Where Apple fails

So Apple's turning 30--CNET News.com's Michael Kanellos wants to know what the big deal is about.

Michael Kanellos Staff Writer, CNET News.com
Michael Kanellos is editor at large at CNET News.com, where he covers hardware, research and development, start-ups and the tech industry overseas.
Michael Kanellos
4 min read
If Apple Computer is so great, how come it's so small?

With all the hoopla surrounding the company--and you'll hear a lot this week as Apple turns 30--you'd think it pulled off the first manned spaceflight to Neptune or invented long division. Instead, the company's recent accomplishments include making it possible to buy Foghat singles on the Web and selling a leather pouch for music players for $99.

Apple held 2.3 percent of the world's computer market at the end of last year. If you compare that to global population figures, Apple is roughly the Philippines, Ghana and Spain combined.

Apple shipped 4.74 million Macs in calendar year 2005. That's 20 percent lower than the growth in shipments (5.7 million) Dell experienced in the same year. Dell, in other words, grows an Apple and a fifth a year--and investors worry about Dell losing its edge?

CNET News.com editor at large Michael Kanellos offers a contrarian spin on the import of Apple's 30th anniversary during Friday's daily podcast.
Listen now:

More podcasts at http://podcast.news.com/

In relative terms, Apple continues shrinking. Back in 1990, Apple was the largest PC maker in the world, with 10 percent of the market. In the third quarter of 1997, the company had 7 percent. During one of its most rocky periods--when it fired CEO Gil Amelio--market share had only dipped to 2.8 percent. Put another way, the company's PC group is about a third the size it was when CEO Steve Jobs returned.

Apple is growing faster than the PC market overall, but so are Acer, which is larger, and Gateway, which is No. 3 compared to Apple's No. 4 spot in the States.

Size, of course, isn't everything. Unlike some other PC makers, Apple turns a profit and has successfully branched out into other markets with the iPod. The company has a strong influence on PC designs and home technology, according to, among others, Intel Vice President Deborah Conrad.

At scientific conferences, I see a greater percentage of attendees toting Macs than at other events, so clearly the intelligentsia has tuned in. Plus, people love the company and its products. My brother-in-law and sister-in-law rave about their days at Apple, and they got laid off a cumulative total of three times--once by Steve himself.

But the company could accomplish all that and still sell a lot more computers. So why doesn't it?

The reason, I think, comes down to the fact that Apple is a company that's always been more concerned about having good ideas than good friends. In a way, it's a decision many face: Do you want to get by on brilliance or an ability to get along with others?

Ideas are great--civilization couldn't progress without them--but they can be difficult to live with. It's not a coincidence that Voltaire spent a lot of years in exile. The same thing happens in politics: Cerebral candidates often grab an early lead, but the electorate invariably gravitates toward people like Clinton or Reagan, more known for their personal charm.

When you look at the history of Apple, you can't really say it plays well with others. It had a licensing program, but when clones began to cut into its market, it killed the program. Back in the '90s, I interviewed several resellers who were bitter about how Apple had eliminated their authorization to sell Macs into the education market. Many retaliated by de-emphasizing Apple in other accounts. Component makers and retailers still regularly grouse about the company.

Microsoft and Intel don't behave that way. If one of them hears a rumor that a customer may defect, sales execs are practically drop-shipped the next day.

In the consumer world, of course, there's that $300 price delta on the company's computers. According to the Apple view of the world, consumers should pay for advanced technology. If your LCD screen has a viewing angle of 170 degrees and more nits of brightness, you should pay for it. Most other companies take a different tack: This is America. People are cheap. Give them a free printer.

There's also another problem with ideas: No matter how brilliant you are, not all of your ideas will be good. Apple has popped a few doozies in its day. The inventors of lithium ion batteries once gave Apple the opportunity to buy the technology, according to VLSI CEO Dan Hutcheson.

"(Then-CEO John) Sculley's office passed it down to the Chief Technical Officer, who brushed it aside, saying battery technology was not important in electronics. Apple could have owned the portable electronics market," Hutcheson wrote in a recent newsletter.

Apple also passed on America Online to create the now defunct e-World. Newton and Pippin (a fumbled entertainment console for TVs) were ahead of their times--and not very good technologically.

The cube PC, the iBook with a handle, the flower power iMac, the Shuffle cut down in the prime of its life. Not everything that comes out of Cupertino results in a hit.

Then again, the company remains highly entertaining. Who ever debates the cultural impact of Fujitsu-Siemens?