Apple, Inc

Apple

In the late 1990s, I bought some Apple stock. I only had about $100 to put in the market, and I thought it would be fun. Apple was cheap, under $20 per share. A couple of years later, I pulled my money out, since I didn't know what I was doing, and I hadn't mad or lost much. If I recall correctly, it was trading at about $14 per share. This was all prior to the return of Steve Jobs.

Apple is now projected by some analysts to rise to nearly thirty times that amount. In the past two years alone, Apple's share price has about tripled, and the company is now the second largest firm by valuation, just behind ExxonMobil. Being an MBA student with extensive experience with Apple, I'm long overdue for comment.

I've worked in IT my entire professional life, and much of my career has been focused on supporting Apple products. I've never considered myself a fangirl, but I am often labeled as such, because like any minority, I get defined by what makes me different. In the corporate IT world, my expertise in Apple products is second, right behind the fact that I'm female - and I'm not sure even that distinction will continue to rank first in the future.

Much of my expertise was acquired informally. Like many Apple specialists, I was more of a user of their products than a supporter for many years. I wrote and directed short films. I edited videos using analog and digital tools connected to Apple products. I designed web pages and print graphics using Apple computers. It wasn't until the last recession that I began to value the technical skills I had acquired, and focused on an IT career instead of a creative one.

In the business world, I've interacted with Apple directly and indirectly in a number of ways. I've worked for Apple Authorized Service Providers. I've worked for schools. In my current position, I'm responsible for the corporate support relationship with Apple at a Fortune 500 company. I can tell you that at all levels, in all periods of Apple's history, they have been a bickle fitch to deal with.

For a company known for consumer-friendly products, Apple is remarkably difficult to deal with as a business. They don't share information, even with their own employees. They do not comment on issues until forced to. They will suddenly announce a product going end of life with no replacement, and certainly no interaction with their customers. While they've gotten better at being communicative and considerate of their customers as they've grown, they're still not very forthcoming.

For example, let's say you're an enterprise IT shop. Part of your role is to define how computers are configured, and define which hardware models are supported in your enterprise. There are dozens of systems that your standards must work with, so it behooves the company to have a team that tests new products for compatibility with those standards. Normally, a company such as Dell or HP will allow you to test new hardware before it is released for purchase. Not so with Apple. They won't even tell you when they'll be updating a given model, or how different it will be from the current model. You find out at the same time that your employees are running out to buy whatever was just released.

An example of how not to engage your stakeholders in ending a product comes from Apple's recent announcement that they were going to discontinue the Xserve, their server hardware product. I understand that it was not a big seller and did not fit into the company's strategy, but I also just spent a year upgrading twelve Xserves and implementing a service that only runs on the Server edition of Apple's operating system. Apple's suggested replacement hardware is a joke in the data center world - either huge towers or tiny portables, neither of which have enterprise-ready features that only the Xserve provided. The only good thins I cane say is that at least we had two months to purchase replacements.

A lot of Apple's success has been attributed to supply-chain management. Under COO Tim Cook, Apple has co-located with many of its overseas suppliers and keeps tight control on inventory. This in turn results in a better customer service experience - replacing defective products doesn't cost much more than creating new products. This is great for consumers, but it doesn't do enterprise or small business much good.

Large or small, business needs stability. Businesses need the platforms they rely on to work consistently, year on year, without significant changes. Apple changes their operating system significantly every two years, or sooner. In my current company, new versions of their web browser were incompatible with existing databases. We had to prevent people from buying new computers for nine months because the operating system that shipped with those machines was not compatible with software used by half of our Macintosh users. I don't expect Apple to cater to my needs, but I do expect a heads up, and a workaround until we get a proper solution sorted.

As a vendor, Apple tries to leverage third parties to support their products. They do not have their own consultants; instead, consulting contracts are fulfilled by authorized third parties. When it comes to resourcing repairs of Apple products, they direct you to either 1) the Apple store or 2) direct dispatch of a local AASP to come in with a box or two of parts.

Apple computers used to get thought of as toys. While that's still the perception among the older crowd, most of the engineers I work with these days appreciate Apple's OS X as an operating system. There's even a little jealousy of the hardware I have at my desk (a 27-inch iMac, a 21.5-inch iMac, two Mac Pros, and a drawer full of laptops). As frustrated as I get with some of the undocumented shortcomings of OS X, they will speak casually of the shortcomings of Windows.

Apple's biggest obstacle to dominating the enterprise isn't their product, it's their practice. to be fair, that's a legitimate choice - selling thousands of premium goods to consumers, rather than tens of thousands of commodity goods and services to business. It is clearly a strategy that works for their bottom line. I say all of this in part to counter the notion that Apple does not dominate because it is an inferior product - it isn't - but also to counter the idea that it is a great product that Big Bad Corporate IT hates.

Corporate IT loves Apple's products. We just wish they made it easier to support.

The Road Ahead

I acknowledge that I am copying the title of Bill Gates' book from about ten years ago. I'm halfway through my degree, and considering my own road ahead. Since it's the start of a new calendar year, I'm going to make some wild guesses about the future of two firms I work with quite a bit, Apple and Microsoft.

Both are hardware companies. Microsoft may not manufacture computers, but they do make the Xbox and Zune, as well as a handful of peripherals. Both companies make operating systems, and both companies make application software.

Apple is run like a startup. Steve Jobs is entrepreneurial; after he was ousted from Apple in the 80s, he went on to start NeXT and run Pixar. Microsoft is turning into a growth company; they have their hands in many pies, and have a stable of goods and services that, for the forseeable future, provide steady revenue and growth.

Apple has a reputation as a warm and fuzzy company, while Microsoft has a reputation as an 'evil' company, based largely on their business practices in the 90s. Apple is not your friend; I say this having interacted with the company over many years in my career. They do not share information, they provide limited options to the enterprise space (and education, as well, educators just don't realize that). The company has had its share of failures, and they take their time to acknowledge and resolve them. This doesn't make them worse than Microsoft, or any other company, for that matter.It just means that they are a large corporation, and the notion that they are somehow nicer or cooler or better than other firms is laughable. They are very good at what they do; that is as far as it goes.

Microsoft has made some missteps. They had a huge manufacturing error with the Xbox, resulting in a $1BN charge to pay for defective units. That alone should knock out any profit they might have obtained from the Xbox, yet it is worthwhile to them to stay in the game console space - a space Apple has avoided. Their ties to Netflix, Facebook, LastFM, and licensed products sold via Xbox Live represent a multi-threaded approach to generating revenue from services. The Xbox is the razor; Xbox Live and various games are the blades. I would argue that the Xbox and Xbox Live are Microsoft's iPod and iTunes Store.

So where are these two firms headed in the near future? Everyone is certain Apple will be coming out with a tablet or netbook soon. Apple is known as a media company, and with the iTunes Store, they are establishing a strong presence as an e-tailer. Microsoft seems to be repairing its image and trying to stay warm and fuzzy in the consumer space; this is a departure from their previous attempts to become integrated with new services, ala operating systems for cable boxes. I'm not sure this is the best bet, unless they really have got all of the market they are going to get in their original markets, or are willing to cede it to other operating systems.