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Editorial

The myth of Apple's impossibly difficult (yet super easy) hardware business

Every time Apple has entered a new market segment, the wailing sirens of punditry have scrambled to scream out their logic of how impossible it will be for the company to ever get established, to meaningfully change the rules, and to succeed commercially. And at the same time, those same critics frequently throw out the idea that Apple doesn't even have to try to succeed in hardware, because its audience of raving fans will blindly buy any overpriced, underperforming thing the company releases. In both cases, they're wrong, here's why.

HomePod

HomePod is supposed to be impossible for Apple to sell, just like everything else Apple ever sold


We've seen two decades of this cognitive dissonance posing as analysis with iPod, iPhone, MacBook Air, iPad, Apple Watch and now HomePod. At first, there was supposed to be no way Apple could be successful or even compete in any of these markets. Then, in hindsight, Apple's performance is portrayed as a fait accompli, the result of the company's effortless ability to shovel anything into the market, douse it with marketing, and ignite a bonfire of vanity that attracts simpleton fans who don't know any better.

Apple's hardware business is portrayed as so effortless that the company doesn't even deserve any credit for its success. The obvious corollary to this bizarre flawgic is that rival companies can also just throw out new ideas that will obviously be accepted and embraced by consumers the same way Apple's are, because hardware is easy.

And even more bizarrely, when rival attempts to launch hardware fail (think: Zune, Windows Phone, Android Tablets, Chromebooks, Nexus, Surface, Pixel, Galaxy Watch, Android Wear, etc), the people who fervently believed in them while there was some hope they might take off suddenly spin around and explain that none of these product attempts were really important or should even be considered failures because they were just practice rounds or corporate pantomime exercises designed to signal to licensees how they could best copy Apple on their own, as if they weren't already.

Another logical leap that always comes up short: if Apple's marketing were the main thing driving its sales, why haven't Google and Microsoft been able to sell their brands in commercially significant volumes, given Microsoft's billions devoted to marketing and Google's supposed genius in targeting and reaching buyers with effective advertising messages?

Surface

Microsoft spent billions dancing, and like nobody was watching


Apple and the long hardware struggle



Apple has always ostensibly focused on hardware, where it makes the vast majority of its revenues. Despite an insistent media narrative that all the company does is throw overpriced hardware at an audience of raving fanatics who will buy anything, and/or fools the world with its clever advertising, the reality is that Apple hasn't always been magically successful in introducing new hardware.

After its first two decades focused mainly on desktop computers, Apple expanded into the business of printers, digital cameras, monitors, CD-ROM and PDA devices in the 1990s, all of which failed to establish significant new markets for growth. This all wasn't just due to the departure of Steve Jobs and his magical insight back in 1986; Jobs' own NeXT Computer also failed to succeed commercially in hardware sales.

The fact that Apple and NeXT hardware were both struggling into the 1990s while Microsoft's software was ascending into near total control of personal computing set the stage for a persistent mindset that hardware simply wasn't going to ever make money. The new gospel was that hardware would be nothing more than a commodity product running Windows, or perhaps someday Linux, and that niche OS hardware would never again matter commercially.

In 1994, Apple itself attempted to begin licensing its Mac OS (and later its Newton operating system) to third party hardware makers. The previous year, Jobs had similarly decided to shift NeXT from its original hardware focus to a pure software licensing business. Both efforts failed to work out well.

Somewhat surprisingly (at least to people at the time, who were saturated in the mindset of commodity hardware), when Jobs returned to Apple at the end of 1996 he terminated all of those software licensing deals and returned Apple to a hardware focus, starting with new PowerBooks in 1997 and then the new iMac in 1998.

iMac

Steve Jobs challenged the notion that hardware was a commodity with iMac in 1998


In the 2000s, Apple found incredible success with iPod, then iPhone. But it also failed to find significant interest in some of its other new hardware introductions, including Xserve, Xserve RAID and the Mac mini. All of these products were enthusiastically introduced by Jobs and were expertly marketed, updated and enhanced at regular intervals.

Clearly, the idea that Apple always succeeds without even trying because of its indiscriminate, marketing-fooled fans is total hogwash. There's obviously something else that has fueled Apple's hits, something that was missing in its strikeouts. This factor is also evident in the product introductions by other companies.

Apple's secret Services sauce sells systems.