What’s really wrong with Apple?

Despite the huge tumble Apple has taken on their share price, the reality is they are doing well on most measures that count, and exceptionally on some. Take for instance the way they have pushed Samsung to second place in the US cell phone market in the last quarter of 2012. Samsung has a vast range of phones including some very cheap entry level models, whereas Apple only has premium models. This is like Mercedes-Benz pushing Toyota or VW into second place.

Here’s a much bigger story of decline.

Dell is buying back its shares and going private, while pretty much scaling back on manufacturing.

Anyone following this story will no doubt have seen numerous reminders of Michael Dell’s advice to Steve Jobs: close Apple and give the money back to the shareholders (repeated in the article I point to above). Apple right now could buy Dell for cash and still have $100-billion left in the bank. For now it seems that Apple had the right business model all along, it was just poorly executed until the Jobs revival.

Next year, we could have a different theory of the universe.

My view: Apple does some things right, other things wrong. They could still have a major stumble if one of the competition gets a major thing Apple is missing right, whereas they are all trying to do better than Apple at the minor things and missing the big picture.

Next year, we could have a different theory of the universe.

Microsoft Surface: a precision-engineered kick stand, I ask you: what major problem does that solve? Microsoft has designed a laptop you can’t use on your lap and is selling it as a better kind of tablet.

Many of the arguments about what Apple is missing revolve around minutiae, like the absence of this or that port, or this or that hardware or software feature deemed so essential that the Apple product will surely fail if one of the competition remedies the defect. One of the competition remedies the defect, and sinks without trace. How often have we been told some Apple product would be a success if only it had a USB port, could use SD flash cards, or could receive FM radio? Products like Zune that supposedly met one or more of these needs litter the trash heap (or, better, the recycling bin).

If any competitor is to get serious traction, they need to focus on finding something major that Apple is missing or getting wrong – and finding a product or niche is not enough. You need also to find a fundamental flaw in their business model that stops them taking on your new idea.

All these other things excite geeks, not people who just want something that works and don’t care about technology.

Of course Apple did get things badly wrong in the past. In the late 1990s, they almost went broke.

The original Mac OS did not have a proper kernel, so it did not implement memory protection or true multitasking, meaning one program could take over the machine if it went awry, destroying data of other programs or requiring a hard reboot to get the machine back under control. In the late 1980s, I told someone from Apple that they already had a solution. At the time, Apple had a version of UNIX, called A/UX, that included a way of running Mac apps in a compatibility layer called Blue Box. I proposed that they give up on their own operating system project that eventually became the disastrous Copland project, and create a new Mac-like interface on top of UNIX, with Blue Box for old apps. No, they said. UNIX was way too heavyweight for ordinary users. At the time, A/UX only ran on the top of the line Mac II (with a wicked fast 16MHz Motorola 68020). I tried to explain that they didn’t need all of UNIX, just the kernel, and the application layer could be a version of the existing Mac application layer, but they insisted it wasn’t possible. Nearly 10 years later, Apple bought NeXT, and the resulting new Mac OS, called Mac OS X, was pretty much what I proposed. You may argue that the entry level Macs of the day didn’t have hardware to support a proper operating system with memory protection, but that’s very short-sighted. By 1991, System 7 was launched with virtual memory support, requiring a hardware memory manager (though still without protection, since that would have required a major rewrite of many applications that relied on accessing a single common memory).

Where Apple went wrong in this whole exercise was taking focus off their key strengths: usability and clean integration between multiple hardware and software components. Design of an operating system kernel is secondary to this focus. Once they reverted to their traditional strengths, they recovered fairly quickly (in the process also addressing another of my criticisms, a complex product range no one could understand).

Apple went badly wrong because they took their eye off the ball, and wasted huge amounts of money on something that no one but a geek or hard-core computer scientist would care about, a highly innovative operating system kernel.

So if anyone is to seriously dent Apple’s dominance of their key markets, what it will take is a clear understanding of the important things Apple does well and the important things they do badly. Identify the latter, and address them, and you’re in with a chance.

What options are there? Here’s a few hints. Apple’s serious weaknesses are not in areas like ports, memory expansion or kickstands. So what are they then?

I do think Apple has some serious weak points, and I’ve been right on these things in the past. So what do I think Apple’s real problem is (or will be if someone sees it and exploits it)?

Sorry, I’m tired of giving my ideas away for free. If you have a serious amount of money to invest, let me know.