How Apple Inc. managed to upstage the tech industry at CES for fifteen years
Within three years of Steve Jobs' return to Apple in 1996, he transformed the then-struggling company into an innovation machine capable of consistently stealing attention from the rest of the industry. This year's Consumer Electronics Show in Las Vegas suffered at least its fifteenth year of being upstaged by Apple.
A decade and a half ago, the old Apple Computer was barely taken seriously by much of the industry, but today Apple Inc. is by far the most profitable and most powerful company in technology, globally. It's also establishing industry trends (such as with CarPlay and Continuity) for others to follow and advancing leading technologies in key areas (including Touch ID and 64-bit ARMv8) that its rivals can't seem to copy.
Conversely, in areas where Apple has been beaten to market by rivals (in many cases by multiple years, such as with 4G LTE, large screen phones, mini tablets and NFC payments), it has immediately crushed its competitors once it did catch up, stealing away the lion's share of potential profits in each arena.
Apple's ability to consistently overshadow everyone else at CES over the past 15 years offers clear insight into how the company's transformation occurred, but also offers advice to struggling, smaller rivals; highlights the problems inherent in broadly licensed platforms (like Windows and Android) and provides some clues of how the consumer electronics industry will play out into the future.
Conveniently, Apple's 15 years of overshadowing CES begins with a decade of the company's successfully stealing the show from Microsoft, followed by the most recent five years of whipping Google and its Android partners (particularly Samsung), which have collectively inherited Microsoft's role at CES. (If you're not a fan of history, you can skip ahead to read about 2010-2015).
2000-2004: Five years of Microsoft's decline and the rise of OS X
Over the first ten years of the new millennium, Apple grew to fame within an industry largely beholden to Microsoft. Bill Gates began the decade presiding over the most powerful firm— by far— in consumer technology. However, in just ten years the two companies experienced a dramatic reversal of fortune, where Apple actually surpassed Microsoft in revenues.
Gates opened CES each year with an evolving set of promises and predictions centered around how the world's manufacturers would implement Microsoft's ideas.
In hindsight, Gates' vision for Microsoft— and CES in general— was consistently a delusional failure. At the time, Apple didn't have hundreds of companies telling journalists that they were working to deliver Apple's vision, so Microsoft's version of events was originally the only one that the mainstream tech media recited.
Apple actually developed working, finished ideas and was able to ship them.
That incrementally changed throughout the decade as Jobs' vision for Apple, initially presented at the parallel Macworld Expo, consistently beat Microsoft's in its originality, practicality and in the operational competence behind it (thanks in large part to Tim Cook).
A primary key factor underlining its success in the 2000s was the fact that Apple actually developed working, finished ideas and was able to ship them.
At CES 2000, Microsoft presented its acquired WebTV and its planned Microsoft TV successor. The company also announced its plans for Windows CE smartphones, two years before it ultimately shipped the first working model of what would become Windows Mobile.
At Macworld 2000, Apple introduced the translucent G4 Cube, previewed the new Mac OS X (with its matching Aqua user experience, below) and introduced iTools, marking the beginning of its cloud services. As always, Apple was focused primarily on products that were ready to sell (or would soon enhance the products it was currently offering).
At CES 2001, Microsoft introduced Xbox as a competitor to Sony's PlayStation, rebranded its "Ultimate TV" and announced "Windows Powered," an umbrella marketing term for devices running the company's ill fated mobile OS, Windows CE. Xbox sold at a multi-billion loss for years, while the other ideas didn't really sell at all.
At Macworld 2001, Apple introduced its Titanium PowerBook G4 (below) and launched Mac OS X 10.0, iTunes and iDVD. All were products consumers could actually buy. Jobs presciently described OS X as being Apple's platform for the next 15 years. It was based on technology from NeXT, which at the time was itself almost 15 years old (being first conceptualized in 1986, after Jobs initially left Apple).
Windows enthusiast Paul Thurrott observed at the time, "Apple is actually delivering a Web services vision that, so far, Microsoft has only made promises about." Later that year, the new iTunes helped Apple launch iPod for the holiday season, just as it was ready to go on sale.
At CES 2002, Microsoft introduced Mira "Windows Powered Smart Displays," an initiative to sell monitors running Windows that people could have sitting around their house, as its vision for expanding the PC market. The concept flopped. Gates also floated the beginnings of Windows Media Center.
At Macworld 2002, Apple introduced its flat panel iMac, a computer that people could actually use, along side a new 14 inch iBook and the release of iPhoto. Consumers could— and did— buy all three.
At CES 2003, Microsoft rolled out the Media Center PC, refocused attention on Tablet PC and introduced SPOT ("Smart Personal Object Technology") watches, designed to tune into special FM radio stations to stream weather and other updates.
Microsoft also announced that its ambitious, intended response to Apple's iPod, then branded as "Media2Go," would be delayed until mid 2004. Unlike iTunes, Media Center was unable to stoke any real interest in new, non PC hardware products. Tablet PC and SPOT flopped as well.
At Macworld 2003, Apple expanded its notebook line to offer 12 and 17 inch PowerBooks (below), and launched Final Cut Express, the new Safari browser, the beginnings of iWork with Keynote and introduced the iLife bundle, helping to establish Macs as a viable alternative to the Windows PC as iPods attracted new buyers to Apple's platform with the help of the company's expanding retail stores.
At CES 2004, Microsoft announced Windows XP Media Center Edition 2004, a tepid update for 2001's Windows XP, and Gates repeated the company's goals to eventually deliver Portable Media Center devices as a response to Apple's iPod.
At Macworld 2004 Apple introduced Mac OS X 10.4 Tiger, launched the iMac G5, iPod mini, 30 inch Cinema Display, Final Cut Express 2 and GarageBand as part of iLife 04. Again, all were available for sale within months.
Half-way through the decade, one of Microsoft's staunchest fans— and one of Apple's most aggressively hostile critics— revealed an inconsistency in his expressed opinions that perfectly mirrored the generally phony coverage rampant in the tech industry of the day.
Speaking to his Windows audience in 2004, Thurrott wrote, "Lost amid all the hubbub of CES was the start of Macworld Conference & Expo, which opened Tuesday with an unexciting Steve Jobs keynote. [...] All in all, Macworld was a rather boring affair."
At the same time however, Thurrott also wrote to a more general audience that "Jobs's Macworld address, widely expected to be an almost funereal event for an ailing company, instead turned into a tour de force celebration of technology, marketing, and sheer chutzpah, with Jobs touting the company's Switch ad campaign, retail stores, and consumer-oriented products such as iPod, iCal, iSync, iTunes, and .Mac. Jobs also wowed the crowd and industry watchers with a slew of new product announcements, virtually none of which the rumor-savvy Macintosh online news organizations predicted."
Gates predicted the opposite trajectory for Windows at COMDEX 2001
Across the first half of the 2000s, it wasn't just CES that had served as a podium for Gates' ineffectual vision for Windows. At COMDEX 2001 (two years before that trade show died) Gates had predicted the rise of Windows Tablet PC, a rewarmed copy of Apple's 1994 Newton MessagePad initiative (a platform Jobs had terminated as a distraction to Apple's focus back in 1998).
"The Tablet takes cutting-edge PC technology and makes it available wherever you want it, which is why I'm already using a Tablet as my everyday computer," Gates said in his keynote. "It's a PC that is virtually without limits — and within five years I predict it will be the most popular form of PC sold in America."
Gates' prediction of tablets taking over the conventional PC by 2006 didn't happen. Instead, a seemingly unlikely scenario played out: Jobs' Apple returned the Macintosh to commercial relevance as Windows Longhorn (aka Vista) lurked in vaporware status. That also set the stage for the second half of the decade, where Apple's investments in retail and mobility would devastate Microsoft's own efforts to build music players, smartphones and, ultimately, tablets.
2005-2009: Five more years of Window's collapse and the rise of iOS
At CES 2005, Microsoft's Gates suffered through an embarrassing "Blue Screen of Death" while showing off a still unfinished Windows Media Center. He also offered nebulous ideas about "Digital Entertainment Anywhere," including mentions of initiatives branded as "PlaysForSure," "Windows Media Connect" and "IPTV" without really articulating any clear vision how those strategies would be successfully implemented by the same OEMs that had failed to deliver Mira displays, Tablet PCs and SPOT watches over the previous five years.
At Macworld 2005 Apple launched the Mac Mini, iPod Shuffle, Mac OS X 10.4 Tiger, Final Cut Express HD, Pages with Keynote 2 in iWork 05 and iMovie HD in iLife 05. Later that year Apple would also announce its plans to shift from PowerPC to Intel-powered Macs, erasing a key economies of scale advantage in the Windows PC world.
At CES 2006, Microsoft unveiled Xbox 360 paired with HD-DVD, launching an expensive, failed disc battle with Sony's Playstation 3 and Blu-ray that hurt the entire industry. Gates also finally introduced Windows Mobile-based Portable Media Center devices. Later that year, the company introduced Zune, its ambitious plan to take on Apple's iPod itself, rather than leaning on PC makers as it had under its Android-like PlaysForSure initiative. Zune failed and took out Microsoft's broadly licensed PFS platform with it.
At the time, Thurrott observed, "Despite the size and scope of CES, expect Apple to generate more news and excitement next week with MacWorld than the entire CES show does this week. They're just on top of the world right now, so deal with it."
"Despite the size and scope of CES, expect Apple to generate more news and excitement next week with MacWorld than the entire CES show does this week. They're just on top of the world right now, so deal with it" - Paul Thurrott
Apple had already overshadowed CES, despite the more general trade show having a week long head start. In successive years, Apple would eventually suck the oxygen out of CES without even participating in a parallel trade show, even when the majority of its announcements launched six months after CES at Apple's own Worldwide Developer Conference.
At Macworld 2006 Apple introduced the Intel-based MacBook Pro and iMac, and launched Intel versions of Mac OS X 10.4 Tiger, iWork 06 and iLife 06 apps. Rather than backing a disc format, Apple focused its efforts on digital downloads, setting up iTunes as the most popular place to buy movies, TV and eventually mobile apps— one critical aspect that would later drive the success of iOS.
At CES 2007 Microsoft's Gates again opened up the show, touting Windows Vista and Windows Home Server. Despite keynote appearances by Motorola's Ed Zander and Michael Dell, the entire event was blown out of the water by Apple.
That's because at Macworld 2007, Jobs unveiled iPhone (below), along with Apple TV and AirPort Extreme (with 802.11n wireless networking). While the iPhone launch most famously suffocated CES 2007, Apple had been releasing real products every year, incrementally building a business and the retail presence it would need to successfully launch a product like iPhone.
At CES 2008, Gates announced he would be retiring. The second most notable thing that happened there was that somebody from Gizmodo remotely turned off a bunch of the big TVs on display as a prank. And rather than seeing any real completion to Apple's iPhone, the site observed, "CES was absolute crap for phones."
At Macworld 2008, Jobs unveiled the new MacBook Air, and announced the new iPhone SDK that would launch the App Store the next month. Late that year, Apple also announced its decision to leave Macworld Expo, its last major trade show, in favor of featuring new product introductions at its own events throughout the year and launching new releases through its retail stores.
In retrospect, Apple's strategy was prescient and phenomenally successful: rather than attracting its customers to a third party event where competitors and copycats could compete for attention, Apple began launching its new iPhones, iPads, Macs— and most recently its latest Apple Watch— without distraction in a way that did not allow rivals to steal its show.
Apple Events look easy, but so far nobody else has been able to pull off similar product introductions.
At CES 2009, Microsoft's dominance of the trade show was clearly ending. The biggest news wasn't Windows but rather Palm's webOS-based Pre, the first smartphone to credibly challenge Apple's iPhone. Palm was fighting back after earlier ceding most of its smartphone market share to Microsoft's Windows Mobile, using a new platform many expected to make a serious dent in Apple's iOS.
However, the Pre didn't actually launch until the summer, when it ran smack into Apple's iPhone 3GS, a model that caught up to or exceeded virtually all of the exclusive features Palm had promised at CES. As it turned out, Apple's reliance on retail stores instead of trade shows allowed it to better fend off Palm's competitive threat.
Microsoft's damaged credibility collapsed at CES 2010. A decade after Gates had proclaimed Windows Tablet PC as being the future of computing, the company relaunched its troubled Tablet PC initiative as Slate PC in a partnership with HP.
It was an attempted preemptive strike against the tablet Apple was rumored to have been working on. The end result was even more embarrassing than its launch by Steve Ballmer.
Apple didn't need a Macworld Expo to launch iPad. It held its own event in San Francisco. And while the media mostly scoffed at iPad, the market embraced it while scoffing at the embarrassingly bulky and expensive UMPC and Slate PC products Microsoft had launched with PC makers such as Samsung and HP.
Apple's iPad went on to sell more tablets in its first year than Microsoft and all of its Tablet PC, UMPC and Slate PC partners had collectively sold over the previous decade.
Microsoft's loss of control over PC hardware makers was already apparent at CES, where Android was growing in prominence— largely to Verizon Wireless abandoning BlackBerry and backing the Motorola Droid. Google capitalized on the attention by subsequently launching its self-branded Nexus One, although it was almost immediately canceled after it failed to sell.
The following year, at CES 2011, Microsoft floated plans to port Windows from Intel x86 to ARM, in order to be able to better compete with Apple's iPad in performance and battery life. That ultimately helped to tear apart the tight partnership between Intel and Microsoft. But the new star of the show was Google's Android 3.0 Honeycomb, which planned to target ARM tablets ("the iPad") immediately.
The CES Best of Show tablet was the Honeycomb-powered Motorola Xoom, a failed product with unfinished software and major hardware issues. Its strongest feature was its dystopian ad that attempted to replicate the defiant humor of Apple's "1984" Mac introduction, but even that didn't work well.
At the same time, Android licensees launched a series of new 4G phones that should have taken on the 3G-only iPhone by storm. Apple wouldn't deliver a 4G iPhone until late 2012, providing Android with a readily apparent, significantly differentiating feature. However, Android licensees failed to capitalize on 4G, in part because they launched unfinished products that weren't very good, suffering particularly from the rapid battery drain of first generation 4G chips.
At CES 2012, Microsoft announced that it would be leaving the trade show. Samsung effectively took over the show with the announcement of the Galaxy Note, a tablet-phone hybrid equipped with a stylus. Intel also made an ineffectual splash with Ultrabooks, its reference design copy of Apple's MacBook Air.
Apple enjoyed a blockbuster year without introducing anything really groundbreaking. After iOS 6, OS X Mountain Lion, the "New" iPad 3 followed by a new iPad mini and the underpowered Retina Display iPad 4, a slightly larger iPhone 5 and new Retina Display Macs, Apple announced a major restructuring as critics fronted "the story line" that Apple was running out of ideas and fated to be taken over by commodity producers such as Samsung.
At CES 2013, Samsung showed off big TVs, Blackberry released BB10 and Intel revealed its mobile Bay Trail Atom chips it would ultimately spend billions to convince Android tablet makers to use.
Apple didn't have to pay other companies to use its platform. It announced new downloads of 20 billion apps over the previous year. Then, in the middle of the year at WWDC, it released OS X Mavericks, the new appearance of iOS 7, the new Mac Pro, new MacBook Air and revamped iWork apps with a new web client.
Apple then unveiled iPhone 5c and the 64-bit A7-powered iPhone 5s with Touch ID. It then announced their initial launch on Japan's NTT DoCoMo and then China Mobile LTE early in 2014. Despite being physically smaller than virtually every other mainstream smartphone, the two iPhone models were consistently top sellers around the globe.
At CES 2014 announcements grew increasingly nebulous. Samsung introduced new big TVs and big tablets, but the fact that its spokesmodel Michael Bay flubbed his lines distracted from the products themselves. One of the more interesting announcements of the show was Nvidia's Tegra K1 chip, which promised to deliver Playstation 3-class graphics— and eventually a 64-bit CPU, just like Apple's A7— to mobile devices such as tablets.
Apple again left the media to pontificate— through its spring quiet period— about how the company was doomed because it hadn't revealed its hand at the beginning of the year. However, Apple demonstrated a new level of partnership savvy in launching CarPlay with a series of global carmakers; acquiring youth-oriented Beats and jointly working with IBM to deliver a new class of mobile enterprise apps for iPad.
At Apple's WWDC, the company demonstrated HomeKit and HealthKit for iOS 8 alongside OS X Yosemite and its new Continuity features, then launched iPhone 6 and 6 Plus (below) with a preview of Apple Watch and Apple Pay, then launched the new iPad Air 2 and 5K iMac, all at strategic points that left competitors flatfooted, right before the peak holiday sales season.
Google's Tegra K1-powered Nexus 9 was smoked at launch by Apple's secret new A8X inside the iPad Air 2, while Samsung's most profitable premium, large screen phones were eviscerated by Apple's thermonuclear launch of its first large iPhone models.
Further, all sales of smartwatches during the holiday season were frozen in limbo by the looming release of Apple Watch, as Apple Pay gobbled up attention and provided free advertising for iPhone 6, which still remains the only smartphone with functionality like Touch ID and ARMv8 64-bit processing.
It would be hard to imagine the orchestration of a more powerful series of interconnected product and technology launches than Apple pulled off at the end of 2014.
And there is simply no scenario where a general purpose tech convention like CES— particularly one held in January— could enable any one company to so completely dominate the market's attention span and suck up the majority of an entire industry's profits.
At CES 2015, Apple dominated the conversation because some of the most lucrative opportunities for third party developers and manufacturers are attached to iOS. Two broadly licensed platforms that saw significant attention were Apple's HomeKit and HealthKit. At this point, Apple doesn't need to upstage CES. It's already well represented by the companies who have jumped on the Apple bandwagon.
Fifteen years ago, Microsoft hoped to own tablets, phones and PCs, and detailed its roadmaps to get there at CES. Five years ago, Google and its Android and Chrome partners similarly aimed to take over tablets, phones and PC computing via CES introductions.
So far, all Google has done is give away its software to the same hardware makers who were unable to achieve Microsoft's vision. Samsung, which represented more than half of Android, has seen its profits collapse while Google itself has earned very little from its half decade of efforts to push Android (and Chrome).
The impressive progress Apple has made over the past 15 years is itself a reminder of how long it takes to cause major shifts in the PC industry, or to introduce and develop a potentially successful new platform. And there are plenty of examples of once powerful and rich companies that failed to affect the change they intended, from Nokia to Blackberry to Palm to Microsoft.
Going forward, Apple's largest potential threat appears to be the risk of internal failure, getting sidetracked or distracted away from its core values by too much self-assuredness. With Samsung on the ropes and Google failing to really turn things around, Apple appears to have little real external competition going into 2015, allowing the company to rapidly expand and build upon its existing successes.
Apple's 2015 is looking a lot like Microsoft's 1995.