More of my sites

WinInfo Daily News
SuperSite for Windows
Windows IT Pro Magazine
Connected Home
Thurrott Dot Com
Windows Weekly at TWIT

About this site

For six years, the Internet Nexus served as my technology blog, but I've since started blogging at the SuperSite Blog instead. If you're looking for the blog, please head there. --Paul

Wednesday, December 24, 2003

Great article about Apple and innovation

This is a must-read, and Fast Company's Carleen Hawn should win an award for this article: "Innovate or die, we were told. It's the core of excellence and the root of entrepreneurship. It's the attacker's advantage, the new imperative, the explosion, the dilemma and the solution ... And yet it's hard to look at Apple without wondering if innovation is really all it's cracked up to be ... Apple's creative energy hasn't amounted to very much in financial terms. For its fiscal year ending September 27, 2003, Apple reported just $6.2 billion in revenues, three-quarters of it from the sale of personal computers. The father of the PC--and, remember, the industry's number-one vendor in 1980--has since sunk to a lowly ninth, behind competitors Dell, Hewlett-Packard, and IBM, just for starters. Sadly, Apple is also behind such no-namers as Acer (seventh) and Legend (eighth). So much for innovation and creativity ... Where Apple was once one of the most profitable companies in the category, its operating profit margins have declined precipitously from 20% in 1981 to a meager 0.4% today, just one-tenth the industry average of 2% ... Its chief competitor in software, Microsoft, earned $2.6 billion in its most recent fiscal quarter (ending September 30). That's nearly 15 times the $177 million in software sold by Apple in its most recent fiscal quarter and roughly equal to the profits that Apple has earned from all of its businesses over the past 14 years. In just three months."

The lesson here is in the sidenote, and it's something I touched on just the other day: "Technical innovation will earn you lots of adoring fans (think Apple). Business-model innovation will earn you lots of money (think Dell). If your cool new thing doesn't generate enough money to cover costs and make a profit, it isn't innovation. It's art." Bravo, Carleen Hawn, bravo.

[ Posted at 10:55 AM | Permalink ]