Stubborn Chronicle Staff Writer Is an Ignoramus

Ha. No sooner do I begin an essay on the state of Apple’s iPod empire by claiming that “we’re no longer subjected to moronic business and tech pundits proclaiming that Apple, despite its initial success, is ‘making the same mistake with the iPod that they made with the Macintosh in the 1980s’” than we see this delightful commentary from San Francisco Chronicle staff writer Dan Fost: “Stubborn Apple at Risk of Making the Same Mistake Twice”.

A few nuggets of Fost’s (and his sources’) wisdom, starting with this quote from Wired News managing editor and “Cult of Mac” author Leander Kahney:

“Even if what happened to the Sony Walkman happens to the iPod, they’re all going to be called iPods from now on.”

This is stated as though something bad happened to the Sony Walkman. What happened with the Walkman is that Sony has sold over 330 million of them (and considering my source for that was his own newspaper, you’d think Fost might have been able to dig this up). If the next five years of the iPod go as well as the second five years of the Walkman, I’m sure Apple — and Apple’s shareholders — will be pleased as punch.

And that triumph of branding over business could happen, Kahney said. Even though Jobs has learned from his mistakes and has taken a somewhat different path, many others wonder if the company isn’t repeating history by focusing on the hardware and refusing to license its technology.

I look forward to Fost’s future haranguing of Sony, Microsoft, and Nintendo, all of whom are surely on the verge of collapse because they’re all foolishly focusing on video game hardware and refuse to license their hardware to other companies.

In essence, that’s what happened the first time around: Apple dominated the market for personal computers, but Bill Gates struck a shrewd deal with IBM that allowed him to put Microsoft’s operating system on any computer. Makers of clones, including Compaq, Dell and Gateway, sprang up, selling computers much more cheaply than Apple and winning the business market in a runaway.

Please tell me at what point in the last 30 years Apple’s market share in the personal computer business was ever higher than 20 percent, a peak it reached before the Macintosh was even released.

Now Apple’s worldwide market share hovers at a little more than 2 percent, according to analyst Roger Kay, president of Endpoint Technologies Associates.

“Lester Thurow, the economist from MIT, estimated that Apple gave up a half a trillion dollars in profit when it allowed the PC market to slip through its fingers,” Kay said in an e-mail.

John Gruber, a non-economist from Daring Fireball, estimated that Lester Thurow made that up.

Update: Reader Daniel Lawson points to this January 2004 article by Thurow in Fast Company for an example of the analysis behind this figure. Thurow wrote:

What is the biggest business blunder in the past half-century? That’s easy: Steve Jobs’s decision not to license the Macintosh operating system, which cost Apple $559 billion (going by peak market values). Apple had, and probably still has, a better OS than Microsoft’s. Instead of leading a $23 billion also-ran, Jobs could have been Bill Gates, with a company worth $582 billion. But Jobs failed to foresee the Mac OS’s decline and to take appropriate action: Give in to the inevitable and license the thing.

So it would appear that Thurow derived this “half trillion dollar” figure simply by subtracting the peak market cap of Microsoft from the peak market cap of Apple. Which is to say that if Apple had simply licensed the Mac OS (presumably at some point in the ’80s), they would have made every single dollar that Microsoft made from that point forward. (And as I’ve covered before, licensing the Mac OS during the ’80s wouldn’t have been simple at all.) As if this weren’t asinine enough, Thurow attributes the blame to Steve Jobs, who was fired from Apple in 1985 and didn’t return for a dozen years.

Back to Fost’s piece in The Chronicle:

Apple could have dominated the Internet as well, according to tech pundit John Dvorak. “Don’t forget their online service that was rolled out to compete with AOL back when the Net was cranking up,” Dvorak said. “Meanwhile, the company could have owned the Net since Mosaic — the first browser — only worked on a Mac when it was released.”

Even if we grant the veracity of these comments for the sake of argument, these facts pertain to Apple’s current situation how?

And granting the veracity of these comments can only be done for the sake of argument, as they’re utter bunk. How can Dvorak claim something like this with a straight face? Mosaic shipped first for the Unix X Window system, and the Mac version followed afterward. And Mosaic wasn’t even close to being the first web browser, although it was certainly the first browser to gain widespread popularity. Quite obviously and famously, the first web browser was Tim Berners-Lee’s “WorldWideWeb”, written on and for the NextStep system.

And even if Apple had somehow managed to obtain the exclusive rights to Mosaic in 1993, does anyone seriously think that the web would have done anything other than wither in obscurity had that happened?

Are there fact-checkers at The Chronicle? If so, have they heard of Wikipedia? Have they heard of Google? The first hit when you Google for “history of web browsers” is this lovely chronology. Can you just make up any crazy bullshit you want and get it quoted as fact in The San Francisco Chronicle?

In a way, Apple’s survival is remarkable, author Kahney said, like a dinosaur living beyond the Ice Age. All the early PC-makers like Amiga, Commodore and Acorn crumbled, but idiosyncratic Apple hung on.

Is it not perhaps the case that Apple “hung on” not despite its idiosyncrasies, but because of them? Like, say, its quirky little habit of designing and producing vastly superior products? Is it not arguably more remarkable that no other computer manufacturer has tried this?

Even though it shed its printer business, it still is largely a hardware company with computers and iPods. And that’s a risky business, as other companies including Microsoft enter the fray.

Much less risky to be a software company, I suppose, like WordPerfect, Borland, Lotus, and Netscape, all of whom fared so very well against Microsoft.

In addition, Kahney points out that the music industry hasn’t exactly been turned over to iPods. Roughly 95 percent of all music sold is still on a compact disc, and illegal downloads still outnumber Apple’s legal music sales online.

And all that music sold on CDs, and all those bootleg downloads — I guess they don’t play on iPods?

Apple gets deservedly high marks for innovation, Kahney said, but for all the coolness brought to the brand by the gleaming white stores, the U2 iPod ads and Jobs’ stylish appearance, at its core Apple still represents Silicon Valley at its geekiest.

“It’s a big American corporation, cutthroat,” Kahney said. “The reality doesn’t fit with the image. Jobs is the only cool guy there.”

I’ll be sure to pass that quote along to all my friends — and Daring Fireball readers — at Apple.

Ads via The Deck Ads via The Deck