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  • Newsletter Issue #1031

    January 30th, 2022

    APPLE AND THE MONEY MACHINE JOURNEY

    When I first began using a Mac in the 1980s, I didn’t look at the company as a potential money machine. For well over a decade, my decision was often attacked by PC-using critics. They told me there wasn’t any useful software for a Mac, at the same time I was generating content with Adobe Illustrator, QuarkXPress and Microsoft Word. They told me that Macs weren’t easy to use at the same time they were struggling with their DOS and Windows boxes trying to manage what were, to me, simple tasks.

    By the mid-1990s, you might have thought, with a fair amount of justification, that Apple was on the ropes and a possible takeover target for another company that would quickly merge and kill its unique character. You might have thought that Apple’s executives weren’t really sure what made Macs different as they introduced more and more models with insignificant differences you could barely tell apart. The aging Mac OS was becoming increasingly unstable. With the arrival of the first really usable version of Windows, Windows 95, more and more app developers decided to ditch the Mac and embrace what they felt to be a platform with more potential.

    Through it all, Windows didn’t strike me as any better actually. The interface was sort of Mac-like in a clumsy way, and performing even basic setups took at least twice as many steps with less predictable results. But since apps available on both platforms more or less worked the same, though looking less pretty on a PC, I suppose most people wouldn’t notice so much of a difference once things were set up properly.

    But the tech people must have loved the workloads in supporting Windows. They were the doctors regular employees needed to cure what ailed their computers.  With a Mac, you could usually fix things yourself without having to go through a special training course.

    When stories appeared that Apple had given up trying to build its own industrial-grade operating system, code-named Copland, and buy someone else’s operating system, you couldn’t ignore the implications. Apple could no longer innovate and would be forced to take out its checkbook to solve the problem.

    Apple was considering two options. One was BeOS, the brainchild of a former Apple executive, Jean-Louis Gassée, and used PowerPC-based hardware, similar to a Mac. There were even ways to install BeOS on Macs, and its simple, easy-to-learn multimedia interface was truly attractive. But it was unfinished, untested, and would have required lots of work to adapt to Macs, or for Macs to adapt to it.

    The other option was NeXT, a company started by Apple co-founder Steve Jobs after he departed the company in a power struggle. NeXT once built its own cutting-edge hardware, the Cube, which was designed as a high-end workstation using a Unix-based operating system. But the hardware was never successful, and the company, at the time all this was being negotiated, was focusing strictly on software.

    Finally, on December 20, 1996, Apple CEO Gil Amelio announced that the company had bought NeXT for some $429 million, far more than it might have cost to acquire BeOS, but evidently Jobs’ sales pitch was far more compelling.

    Jobs return to the Mac made him a cultural hero, and over the next few months he consolidated his position. When Amelio was ousted, Jobs “reluctantly” became the interim, or “iCEO.” He quickly moved reorganize the company and ditch product lines that had failed to provide acceptable sales and profits. Laser printers were gone, digital cameras were gone, the Newton Message Pad was gone. All three products were pacesetters in their categories, but Jobs wanted to tightly focus on simplifying and sprucing up the Mac lineup.

    And they did focus mostly on personal computers until the world changed on October 23, 2001, when the very first iPod was released. Then again, the little gadget was essentially a simplified personal computer with an operating system and bare bones interface, only it was designed strictly to play digital music tracks. For $300, you’d get the tiny device with a storage capacity of 5GB, enough to contain about 1,000 tracks. Though certainly not 1,000 songs the length of “MacArthur Park” or “Hey Jude.”

    Up till the iPod arrived almost as an afterthought, digital music players were clumsy and slow. I actually reviewed a few for ZDNet in those days. They were universally useless, and I was only too happy to return them once the review was written.

    Without any useful competition, iPod sales took off. Apple’s iTunes software, designed to manage your music library on Macs, was soon ported to Windows. Mac users felt betrayed, but PC users had little alternative, and the iPod soon had more users on the Windows platform.

    Microsoft’s foray into music players, the Zune, debuted in 2006. It made barely a ripple on the marketplace. I remember, in fact, seeing someone standing near a convenience store trying to sell off his brand new Zune. There were no takers. With a market share largely in the single digits, Microsoft kept the product going, more or less, until it was discontinued in 2012. That was five years after the first iPhone was introduced.

    Many of you recall the introduction of the iPhone at a Macworld Expo in 2007. In retrospect, Apple lucked out. The prototype displayed by Steve Jobs had an incomplete OS, and the presentation had to be carefully tailored to present working features, so as not to trigger any of the known bugs. At the same time, Apple did something that seemed curious at the time, but later turned out to make a lot of sense. And that was to remove “Computer” from its corporate name.

    After all, Apple was now about more than computers, even though that was true even back in the 1980s and 1990s.

    In any case, as I watched, not quite from the sidelines, Apple’s moves through the years, it seemed clear that it was much about printing money. More money than you can possibly imagine, considering that the corporation briefly exceeded three trillion dollars in market cap a short while back before the stock market went crazy.

    I bought my first Mac in 1989, after using it at the office for a couple of years before that. In that year, Apple earned $5,284 billion, with net income of $454 million. While this represented a growth rate of 5% for the year, the fourth fiscal quarter results for the three months ending September 1989 were $1,383 billion, with net income of $161.1 million; the former represented a drop of 2%, with net income falling 39%.

    In 2022 dollars, Apple’s 1989 earnings would amount to $11,880 billion.

    To put things in perspective.

    In its most recent fiscal quarter, for the period ending in December, 2021, Apple reported earnings of $123.9 billion, and a net profit of $34.6 billion. In other words, one quarter’s earnings are many times what Apple could manage for an entire year 32 years earlier.

    I doubt if anyone in 1989 would have imagined where Apple would be right now, or that some 1.8 billion of its devices would be activated across the planet. Or even that the major source of revenue would not be a Mac — though they are obviously still being produced — but a fancy, schmancy cell phone that was actually a miniature personal computer.

    Now nothing lasts forever, so it’s inevitable that, some day in the future, Apple may again face hard times. Maybe it won’t succeed with an expensive new product, or maybe the public’s interest will move elsewhere. Corporations do not last forever, but ongoing doom and gloom pronouncements clearly are going nowhere.

    The time to cry wolf about Apple may come, but it’s likely many of us won’t be around to see it. These days, Apple is far too busy being a money machine.

    THE FINAL WORD

    Gene Steinberg’s Mac Radio Newsletter is a weekly information service of Making The Impossible.

    Publisher/Editor: Gene Steinberg
    Managing Editor: Grayson Steinberg
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