Is Apple Making the Same Mistake Again?

It's such an object lesson, and is probably taught in business schools the world over. What Apple lost by not licensing its operating system to multiple hardware developers was more than market share and millions of dollars. It was control of how we all work.

A seeming blink of an eye after these "OS Wars," when Microsoft went from DOS to a system called Windows, (which mimicked Apple's OS), the Redmond, Washington company became today's behemoth. We all know the story - they did this largely by sharing this OS with everyone they could.

By the late-1990's, Windows had become ubiquitous and Microsoft ruled the known world. The company soon had to invest millions in Apple just to prove to the SEC that it wasn't a monopoly. Soon, it promised to do all it could to ensure that software titles would continue to be written for Macintosh users, if for no other reason than to convince the SEC and DOJ that it wasn't a monopoly.

For those of us who swore on Macs and swore at Microsoft, this was the height of irony. After all, Macs were better, faster, and cooler to work with. Being able to network in MS environments was a challenge, to say the least. But, Mac users were the more creative among us. By and large, they could have cared less that they made up less than 5% of the market share represented in a Windows world.



Look around the offices where you're reading this column. The Mac users generally create visual images with their computers, right? It's tough to characterize Windows users, since they basically comprise the rest of us (including me, after 1998). After all, one must get along, no?

Anyone owning Apple stock was pleased by the launch of the iPod two years ago. Here was Apple, once more, leading the way with a better, cooler, faster technology. Though they cost much more than other digital media players, iPods have sold briskly since their launch, and their Flash-dependent branding has remained cooler than just about anything else we see on TV or the Web, keeping the Apple brand at the top of a very cool crowd. Think about it - what other media player leverages the kind of make-you-wanna-boogie images that the iPod is linked to?

Now, Real Networks CEO Rob Glaser and others are complaining that Apple is taking a big risk, perhaps even making the same mistake in the digital music world that some would say they made in the PC market.

Real Networks, as has been reported, wants to partner with Apple to share software platforms with Apple's iTunes. Meanwhile, Apple has kept its headphones on instead of listening to Glaser, and will persist in keeping its software and hardware largely proprietary, thanks.

The irony here is that it's Glaser and Real Networks who are effectively being left out in the cold. At the launch of the iPod, Apple took some major steps to avoid the mistakes they made in the PC market, notably making the iPod compatible with Windows PCs, ensuring that its potential market would not be bobbed by a PC cohort that dwarfs Mac users by a factor of about 18. The strategy Apple dismissed last time has worked this time. Last quarter, iPod sales helped lift Apple's earnings to a level three times a year ago. The iPod is regarded as the best - and is the best selling - of all portable media players.

The company sold more iPods last year than they did Macintosh PCs - including more than 800,000 units last quarter, setting a new record. The company's iTunes music store, designed to break even by this point, they hoped, actually posted a small profit.

At this point, it's clear that Apple doesn't need Real Networks nearly as much as Real Networks needs Apple. Making this decision may even have been something of a no-brainer for Steve Jobs and his managers.

Meanwhile, anyone who plays music and video on their PC as much as I do has to wonder what's next for Real Networks in a world in which Apple and Microsoft are making such sweet music together. Microsoft may very well integrate audio and video for portable delivery and methods of streaming capture that we haven't thought of yet. But, for now, Apple is making money and dominating one market segment that is hot today and growing briskly. 1984 was a long time ago, but one "niche" company that has been profitable for years, while its rivals mostly have not, is leading the way again. Very cool indeed.

Who knows? If Google can enter the email business before its IPO, why can't Apple own the portable market that will eventually play a role in how each of us works, plays, and eventually communicates? There are millions of us who've cursed their cell phone or been frustrated by their pocket PC. But, how often have you heard complaints uttered by iPod users? Generally speaking, they're too busy dancing to their own beats.

Next story loading loading..