Apple’s New Strategy Is Their Old Strategy, Only More So

An Apple Strategy Failure

Let’s start with a little history. In the 1980’s…

Apple had agreed to license certain parts of its GUI to Microsoft for use in Windows 1.0, but when Microsoft made changes in Windows 2.0 adding overlapping windows and other features found in the Macintosh GUI, Apple filed suit. (The courts decided against Apple.)

Much of the court’s ruling was based on the original licensing agreement between Apple and Microsoft for Windows 1.0, and this fact made the case more of a contractual matter than of copyright law, to the chagrin of Apple. ~ Wikipedia, Apple Computer, Inc. v. Microsoft Corp.

I believe the lesson Steve Jobs learned from the above was all new Apple technology had to be patented to the max. Here is Jobs famously saying, “and boy have we patented it” at the 2007 introduction of the iPhone:

Unfortunately for Apple, Jobs got it wrong. What Apple has learned in the seven years since the introduction of the iPhone is that patent enforcement is entrusted to a worldwide court systems that is expensive, maddeningly slow and wildly inconsistent. Further, courts are justifibly reluctant to issue injunctions in patent disputes and it is injunctions — not money damages — that best serve Apple’s strategic purposes. In other words, Apple — an organization fanatical about owning its key technology — delegated the enforcement of its key technology to a court system totally out of their control.

I believe Tim Cook is now employing a very different grand strategy.

Out With The Old, In With The New

I think it’s clear Tim Cook long ago abandoned Apple’s failed patent strategy and replaced it with a strategy fully within Apple’s control. In essence, Apple decided to do what only Apple could, and only Apple would want to, do: out-integrate their competitiors.

Let’s recap. In only a few short years, Google was able to pivot and turn Android into an operating system that rivaled, and many would contend surpassed, the iPhone’s operating system. In only a few short years, Samsung was able to take the hardware they were making with Apple and use it to compete against Apple and surpass Apple in hardware sales. Apple’s “boy-did-we-patent-it” strategy failed and failed miserably to deter either Google or Samsung from competing with Apple.

Now look at the integrated services introduced by Apple at WWDC 2014. Services like continuity, Apple Family Accounts, Healthkit and Homekit make it clear that where Apple is going, no one can follow.

It’s not because Apple’s rivals aren’t world class. They are. It’s because Apple’s rivals don’t make both the hardware and the software. They literally can’t create a closely integrated product because they don’t make one.

Now you could argue Microsoft makes both the hardware and the software, but Microsoft is very late to the hardware/software game and when it comes to hardware like the A7 (soon to be A8), 64-bit processing and Touch ID, Microsoft is not on the same playing field as Apple.

Further, even if Microsft COULD follow Apple’s strategy, they wouldn’t have the economic incentives to want to do so. Apple is devoting endless amounts of time, energy and effort into integrating their hardware with their software becasue they want you to live exclusively within Apple’s ecosystem. Microsoft wants its cloud services to run on all devices. Microsoft wants its operating software to run on all devices. Microsoft wants its hardware…uh…frankly, I have no idea what Microsoft is trying to do with their hardware. And I don’t think they do either.

Apple’s strategy involves ever tighter hardware, software and services integration on such a scale no other company could do it (because it requires the simultaneous creation of both the hardware and software). Apple’s strategy is tied to a business model so unique that no one else would be incentivized to do it.


Does all of this mean Apple is going to dominate the iPhone and the tablet markets? Just the opposite. All of this integration comes at a cost. This is premium, a vertical, a walled garden strategy. Apple wants you to want to own at least two and perhaps all three of their devices (iPhone, iPad and Mac). Many will gladly do so. Most will glady do with out. And others will will sadly do with out. Apple will dominate only the premium market. That will be more than enough.

Is this a growth strategy for Apple? Maybe no and maybe yes. Premium is premium and there’s only so many people who want and can afford a premium product. This is true of all markets. But those who can afford an iPhone or an iPad or a Mac will also be those who can afford to buy all three. Apple is providing them with stronger and stronger incentives to do just that.

Published by

John Kirk

John R. Kirk is a recovering attorney. He has also worked as a financial advisor and a business coach. His love affair with computing started with his purchase of the original Mac in 1985. His primary interest is the field of personal computing (which includes phones, tablets, notebooks and desktops) and his primary focus is on long-term business strategies: What makes a company unique; How do those unique qualities aid or inhibit the success of the company; and why don’t (or can’t) other companies adopt the successful attributes of their competitors?

28 thoughts on “Apple’s New Strategy Is Their Old Strategy, Only More So”

  1. I loved and agree with every word in this article! No, I’m not being sarcastic.

    The patent system is a joke, surpassed only by some patent seekers. It’s an easily overwhelmed, easily manipulated system, especially by the wealthy. It does not offer a lot of protection for the “lone inventor” whom it was designed to protect.

    Remember pre-WWII isolationist America? I think that teaches us that isolationism has it’s downsides, and Apple is getting ever more isolationist via integration. They can’t do it all, though they can try to control it all. And therein lies the rub…

    The only service I could offer to someone asking me which device to buy is “be careful”. If it’s my mother-in-law (who I adore), I tell her to use her iPad, but don’t buy any content for it beyond Apps and rentals. She should come to me for everything else. We would buy a Blu-Ray and rip it, get books from other booksellers, etc. Being too beholden to one source is rarely a good thing, and the problem with walls is they work both ways. Never go somewhere you can’t easily leave. If you do, you do so at your own peril.

    It’s not all roses my heliocentric friend. 😉

      1. Anything having to do with their customers devices. Whether their customers agree or not. The jailbreaking community are the only ones within Apple’s sphere doing anything about it.

        1. Open-ness (def): 1. The religion of choice, often used in technology marketing 2. A strategy of forced commoditisation through abundance.

          Religion is the fashionable substitute for Belief. ~ Oscar Wilde

          1. con·form·ist /kənˈfɔrmɪst/
            1. a person who conforms, especially unquestioningly, to the usual practices or standards of a group, society, etc.

            2. ( often initial capital letter ) a person who conforms to the usages of an established church, especially the Church of England.

            of or characterized by conforming, especially in action or appearance.
            “Think Different” my friend.

          1. Hardware,OS, Apps, Content, Retail, Accessories.
            They even took the position that jail breaking your own device was a violation of the DMCA and thus illegal.

          2. But not ALL hardware or ANY hardware, just the hardware they make and sell. They have chosen, as a company that sells products, what they they think they can do well and create and environment that they feel best serves their customers. The only things they are trying to control are the points within their offerings that have traditionally caused conflict and dissatisfaction on the parts of their customers while trying to provide top quality user experiences on and through the devices they sell, pretty much the only point they have control of BECAUSE it hasn’t always roses for THEIR customers by ceding control of their products to people who do not have their customers’ best interest in mind (such as Adobe, Google, many retailers, or Microsoft). AND customers are resoundingly responding affirmatively.

            Again, Apple isn’t trying to do it _all_. They have chosen very specific things they think they can do well, do them differently than anyone else, and serve their customers better by doing it differently. It may not be _perfectly_ roses, but it is closer to being roses than it has been for Apple’s customers than it was in the wild west days of computing.

            Why does it bug you so much that you are not an Apple customer?


          3. I am an Apple customer. Over $10K between 2007 and 2011. Over that time, they only got weirder and weirder in their controlling behavior. Coming from PC’s I wasn’t going to take that well. And I didn’t. I don’t want an IT department over my property, though I agree it’s a great service if you want/need it. iOS censorship was the last straw.

            On an open system, when the manufacturer does something I don’t like (which is too often the case), I can usually fix it. Not on Apple!

            Finally, in another post, I went into detail on terrible experiences I’ve had with them.


          4. I would say you have purchased Apple products, but you are clearly not an Apple customer. For some reason you keep expecting Apple to be something that they have made no claim to be, to have offered things they have never offered.

            I read what you posted it. I am sorry you had that experience. Although, I do remember deciding not to buy that model Macbook Pro that year precisely because of the lack of the slot. So the information was out there, Apple did not try to hide the fact. I had an eSATA drive I was using for back up. As a matter of fact I finally bought a new Macbook Pro last year, that’s how long I put that off. And in reality, my eSATA drive enclosure bit the dust before the Macbook did, so I had already moved on from eSATA.

            Apple’s model is not for you. Be content with non-Apple devices and enjoy that choice still abounds. You don’t have to choose Apple and those who do choose Apple are no less intelligent. They just don’t want to be forced to make the choices you enjoy making.


          5. “you are clearly not an Apple customer”
            You said a mouthful! 🙂

            But I’m not going to let you off that easy… 😉
            My mistake aside, are you really going to defend the position that a $2,000+ machine should not have a fast external storage capability for over two years? It has to be taken in the context of available norms of the time.

          6. I don’t believe I am one who has to defend it. I enjoyed my eSATA and I went that route because at the time I was doing a great deal of video editing. But all the professionals I knew had no problems with Apple’s offerings and still preferred the Apple model for all the other benefits it brought. What was the point of a faster external storage capability if your machine was in constant need of attention to avoid the blue screen of death? Not that Apple machines were impervious to their own issues, but they were far less frequent and far less detrimental. If removing that slot made the machine even more stable, all the better. In the real world down time is not “fun, experiment” time like it can be for you and me. It is lost money.

            So if a veteran video or audio editor was content with Firewire 800, who was I to argue? Where they needed that speed, anyway, was not on a laptop. It was on their desktops back in the studio, where eSATA RAIDs abound. What they needed most out of a laptop, after stability, was battery life anyway.

            “Norms of the time” is relative to how something is being used. Most computers are being used for specific tasks. Only in geekdom do we feel the need to be ready for anything. Mostly because we are more governed by our whims than necessity.


          7. Yeah, but we are a quickly shrinking slice of that pie. If Apple chooses not to address geeks as customers, it’s all good. Admit it and move on. They do.


          8. Or…we continue the dialogue to keep the pros and cons on the forefront.
            Apple has done things that, had the government done them, at least 50% of the US would be rightfully up in arms. If I won’t tolerate my government censoring me, why would I tolerate it from by “information device”? And why would I not inform other’s?

          9. Because one typically doesn’t have a choice which government is in power (democratic/republic governmental systems aside). You do have a choice of which company you do business.


          10. And that company is subject to review on how they “stack up”. It’s not all roses.
            Put in other words, I would love to be an Apple customer, they do a lot of things right. It’s their stubborn things that keep me out. Walls again…

          11. Nothing is ever “all roses”. What is important is to figure out, are the roses where you want and need them or not?


          12. And that requires being informed. I feel that the press, in general, glosses over too many things, or skips them entirely This is for all companies. If they don’t show the outrage, then hopefully, dialogues such as ours will. Not holding my breath, but one must try.

          13. And in the spirit of informing, I just upgraded my internal SSD to a 480 gig and put the old 250 in an external case (all from OWC). This set-up is infinitely faster than the eSATA set-up I had. Wicked fast.


          14. Ah the joy of SSD!!! Enjoy it. I don’t know what it cost, being Mac and all, but there’s no going back.
            Keep in mind, they didn’t even have USB3 at the time, though every other machine in that class (and lesser ones as well) did. Even if it cost, say, $20 for a USB3 controller, I find it’s absence at the time to be quite petty for a $2200+ machine.

  2. John, again you have great insight into where Apple (and the industry) is headed. I think this will work for apple because it will be their entrance into the “next big thing” which appears to be the internet of things. There is plenty of growth potential for Apple in new “fully integrated” products even as their market share for existing products continue to decline.

  3. And Apple should invest big time in the battery technology that Tesla is building for the future!

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