Editorial: Google, Microsoft claiming Apple's crown, albeit from 1994

Posted:
in General Discussion edited July 2014
Google and Microsoft have virtually achieved their goal of becoming Apple, albeit twenty years behind today's Apple. Which is sort of a beleaguered achievement.

Macintosh Performa

Reversals of Fortune

Google is riding high, with a peak stock valuation and an army of devoted fans ready to explain why none of the problems the company is facing (including its clumsy transition to mobile) are actually problems. Companies that make money never stop making money, right?

Then there's Microsoft, which has been losing its fans like a data center after a catastrophic power system failure. Ten years ago, Microsoft was 'the Google,' making money so fast and furiously that nobody could imagine its fortunes ever changing. I remember arguing this possibility with the Internet, and being told (even by Apple fans) that I shouldn't say such things if I wanted to retain any credibility. Because change never happens, right?

I didn't predict that Microsoft would completely fail at mobile and be forced to watch Apple beat it in the enterprise. I merely suggested that Apple would survive and retain a growing market of customers, because it had addressed the problems that had earlier forced it into decline and was now executing successfully as a profitable company building products that customers wanted.

There's lots of evidence that Google is now following Microsoft's decline into beleaguerment, and that Microsoft still has a long way to fall before it hits the bottom, with Google right behind it. Essentially, they're wrong, here's why.

This all happened before

Twenty years ago in 1994, Apple Computer was at its most beleaguered. Things would continue to get even worse for the company over the next few years, but at least by that point the company was starting to become aware--at least internally--that there was something tragically wrong that needed to be fixed.



The Old Apple Computer was being surpassed in the graphical desktop computer market it had created a decade earlier. Its lead in developing consumer tech was slipping both in software development (where nimbler companies like Microsoft--that were less concerned about bugs--were becoming far more prolific in generating code) and in hardware manufacturing (where cheap labor at overseas factories was surpassing Apple's ability to build machines in American factories).

Apple had partnered with IBM four years earlier to collaborate on CPUs, multimedia and OS software, but those collaborations (particularly in software) had largely resulted in copying existing work that didn't need to be duplicated, ultimately building tools that nobody would ever actually use.

Despite having launched the Newton Message Pad (and developing the new ARM mobile processor to power it), Apple couldn't figure out how to make significant money from mobile devices, even as the profits from its previous cash cow (the high end desktop Macintosh) began to erode away.

Newton


The Old Apple failed so publicly that even ten years later tech pundits were largely incapable of understanding how Apple could ever possibly bounce back, just about the time that it began turning its fortunes around with iPod. It took nearly another ten years after that for Apple to regain its position in leading technology on a global level, something it had lost leading up to 1994.

Tech Rehab

Back in the beleaguered 1990s, no amount of rosy optimism expressed by fans (including "Windows 95 = Mac 89") was capable of saving the Old Apple from its trajectory. The company couldn't be turned around by mere marketing spin; it needed some serious rehab.

The old Apple had to hit bottom, shake off its operational inefficiencies, refocus on its core competency, escape from a series of toxic relationships, plot a new course and rebuild its identity with customers. And it needed to start down this long turnaround path before its losses exceeded its remaining revenues.

The fact that Apple was able to reinvent itself between 1994 and 2014 is nothing short of miraculous. There are few other companies that could claim anything comparable, while there are long lists of once important tech giants from every decade that failed to similarly turn themselves around once the market began to shift: Atari, Acorn, Commodore, Sony, Palm, BlackBerry and Nokia to name a few. Microsoft is also revealing that a significant portion of what it does is actually farmed out to non-employee vendor and temporary contractors

Microsoft is increasingly looking like a company with serious cracks opening in its facade, and within those cracks you can observe some very rotten stuff that will require very extensive surgery to remove.

One example: in addition to massive layoffs, Microsoft is also revealing that a significant portion of what it does is actually farmed out to non-employee vendor and temporary contractors, resulting in exposure of "Microsoft IP and confidential information."

Apple's calm before the storm

It's important to realize that not too long before many of these tech giants fell, they were apparently doing fine. Just like Google today, like Microsoft a few years ago, like BlackBerry in 2011, like Nokia in 2009 and like Apple two decades ago.

AAPL 1980-1993


In 1993, Apple had been paying dividends for six years and its stock was reaching peak prices over double its original IPO, outperforming even IBM's stock over the same period. It had $5 billion in assets and brought in $2.4 billion in quarterly revenues, which were up significantly over the previous year even though its income was slipping.

Apple had all sorts of technologies planned that it had been working on for years (including Copland and Taligent), in addition to having a crack team of scientists focused on inventing new stuff in its Advanced Technology Group, just like Google's jetpack, robot and self driving car labs today.

It wasn't just vaporware; Apple had already unleashed a series of technical innovations well ahead of the rest of the PC industry, including QuickTime multimedia, HyperCard's model for the web, and advanced social, search and data presentation tools, as well as work in novel programing languages and mobile user interfaces delivered for the Newton.

Hypercard


In 2006, Microsoft had also been making tons of money right up until Windows Vista sputtered into the market, bookended by PlaysForSure and Windows Mobile rolling over like overfed goldfish. Like the Old Apple, Microsoft similarly had lots of people and partnered vendors working on novel concepts and ideas, just not a lot of focused oversight.

After its initial stumbles a decade ago, Microsoft has furiously (albeit ineffectually) spent billions on acquisitions and has realigned its deck chairs multiple times, revealing increasing internal problems that have as much in common with Apple's 1994 as Windows 95 had with 1984.

The biggest difference between today's Microsoft and the Beleaguered Apple Computer of two decades ago is that the Old Apple's cofounder Steve Jobs was both willing and capable of turning it around. Bill Gates doesn't appear to be either of those for Microsoft.

Instead, the company has appointed a Gil Amelio, slashing jobs and spewing verbose but largely meaningless platitudes regarding Microsoft's future strategy.

What about Google's copy of Microsoft?

While Microsoft is clearly facing troubles, a lot of analysts are still making excuses for Google, suggesting that its attempt to copy the "commodity licensing" business model of Microsoft, albeit without collecting any licensing revenue, it still a genius move because (just you wait and see).

Never mind that advertising on mobile is not working out like advertising on the desktop PC browser. Google's ad profitability is dropping with each quarter, something that analysts like to excuse because "mobile ads work differently." But a larger problem is that while the PC desktop is plateauing, Google's control over the Android mobile platform is itself slipping.














While analysts are extremely concerned about Apple's share of mobile growth, and in particular its growth in China, they are only making excuses about Google's mobile performance and completely ignoring the fact that China has built its own version of Google services.

It's only newsworthy when a Chinese company makes an off brand iPhone (that gains marketshare largely at the expense of Samsung, not Apple). When China makes off brand Google internet services that completely shut down Google's ability to make significant inroads into the vast Chinese market, well, Google didn't need China anyways!For 2013, Apple collected $171 billion (mostly from mobile) versus Google's $55.5 billion (mostly not from mobile).

Instead, analysts like to talk about copies of Google's work forked by Amazon and Chinese manufacturers as if they benefit "Android," as if Android is a religion rather than a commercial enterprise, and Google is its supernatural deity rather than a more mundane sort of creator that actually has to pay for its ongoing development.

Imagine if Apple 1994 had been valued based on the widespread proliferation of some form the "Mac desktop," even though the company wasn't making any licensing revenue from Microsoft Windows. Perhaps Apple stock wouldn't have tanked.

Or imagine if Apple today were accounted "market share" based on the ubiquitous use of WebKit, which Apple makes no licensing revenue from, rather than the sale of Apple's actual products, from which it makes more money than Google. For 2013, Apple collected $171 billion (mostly from mobile) versus Google's $55.5 billion (mostly not from mobile). Android is winning?

A tale of two Apple+IBMs

Today's Apple provides a model of tech competency, with product and user interface designs that define fashion and inspire copying; with rapid, focused software development that even companies like Volkswagen want to emulate; with retail store operations that everyone from Microsoft to Samsung copy as closely as possible and with software app markets that Amazon, Google and Microsoft have all worked to duplicate.

Twenty years ago, however, Apple was building a very different legacy. And today, Google and Microsoft are copying all the things Apple got wrong way back then.



Apple's original partnership with IBM--rather than being a simple sales and support agreement with "little overlap" like the one just announced--was a broadly ambitious plan that gave away Apple's own technical crown jewels (particularly multimedia) while mingling divergent corporate cultures and strategies, creating internal political fights over whose microkernel to use, who was in charge of the future user interface and even the underlying design of tomorrow's hardware (PReP vs CHRP).

Sound familiar? That's exactly the same kinds of problems Google is experiencing in its partnership with Samsung today, which represents the majority of Android sales and virtually all of its profits.Today, both Google and Microsoft are facing a new sort of commodity: their OSs. Both companies are now offering their software for free to any tablet makers who will use it.

Issues of which version of Android (or Tizen or maybe Chrome OS) is used and promoted, who gets to choose the UI and who benefits from it, whose apps and services get credited and actually installed have resulted in Samsung shipping mobile devices with multiple web browsers and multiple book, app and media stores while Google ships Samsung-built phones that don't even get Android updates over the buyer's two year contract. It's a mess.

Microsoft long dealt with similar issues, but it earned licensing revenues from its Windows partnerships and enforced strict rules over who could use its software. Today, both Google and Microsoft are facing a new sort of commodity: their OSs. Both companies are now offering their software for free to any tablet makers who will use it, while Apple is earning record revenues selling iPad as a finished product.

As a result, one of the leading enterprise cloud and services companies picked Apple as its mobile platform partner, not Microsoft and not Google. That's a profound reversal of fortune.

Learning vertical integration lessons from the Old Apple

Microsoft had enough competency left to have recognized (following the failure of PlaysForSure, Windows Mobile/Windows Phone, and Windows RT at the feet of iPod, iPhone and iPad) that it needed to stop what it was doing and instead begin copying Apple's finished product business model.

It found this to be far more difficult that it imagined. The Zune, KIN and Surface have all failed spectacularly for Microsoft.

Surface


Google has similarly tried in vain to copy Apple's vertical business, spending billions to acquire Motorola while accomplishing nothing but bleeding additional billions in hardware losses, then turning around to pay additional billions for Nest. Google hasn't even been moderately successful at rebranding its partners' products as Nexus devices, which were aimed at 'fixing" the user interface and bloatware bundling mistakes that Android licensees were making.

Google's Nexus strategy has worked out about as well as Apple's 1994 Mac cloning program: let us do all the design and support work but earn no money for it while eroding any ability to sell our own hardware at a profit. Genius!

Google's Android rehash of Copland, Taligent & Performa

In parallel, to cover up Android's software development failures Google keeps inventing new versions of Android that "finally solve" its laggy performance and security flaws, over and over again.

Google says Android L's ART will "finally solve" lag, but that's also what it said of 2012's Android 4.1 Project Butter, which "finally solved" lag issues that Android fans had earlier announced were "finally solved" by Android 4.0's hardware accelerated UI "just like iPhone" back in 2011. Before that, everyone was loath to even admit Android lag existed.In parallel, to cover up Android's software development failures Google keeps inventing new versions of Android that "finally solve" its laggy performance and security flaws, over and over again.

The Old Apple similarly kept repeatedly patching the outdated design of the original Mac System Software by announcing convoluted ways to shoehorn "modern operating system" features into the Mac throughout the beleaguered 1990s (via Copland), rather than starting over with a real Unix foundation as NeXT had back in 1988. At the same time, Apple's parallel Taligent collaboration with IBM struggled to copy what NeXT had already done.

The problem for Google's Android today is that, like Microsoft, it can't just acquire Jobs' modern operating system because Apple already did. And its own Copland-esque attempts to fix Android are too little, too late.

They're also increasingly focused on low end mobile devices, not profitable hardware. Google should ask the Old Apple about how well that strategy worked out for 1992-1997 low end Mac Performas.
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Comments

  • Reply 1 of 130
    MacProMacPro Posts: 18,367member
    I can sum this editorial up in one word. Brilliant!

    It's going to fun to sit back and watch this all play out.
  • Reply 2 of 130
    jackansijackansi Posts: 116member

    Don't forget to sell your Google stock first (if you had any).

  • Reply 3 of 130
    joergsijoergsi Posts: 17member
    It's Volkswagen not Volkswagon (if you are talking about the car company), sorry!
  • Reply 4 of 130
    On reading the headline, I was extremely skeptical of the article (Google is like 90s Apple? Surely not). I am still not convinced, but DED makes some really good points.

    The massive issue for Google is that its entire operations are bankrolled by web ads. These can be vulnerable to several fronts:
    1) Monopoly accusations like those faced by MS.
    2) Increased regulations preventing them from capturing as much user data.
    3) Customers shifting to no -Google search due to privacy concerns (DuckDuckGo) or because browsers replacing Google search with alternates.
    4) A new revolutionary competitor who slowly erodes Google's lead
    5) Apple and MS eliminating the need for Google searches through better and more prevalent apps.

    While I don't think any of these are likely, the point is that Google as a business has a Death Star like single point of failure. One which may be attacked by the natural and ongoing desktop to mobile transition even if none of the revolutionary scenarios above come into play.

    That being said, Larry Page is a smart guy and I am sure aware of this issue. Google must be actively involved in fighting this off.
  • Reply 5 of 130

    Nice work DED. I do hope the lessons Apple learnt back in the 90's stay learnt and don't resurface. Only time will tell.

  • Reply 6 of 130

    There's an incredibly funny error I'm not to sure if you didn't add it intentionally.

     

    "Instead, the company [Microsoft] has appointed a Gil Amelio, slashing jobs and spewing verbose but largely meaningless platitudes regarding Microsoft's future strategy."

     

    You meant Satya Nadella lol.

     

    EDIT: I misread. You said a Gil Amelio...

  • Reply 7 of 130
    Thanks for this. Finally someone who has been paying attention all this time...

    It's almost funny to hear people talk about "driverless cars" and Google "innovation," while not looking at the elephant standing on the desk: their core business is going up in smoke. When they lost multiple billions on the Motorola deal, the stock went up!

    Yes, the loss of Steve Jobs was a loss for Apple, but brother Steve was present for all the transitions that required him - from computer maker to computing appliance maker; from OS9 to OSX/NeXT; from Motorola chips to Intel chips - all delivered virtually seamlessly to an existing, active and profoundly exacting user base.

    The history of having nearly lost it also taught Apple important lessons not mentioned above: don't trust or operate your business with Wall Street in mind; hold on to your cash assets so you can protect yourself and control the supply chain; be sure that your product design, manufacture and delivery is perfect before release, and only release a product when it is ready and not in response to the financial press need to see "innovation" from the company.

    I don't think that Google will go the way of the dodo, but it's entertaining as an observer to watch the frothy stock value top out.
  • Reply 8 of 130

    I understand your point of view, or rather you're "opinion" you have about these 3 big tech companies, so I see the team your rooting for, very clearly. Next time, do a bit more research on the other 2 companies before writing a piece like this. For example, you state

    "As a result, one of the leading enterprise cloud and services companies picked Apple as its mobile platform partner, not Microsoft and not Google. That's a profound reversal of fortune." Ok, IBM did not pick Apple, they both went into a partnership because IBM desperately needs a mobile platform to start writing apps for their enterprise customers, as does Apple needs/wants to have more market share in the enterprise too. Why would IBM "pick," as you stated, Microsoft as a partner, they directly compete with Microsoft.

     

    I really like this one as well, you state in regards to Google and Microsoft giving away their OS - "The biggest difference between today's Microsoft and the Beleaguered Apple Computer of two decades ago is that the Old Apple's cofounder Steve Jobs was both willing and capable of turning it around. Bill Gates doesn't appear to be either of those for Microsoft.

     Instead, the company has appointed a Gil Amelio, slashing jobs and spewing verbose but largely meaningless platitudes regarding Microsoft's future strategy." Really? Bill Gates has not been the CEO of that company for many many years, so you claim Gates is the only hope for Microsoft, that is if he is willing and capable. That's what I call Brilliant.

  • Reply 9 of 130
    gilly33gilly33 Posts: 280member
    I'm not as historically deft as the other commentators, all I have to say is well done. Greet article, that looks at the realities as they exist for Google and MS. I'm sure you may get some haters but IMO you are spot on.
  • Reply 10 of 130
    dunksdunks Posts: 1,243member
    Quote:

    Originally Posted by AppleInsider View Post



    Instead, analysts like to talk about copies of Google's work forked by Amazon and Chinese manufacturers as if they benefit "Android," as if Android is a religion rather than a commercial enterprise, and Google is its supernatural deity rather than a more mundane sort of creator that actually has to pay for its ongoing development.

     

     

    #Amazing

  • Reply 11 of 130
    rezwitsrezwits Posts: 625member
    Globalization for the best OS is the only thing left to do. UNIX please geez!!

    What's crazy is I would have said Linux would have been ok to go with, maybe back in the early 2000s, but Linux never got any money from anyone, really, and no development support to let the linux core bloom with Apps and whatever else people would enjoy. I mean honestly it's not to late for someone to try and hire Linus (if even possible) to head a complete revamp of someones company, Google? Microsoft? who knows, but it might be too late.

    But yeah windows just keeps piling on top of their os and re-using and scrapping etc...

    agree with digitalclips "It's going to fun to sit back and watch this all play out."
  • Reply 12 of 130
    sblifesblife Posts: 11member
    This is an excellent article. It's one of the reasons I always check in with Apple insider. You guys are doing a great job and your insight is always appreciated.
  • Reply 13 of 130
    gtrgtr Posts: 3,231member
    What this article totally fails to take into consideration is that pretty much all of the positive things that are happening to Apple, not to mention the negatives things that are happening to Microsoft, Google, and everybody else, will be utterly negated in the near future - when Microsoft brings back the Start Button!
  • Reply 14 of 130
    I am such a fan of Daniel's articles. Always a very interesting, unique and insightful angle, well documented, and written in an inimitable style. Well done, sir, well done. There is a book contract in your very near future.
  • Reply 15 of 130
    I can sum this editorial up in one word. Brilliant!

    It's going to fun to sit back and watch this all play out.

    Meh, I've been adding these editorials to my reading list so I can jump back to them when I want. Looking at some from a couple of years ago, they're junk tabloid reading meant to be near some type of bowl. In his defense, he did get me to read it. Which is what counts to the writer.

    Congrats on owning a Jeep. I have the new TrailHawk myself. Amazing vehicles!
  • Reply 16 of 130
    benzeene wrote: »
    Thanks for this. Finally someone who has been paying attention all this time...

    It's almost funny to hear people talk about "driverless cars" and Google "innovation,".

    Yea, that's absolutely ludicrous!

    My Jeep parks itself, hits the break if it thinks I'm going to collide with something, will not leave the lane of travel if I'm moving over 38 miles per hour... I could go on, but you're just so damn right!



    It's not perfect, but it does seem to always work for people with common sense. Also, if you watch the video, keep in mind that when she tried to back into a car she said "it's not going!"

    I'm not an extreme tester, but if you even slightly line your self up with a spot and hit "park" it's a two second thing. It's been flawless for me for a few months now.
  • Reply 17 of 130
    correctionscorrections Posts: 1,386member
    Meh, I've been adding these editorials to my reading list so I can jump back to them when I want. Looking at some from a couple of years ago, they're junk tabloid reading meant to be near some type of bowl. In his defense, he did get me to read it. Which is what counts to the writer.

    The first editorial to appear on AI was last March. So no, you could not possibly look back on "some from a couple of years ago."

    Busted.
  • Reply 18 of 130
    The first editorial to appear on AI was last March. So no, you could not possibly look back on "some from a couple of years ago."

    Busted.

    Oh go on, why is everything so freaking literal here. You, yes I know you are the writer and I read your article. I would think it's an honor that even one person added them to their reading list. I know your always half wrong and half right. So what? Should I post my reading list? You wouldn't like it. There's a lot of the competition's stuff on there.

    Edit: yea, I've gotten your original site and this one confused. My mistake. Still bowl reading.
  • Reply 19 of 130
    prokipprokip Posts: 150member
    Quote:

    Originally Posted by Silver Shadow View Post





    Meh, I've been adding these editorials to my reading list so I can jump back to them when I want. Looking at some from a couple of years ago, they're junk tabloid reading meant to be near some type of bowl. In his defense, he did get me to read it. Which is what counts to the writer.



    Congrats on owning a Jeep. I have the new TrailHawk myself. Amazing vehicles!

     

    So sad, silly fellow Mr Sliver Shadowe, whoever you are (misspelling intended).

     

    I have been around since DOS v1.0 and Windows 1.0 (does anyone actually remember what that looked like ?  I do and have a copy somewhere still.)  I was never an adopter of early Apple kit however defined but was aware of their offerings from Apple II days.  I have run as well as CEO'd businesses running everything from Unix, Linux, DOS, Widows and Apple OSs and applications.  I have also been an avid reader of the commentators for all those many years.

     

    Without giving DED too much of a big head  (it's probably big enough already !), young Daniel, for relatively young he still is, is one of the best informed and technology literate commentators out there.  I have been able to fault some odd bits of stuff Daniel has written, but not often - and who could say that I was right anyway.

     

    But more importantly DED is responsible for one of my most favourite technology quotes of all time (please feel free to interchange "Microsoft" and "Google" below):

     

    "Microsoft isn’t bad because it is closed; it is bad because it is disgustingly greedy. Windows Enthusiasts need to stop deluding themselves into thinking that they live in a free world of an open platform. They are slaves, and their master is not only vicious, but also incompetent and has no taste."  DED, Roughly Drafted Magazine Sept 11, 2007.

    DED, keep going sir, you are well worth the read most times you put pen to paper and hey, I have made some real money from your insights and advice. 

  • Reply 20 of 130
    imatimat Posts: 167member

    Morevoer:

     

    advertisement is shifting into the social network space, of which Google, despite all efforts, is not a player.

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