What Really Scares Apple’s Competitors

on August 20, 2012

I was recently talking with some of Apple’s competitors and they gave me some interesting feedback on how they feel about Apple. The first thing they told me is that they really respect Apple and find them to be very important to the industry in general. And to a company, they feel an exceptional team of leaders runs Apple and they fully expect Apple to have a leadership role in PCs, tablets and smartphones for many years, even with Steve Jobs out of the picture.

But when I asked them what they actually fear about Apple, their answer was interesting. I had expected them to say things like Apple has great industrial design. Or their $117 billion cash position gives them a huge advantage over all competitors. Or even that since Apple owns their hardware, software and services, they can make them work together seamlessly, which also gives them a huge advantage over competitors.

But the consensus from those I talked to about what really scares them about Apple is the fact that Apple sees the future and then creates products that people want even if people do not know they want them. This has befuddled them for 15 years or since Steve Jobs came back in 1997 to rescue Apple. Most of the OEMs create their products along a more evolutionary timeline. They create new desktops, laptops, smartphones and even tablets with the idea of just making them faster and better looking.

But Apple takes a very different line of attack. They approach their future products in two ways. The first thing they do is to look at an existing product and find its flaws. Then they redesign it around what they believe consumers want and then tie it to advanced software and services to eventually create complete solutions. This is the cause of Apple’s competitor’s first fears about Apple and having to compete with them.

For example, first thing they did this with was the iPod. Apple did not invent MP3 players. But they looked at the early versions and realized its flaws. The first generations of MP3 player designs were less than interesting and the process of getting music on to them was difficult. So they figured that they could add their industrial design magic to it and build an ecosystem of software and services that made buying and playing music and eventually video simple to do so that today they still own 70% of the MP3 player market. After 11 years on the market they still don’t have a serious competitor in this space.

They did something similar with the iPhone. They did not invent smartphones, but they reinvented them with the iPhone and have made this smartphone one of the most popular in the world today. Of course, this market is so big that competitors came in very quickly and thanks to Android, the competition for smartphones is fierce. But Apple led the way and continues to be a most important competitor.  I fully expect their new iPhone 5 to set sales records when it comes out in Sept.

The iPad followed a similar path. They did not invent tablets. In fact, Microsoft was the lead player in this space until Apple reinvented the tablet with the iPad in 2010. But here again, Apple applied great industrial design to their tablet, tied it to their ecosystem of hardware and software and currently maintain a 70% market share in tablets.

But there is a second way Apple approaches the market that really strikes fear in them. Steve Jobs had what has often been called a “gut feel” for what consumers wanted in a tech product and would envision them years before the products would even come out. When I met with Steve Jobs the second day he came back to Apple in 1997, Apple was in deep financial trouble and we now know they were about two months away from going bankrupt. I asked him how he would save Apple and he told me that he would focus meeting the needs of their core customers and then added that he would focus on industrial design.

The idea of industrial design being important to saving Apple was foreign to me and I really could not see how that would work. But two years later he brought out the candy colored iMacs and reset peoples thinking about what a computer could or should look like. Then he focused in creating all-in-one Mac’s and made sleek design key to this and all of his next generation laptops.

Apple also saw the future of laptops well before the competitors and added their industrial design magic to the MacBook Air. Now, five years after the MacBook Air first shipped, the PC competitors are just now bringing out similar types of ultra thin and light laptops called Ultrabooks.

It is this anticipation of what people will want in a tech product and Apple’s ability to not only see the future and then create the products people want even if they don’t know they want or need them that makes life difficult for those who compete with them. Even while the rumors fly about Apple’s next major reinvention, which most likely will be the interactive TV experience, it would not surprise me if the folks at Apple have peered into their crystal ball and are working on something really cool in some area of technology none of us have even thought of today. Having to live with this type of threat from Apple is what keeps their competitors up at night and always looking over their shoulder as Apple leads and they are forced to follow.