apple pretty closely for the entirety of the Jobs II era, and my gut tells me otherwise.
Signs and Portents
We’ve heard rumors — some of which look a fair bit like controlled leaks — that Apple has been working on an advanced vocabulary of multitouch gestures for the tablet. That they’ve been working on a tablet-based version of iWork. That the tablet pre-dated the iPhone — that all of this touch technology was developed for a tablet, and was co-opted for the iPhone because the tablet platform wasn’t ready yet, which means this device has probably been in development for at least five years.
We’ve also heard that iPhone OS updates have been delayed because of resources being pulled to the tablet project. There are some indications that Snow Leopard itself was delayed because of iPhone/tablet related development. And there’s the curious fact that Snow Leopard’s UI is virtually identical to Leopard’s despite the fact that, among other things, Apple completely rewrote the Finder, an obvious opportunity for a big UI overhaul that was passed up. We’ve also heard that Jobs is almost monomaniacally focused on the tablet project.
I think this is it.
I think this is going to be Apple’s attempt to redefine personal computing the way they did with the introduction of the Macintosh.
Leading Indicators
The key early indicator of this will be whether that iWork rumor is true. If this device is debuted with a multitouch version of iWork, it will be obvious that Apple intends to position it as a general purpose computing platform. If it debuts without iWork, it might be less obvious, but not necessarily something that could be immediately ruled out. In truth, it might actually be even more clever for Apple to use the tablet as a sort of trojan horse — present the thing as a media player, try to build a user base that way, and unfold a strategy to slowly turn it into a general purpose computing device over a period of years. We’ve seen with the iPod that Apple is capable of strategic long-term platform building that nobody really sees coming until it’s a done deal.
Mind you, even if Apple does take the direct approach, they’ll probably deny outright that the device is intended as a potential future replacement for a personal computer.
The Rematch
Either way, by creating a device situated outside of the paradigm of existing desktop operating systems, Apple would be doing an end-run around Microsoft’s desktop hegemony. Note that nobody expects the tablet to be positioned as a kind of Mac. This is key; being, say, the “MacTouch” would subject the tablet to the same sort of market share “cap” that the Mac has been subject to. (Though if the tablet took off as a general-purpose computing platform, one assumes it would inevitably have to merge with the Mac.)
While the risks here would be large and success would by no means be a sure thing, the mere attempt would be the most interesting thing to happen to the industry since, perhaps, the rise of the Internet. If successfully executed, such a ploy, which would be the first serious move against Microsoft since the return of Jobs, would give Apple a chance to re-fight the platform battle lost in the ’90s, probably from a much stronger position.
I guess we’ll find out. Though of course the ever-clueless Windows advocates and tech industry pundits — the same people who dismissed the iPhone by working their way down the spec sheet point by point — will deny that Apple is up to anything significant almost regardless of what gets announced.
