Foredecker

Jibe!

Apple is not big enough to do search… They need Microsoft

with 43 comments

I’ve said a few times on Slashdot that Apple is likely to partner with Microsoft for search on the iPhone.  A few people have given me rebuttal directly and a portion of the Slasdot crowd thinks this is unlikely.  Here is why I think Apple is not big enough to do search on their own.

In a Slashdot reply node_3 replied to me that “Apple is one of the largest companies in the world”.  I’m not sure what he means by large.  Sure – Apple is in the top Fortune Global 500 for 2009 at #253.   But consider these items from the Fortune list:

Rank Company Revenue Profits Assets SH Eq
117 Microsoft 60,420 17.7 72.8 36.3
253 Apple 32,479 4.8 40.0 21.0
423 Google 21,796 4.2 31.8 28.2

Now consider Apple’s business model – they sell ‘things’ (as in physical do-dads) and music.  They have a relatively small “software and services” Business at ~8% of total revenue (cite).   Its fair to say they are not a software company.   NOTE – do not panic!  Apple develops some great software!  OSX is truly a world class client operating system and the iPhone changed the game dramatically.  But, their business model isn’t selling software – its selling ‘things’.  Just look at the numbers (all in billions of dollars).  79% of their Q2 revenue came from selling ‘things’.  Only 8% was “software and services” and I suspect most of that is services.

Product Q2 2009
Desktop 1.05 13%
Portables 1.86 23%
iPod 1.67 21%
Music 1.05 13%
iPhone 1.50 18%
Peripherals 0.36 4%
Software & Services 0.62 8%
Total 8.11

Compare the Apple data to Microsoft (cite)

Division Q2 2009
Windows 3.980 24%
Server & Tools 3.740 22%
Business 4.880 29%
Online Services 0.866 5%
Entertainment and Devices 3.180 19%
Total 16.646

76% of our Q2 2009 revenue is just software.  And not just any software – world class products that have been consistent market leaders for years and years.   Say what you want, but people keep buying Microsoft software despite very real and credible competition – some of which is free.   (that’s a topic of a future post…)

Just Windows alone (our “client” business) is 36% larger than Apples Mac business (desktop + Portables) by revenue alone.  Unfortunately, I cannot find a public source that indicates Windows unit shipments in that time frame, but in Q2 2009, Apple had about a 7.6% market share in the US at about 1.21 million Macs (cite).  Apple has their best share in the US, with much lower market share in other world wide markets.   Its safe to say that Windows shipments dwarf Apple’s client shipments.

The point in all this is that Apple does not have the chops to build a competitive search engine.  Yes, if they decided to do that, they could – they fundamentally have the revenue to do so.  But it would take them years.  first, they would have to hire people and grow the expertise.  It takes a massive investment in people and assets to build a world class search engine. It also takes another key element: the corporate fortitude to stick with it for years. That is why there are just two of them – Google and Bing.  If it was easy, there would be more than two.

I’m sure someone will point out there are more than two search engines…  yes of course, but there are only two that matter… Google and Bing, this is especially true since Bing now powers Yahoo (cite).  And most importantly, Bing is showing slow and steady growth (cite).  Its early yet of course, but remember, Microsoft has a strong history of sticking with things… (yes, we drop things too, but we do it deliberately, no flaming out like Sun…)

So in one sense, you won an ‘internet argument’.  Woot!  Yes, in a narrow technical sense, Apple is ‘big enough’ to build a world class search engine.    But I stand by my statement.

In practicall terms, Apple is not any where near large enough to build their own search engine: they have no foundations on which to build.  its just not in their league.  They would have to start from scratch.  It would take them years to do this and a huge investment in terms of time, effort, energy, and money.

Hey!  If you had a few billion dollars in yearly revenue, you could try it too.   But would you be successful?   Very likely not – even if you are a pretty smart guy.    That aptly describes Apple today with respect to search.

The biggest barriers to entry here isn’t money.   Anybody with a few billion can build a series of world wide data centers.    This isn’t science – its engineering.

Building a successful world class search engine that can successfully complete with Bing and Google requires something much harder to obtain – skilled and experienced people. A skilled and experienced person is the true unobtainum.

These people do not grow on trees.   There really very, very few of them.  In the search space I’d suggest they number in the few hundreds, maybe even less.   Most of them are currently employed at Google or Microsoft.   Its also a lot of work to grow them – Microsoft and Google both do that very successfully.  Yahoo did too, but couldn’t keep up on the business front.

One of the reasons Microsoft wanted to buy yahoo is to get their best people.  Their business was interesting too, but their people were key to the deal.   Dr. Qi Lu is the canonical example.   I’m senior enough to go to periodic internal briefings by senior execs; let me tell you, Dr. Qi Lu is one of the most intelligent and effective people I’ve ever heard.  He is in the same league as Bill himself.  He has had a very positive and dramatic effect on Microsoft, both externally and internally.   He is a high profile example, but only one of many.  There are a lot of other good people that came from Yahoo.   They are doing impressive things.

In summary: Apple needs a world class search engine on the iPhone.  There are two, Google and Bing.  Yes, we compete with Apple and will likely do so directly in the mobile phone market, but Apple cannot build their own effective search engine in any time frame that matters.  I maintain that Bing and Microsoft is by far the best choice for Apple.

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Written by foredecker

January 23, 2010 at 6:18 pm

Posted in slashdot, Technology

Tagged with ,

43 Responses

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  1. I have no idea if Apple wants to build a search engine but I’m pretty sure they don’t want any one company monopolizing 90% of the search market. I wouldn’t be surprised at all if Apple simply allows Bing to be installed along Yahoo and Google as a search option on iPhones to help keep Google from getting too big.

    Synthmeister

    January 23, 2010 at 9:16 pm

    • I agree in general. I think Apple is very likely to ship Bing on the iPhone. I also think they are likely to make it the default. The big question is will they pull the Google all together. It would really annoy a lot of customers, but that may not stop them.

      foredecker

      January 23, 2010 at 9:40 pm

      • Could be a good collaboration for Apple provided that Bing is only the engine masked by an Apple branded name. similar to how Yahoo retains its name but powered by Bing, if I understand that relationship correctly. I can see some ad revenue profit sharing enabling this deal.

        studentrights

        January 24, 2010 at 2:11 pm

  2. Perhaps they could dust off this. Or they could buy someone with the talent so that they’re not starting from scratch.

    That said, I tend to agree. The concept of Apple having their own web search engine is ludicrous. Even if Apple did something worthwhile with text search, nowadays search is more than just typing in keywords. We want images, news stories, mapping. In other words, context. That’s the tough part and that’s what Apple would have to come up with–y’know, what Google has spent years perfecting.

    Apple’s general rule is that they enter a market when they see that their skills can be put to good use. Apple’s UI and hardware design mean they could make a really nice and usable phone, music player, etc. I’m not sure that I see what Apple would add to the search realm. Are search UIs horrible? Not really. Does search need hardware skills? Maybe, but it would be more on the Xserve side.

    I’ll admit that it’s possible I’m being short-sighted. Maybe I’m not seeing a problem that Apple is trying to solve and if Apple came up with a search engine, I’d say, “Wow! This is the way search should work! Why didn’t Google/Yahoo/Microsoft/AltaVista come up with this?” But I tend to think that’s unlikely…

    Peter

    January 24, 2010 at 1:57 am

  3. Apple is smart enough not to do search.

    Especially when there are suckers like MS, who will go to any length to gain ‘market share’. Apple will gladly let MS perform the search queries, but here’s the catch, Apple will run the ads on top of the MS search.

    They will turn the tables on the revenue model, giving MS a small share of the revenues for the privilege of serving Apple. MS, in their desperation to make an impact on the market, will bend over backward to accept the proposition. MS executives will spin the pact as a victory, while accepting a pact where they will get the shit end of the stick.

    Sorry, but any deal that Apple will do will extract a steep price from MS. Much like the deal with AT&T.

    Sandeep

    January 24, 2010 at 5:25 am

    • We shall see 🙂 Microsoft rarely gets the short end of the stick, espeically when its someting strategically important. I think we could be a very good partner for Apple. Just like we are in the Micorosft Office for the MAC business.

      foredecker

      January 24, 2010 at 10:55 am

      • Outside of Windows and Office can you give me an example?

        studentrights

        January 24, 2010 at 11:14 am

        • Hi Sutdentrights,

          Sure! Just off the top of my head: Sharepoint, Exchange, SQL Server, Windows Server ( as opoosed to client), Bing Maps (we have a thrinving back end business – it considerably more han what you see as a consumer on the site), Visual Studio (very profitable), XBOX and Gamtes, Mice & Keyboards, Office for the Mac (its a different business unit and code base), oh yea, Windows Home Server – nice new profitiable product that…, and System Center.

          These are all things softare products that we sell. Many we sell mostly indirectly meaning that are a bunch of other copmanies that make a living working with us. They are also all profitable.

          Now, that’s hardly two ponies…. you are right though, Windows Client and Office are remain our biggest revenue and profite generators. But they are hardly the only ones. A few of those other products are billion dollar babies.

          Opps, one other thing – as lame as it is (and yes, it is lame) Windows Mobile 6.X remains popular – and profitable. Even in the face of the iPhone (I have five by the way, one is mine the rest in the hands of family), WM 6 jus only lately fell below 50% smart phone market share.

          Best Regards
          Foredecker

          foredecker

          January 24, 2010 at 4:07 pm

        • Hi Sutdentrights,

          Sure! Just off the top of my head: Sharepoint, Exchange, SQL Server, Windows Server ( as opoosed to client), Bing Maps (we have a thrinving back end business – it considerably more han what you see as a consumer on the site), Visual Studio (very profitable), XBOX and Gamtes, Mice & Keyboards, Office for the Mac (its a different business unit and code base), oh yea, Windows Home Server – nice new profitiable product that…, and System Center.

          These are all things softare products that we sell. Many we sell mostly indirectly meaning that are a bunch of other copmanies that make a living working with us. They are also all profitable.

          Now, that’s hardly two ponies…. you are right though, Windows Client and Office are remain our biggest revenue and profite generators. But they are hardly the only ones. A few of those other products are billion dollar babies.

          Opps, one other thing – as lame as it is (and yes, it is lame) Windows Mobile 6.X remains popular – and profitable. Even in the face of the iPhone (I have five by the way, one is mine the rest in the hands of family), WM 6 jus only lately fell below 50% smart phone market share.

          Best Regards
          Foredecker

          foredecker

          January 24, 2010 at 4:09 pm

      • Microsoft has failed at just about everything outside of Windows and Office. It’s a one trick pony.

        studentrights

        January 24, 2010 at 11:43 am

        • mmmm… no? see my reply to below listing several profitable products that are not Windows Client and Office.

          foredecker

          January 24, 2010 at 4:10 pm

      • Apple rarely gets the short end of the stick as well (discounting past history in the 80’s).

        Microsoft maybe a successful company in other segments. But, Microsoft has little to no leverage in the search market. It is trying hard to get its foot in the door. Bing is a pipsqueak.

        Apple already has a great search partner, the king of the hill, Google. Ultimately, Apple’s raison d’être is providing the best experience to their users.

        In this deal, Apple is coming in from a position of power. They are playing off Google and Microsoft to get the best deal for themselves. Any deal they cut will extract a ‘pound of flesh’ from Microsoft. Also, remember that the current management team has delivered little to no growth to shareholders in the last 10 years. A number of people, including the CEO Ballmer are heading for a chop, given the desperation, Microsoft will make a bad deal for themselves, to get into the door.

        -S

        Sandeep

        January 24, 2010 at 3:11 pm

  4. Continuing on… it’s important to realize that this is not about technology. This is about leverage.

    MS has close to zero leverage in the search market, hardly any brand recognition, after years of chasing Google’s tail-lights.

    Apple on the other hand, knows how to leverage desperate companies.

    Sandeep

    January 24, 2010 at 5:28 am

  5. “Only 8% was “software and services” and I suspect most of that is services.”

    Your interpreting the number all wrong. These are sales numbers not a percentage of the resource use to develop and maintain software. OS X is integrated into every sale of a Mac, iPhone, Touch and Apple TV. Yes, they all run on OS X. I would be surprised if OS X and other software development wasn’t 50% of the total workforce if not more.

    Your also ignoring the fact that the iTunes Music/Video store and the AppStore were designed to drive hardware sales, not a profit. So again these number to not reflect the resources used to develop and maintain software. Same goes for Final Cut Pro and a lot of their other software packages that cannot be used with buying a Mac.

    I think you’re unfamiliar with how Apple operates. Software drives hardware sales. Software is there to get you to invest in the platform not the other way around.

    studentrights

    January 24, 2010 at 9:19 am

    • CORRECTED

      “Only 8% was “software and services” and I suspect most of that is services.”

      Your interpreting the numbers all wrong. These are sales numbers not a percentage of the resources use to develop and maintain software. OS X is integrated into every sale of a Mac, iPhone, Touch and Apple TV. Yes, they all run on OS X. I would be surprised if OS X and other software development wasn’t 50% of the total workforce if not more.

      Your also ignoring the fact that the iTunes Music/Video store and the AppStore were designed to drive hardware sales, not a profit. So again these numbers to not reflect the resources used to develop and maintain software. Same goes for Final Cut Pro and a lot of their other software packages that cannot be used without buying a Mac.

      I think you’re unfamiliar with how Apple operates. Software drives hardware sales. Software is there to get you to invest in the platform not the other way around.

      studentrights

      January 24, 2010 at 10:36 am

      • Ah 🙂 Actualy I agree with you. Yes, I’m using revenue numbers. I don’t have access to how many people they put on projects. And yes, their softare is really good and it does drive hardware sales.

        But, my point stands, they don’t sell software, they sell widgets and music. They haven’t sold software in any material way in years.

        A good example is Microsoft Office for MAC. We have quite a good partnership with them there. That is essential softare for them. Bing can be the same.

        foredecker

        January 24, 2010 at 10:43 am

        • “They haven’t sold software in any material way in years?”

          OS X is a major operating system that runs Macs, iPhone, Touch and Apple TV. When they sell you hardware they are also selling you the software bundled with it. Which is what Microsoft does when it bundles windows with a PC or is that not a software sale too?

          OSX, QuickTime, iLife (Mail, iTunes, iPhoto, iDVD, iWeb, Garageband) and iWorks (Pages, Numbers, Keynote) are also sold retail.

          Final Cut Pro Suite (Final Cut Pro, Motion, Soundtrack, Color, Compressor and DVD Studio Pro) is the standard in video (period). It’s easily the equivalent of Adobe Creative Suite for video production.

          Logic Studio (Logic Pro, MainStage, SoundTrack Pro and Production Utilities) is the equivalent of ProTools for music production.

          Aperture for professional photo editing.

          MoblieMe is an online software service.

          OS X Server, XSANs and Apple Remote Desktop.

          “But, my point stands, they don’t sell software, they sell widgets and music.”

          Widgets? Apple sells Widgets? No they don’t.

          Apple just doesn’t sell Music online but also video, games and now a plethora of 3rd party applications for the iPhone. If you’re going to belittle that then every application for the BlackBerry and every other smart-phone and PDA is a widget too.

          Seriously. You’re out of touch with Apple’s business.

          studentrights

          January 24, 2010 at 11:42 am

          • I forgot FileMaker Pro for database application development and Final Cut Server.

            studentrights

            January 24, 2010 at 11:53 am

  6. “Building a successful world class search engine that can successfully complete with Bing and Google requires something much harder to obtain – skilled and experienced people. A skilled and experienced person is the true unobtainum.”

    That’s why Apple bought a talent company already in the field of search – Quattro. When you have 32 Billion in cash-on-hand acquiring talent is not difficult.

    studentrights

    January 24, 2010 at 10:34 am

    • mmmm.. Quattro is an Add firm, not a search firm. But yes, Apple has a pile of cash (which is groovy).

      They could spend it all tomororow and it would still take them years to get where Microsoft is with Bing.

      foredecker

      January 24, 2010 at 10:45 am

      • Not much point in building a search engine if you’re not going to generate any advertising dollars. Clearly one is tied to the other. Google does not provide search out of the goodness of its heart or willing to throw money at it like Microsoft to pickup market-share by paying people to use it.

        studentrights

        January 24, 2010 at 11:48 am

        • if you try to strongly tie advertising to search you will get a product that is inherently designed to screw the user for there usage data. Say hello to 2011 Google and its privacy issues.

          Anyone trying to build a search engine and says that its basing its design strongly on advertising needs will be doomed to fail!!! Stop commenting on things without thinking!

          john mitas

          March 1, 2011 at 5:12 pm

  7. “In a Slashdot reply node_3 replied to me that “Apple is one of the largest companies in the world”. I’m not sure what he means by large. Sure – Apple is in the top Fortune Global 500 for 2009 at #253. But consider these items from the Fortune list:”

    Rank Company Revenue Profits Assets
    117 Microsoft 60,420 17.7 72.8 36.3
    253 Apple 32,479 4.8 40.0 21.0
    423 Google 21,796 4.2 31.8 28.2

    Ok, now I have issue with your numbers. 2009? You mean Microsoft’s 2009 fiscal year since these Fortune 500 numbers are from the fiscal year preceding July 2009. Microsoft’s early quarters have buffered their losses.

    Microsoft has been on a slide over the past two years on the heals of this recession while Apple has had record growth throughout. Windows sales for Q1 2010 were down -52% year-over-year along with declines in every segment besides server sales.

    You might want to check out these numbers:

    http://www.betanews.com/joewilcox/article/Microsoft-Q1-2010-by-the-numbers-Windows-license-sales-at-record-levels/1256310263

    Let’s compare the latest quarter on record which was reported in October. Note that Apple’s Q4 and Microsoft’s Q1 are the same calendar quarter. This is the quarter prior to Xmas sales and Apple is predicted to announce record sales tomorrow.

    Company Revenue Profits Cash-in-hand
    Microsoft 12.92b 3.57b 36.3b? (can’t find it for this quarter)
    Apple 9.87b 1.67b 34.0b

    Not so far apart anymore are they? There are now predictions that Apple may surpass Microsoft in 2010 now that Microsoft’s sun has set.

    studentrights

    January 24, 2010 at 12:26 pm

    • For clarity of reading…

      Microsoft
      Revenue: 12.92b
      Profits: 3.57b
      Cash: 36.3b? (can’t find it for this quarter)

      Apple
      Revenue: 9.87b
      Profits: 1.67b
      Cash: 34.0b

      studentrights

      January 24, 2010 at 12:30 pm

    • mmmm ok – but my point is that its not revenue that gives Apple (or any company) the ‘size’ to build a search engine. The article you link to is pretty groovy though “Windows 7 is off to a resounding start” and all…

      On thing I think you miss in my comments is my respect for Apple. They are a super compnay and build great products. Same for Google. I completley agree that Apples peformance with the iPhone has been specacular – its a game changer. This is espeicaly true given the crappy economy.

      Microsoft hasn’t had a block buster product like that in a long time. Windows7 is doing very well (as the article you linked to explains), but its not in iPhone territory.

      But I still maintain that there are things that Apple cannot effectivly do. Search is one of them. They also struggle in the Enterprise space.

      Note, I love the “Sun has set comment”…. how do you figure? Note, the “Death of Micorosft” has been predicted for years. The Linux guys have been predicting it for years. Scott McNealy used to predict it on a regular basis. Where is Sun now?

      Where still here last I checked – and still very, very profitable and succefull by almost any measure. One thing that sets us apart from most other tech companies is our breadth of sucesfull products on a world wide scale.

      foredecker

      January 24, 2010 at 4:18 pm

  8. I read an interesting piece claiming that Apple’s business model is far different than many suspect. If Apple deems a search engine necessary, then they will have one.

    It is the Disneyworld vs the Disneyland approach: stake out a territory, but leave the surrounding area to others, or stake out the territory and the surrounding area.

    Apple’s model operates on creating what people want – or can be convinced to want. MS operates on the model of getting something (anyway it can), and then getting others to sell it regardless of what people want.

    It does not matter whether Apple is a software or hardware company – it matters that they control the entire ecosystem they created and that people want.

    Apple fails when people stop wanting what they create – like the Cube. MS fails when a competitor presents something better. Apple creates the market, MS competes in a market created by someone else.

    Apple has claimed the territory, and is in the process of filling it in with products. Is a search engine one of those products and is that strategy necessary to fill in the territory? Time will tell, but don’t forget the massive data centers Apple is building…

    PIF

    January 24, 2010 at 1:29 pm

    • Hi Pif,

      I think you make some very good points. I like your Disneyworld vs. Disneyland analogy. And yes, I agree, Apple is world class when it comes to building drool worth consumer electronics. The MAC and OSX are just simply great products. Like I mentioned in another reply, the iPhone is a fundamental game changer, it is disruptive. Heck, I have five of them. One for me (a spiffy 3GS) and four more for my family. We love them.

      In the consumer space (except for Windows), I think there is something to your point that “MS competes in a market created by someone else.” But there is nothing wrong with that – a market only gets created once and there is always room for competition. Moreover, there are really ver fiew ‘firsts’. The iPhone wasn’t the first smart phone, but it was the first smartphone Consumers wanted in mass – it changed the game there. Google wasn’t even close to being the first popular search engine. Remember Altavista? (There were others as well). But they were the first to get it right. I know I will be poo pooed, but Bing is the second one.

      But, I think you are mistaken in one thing. Microsoft does create markets too. Sharepoint is a good example, so is Exchange. Office is too – it sets the standard, just like the iPhone in its market. Enterprise email was pretty lame until Exchange. Just like the phone market was lame until the iPhone. XOBOX live is as ground breaking for gaming and media as the iPhone is for cell phones. It’s really pretty freaking awesome.

      Regards
      -Foredecker

      foredecker

      January 24, 2010 at 4:59 pm

      • Well I would not know anything about entreprise class anything same for dedicated gaming boxes – last used Atari or something like that back in late 80s.

        Never heard of Sharepoint – must be huge somewhere. Else is very small (relatively) dedicated corporate user base. Not much of a market there even if many corporations use it – consumers mostly do not.

        MS markets tend to be made from someone else’s code scrunched into an obsolete OS, which is one reason they cannot create broad cunsumer products – the last thing they made was MS Word (the original version – mac only) and even that was not in-house, but some one else’s app.

        There is a reason why one of Apple’s slogans is “MS get your copiers ready.”

        If and when Apple ever gets into enterprise software and dedicated gaming boxes – I’ll re-assess.

        Xbox maybe awesome but it is a money loser and has a very high failure rate out-of-the-box – so I’ve heard.

        PIF

        January 24, 2010 at 6:28 pm

        • Hi Pif, You are defining success as only being the consumer market? That’s interesting – i think companies like Oracle, IBM, HP, Dell, Redhat and many others would suggest to you that there is quite a bit of money to be made in the enterprise space. Of course, its not sexy and high profile like the consumer space can be.

          It’s easy to check facts – did you do that before commenting about SharePoint? Here is a contemporaneous article for you. Last year, in the recession, SharePoint sales grew to over $1B dollars, very profitable dollars they are too. Is $1B and growing “not much of a market” in your mind?

          Now, you are literally making stuff up. “Someone else’s code..” mmm like what? If you are going to make claims like that, at least be able to cite some references. Do we buy other companies – of course we do! Just like Apple, Google, Oracle (just bought sun), etc. That’s normal business practice. Often make things we buy very, very successful, and the people that come along with those companies very, very wealthy. All good right? Want and example? How about Visio – we purchased them in 2000.

          Do you think Apple wrote all their software from scratch? With people they hired as new grads? Nope, they do things pretty much like we do. They develop some stuff, they buy some stuff, the license some stuff. For example, OSX uses the MACH kernel. Are you going to disparage them because they didn’t write their kernel from scratch?

          Here is something interesting for you – the NT kernel is 99.9% Microsoft from scratch. There are few parts of Windows that came from somewhere outside Microsoft. Those that did are typically not core.

          Next, how is NT obsolete? Can you name something major? Yes, we have quite a bit of legacy code that is there to maintain application comparability. But the Windows code base evolves quite nicely and as world class as anything else, more so in many cases. Note, I’m sure that Linux and OSX (and perhaps Solaris) have some edge of NT, but I’m not familiar with them enough to comment.

          Update: here is timely and relevant link for you: Windows 7 way hotter than Vista off the line, now more popular than all OS X versions (engadget, Jan 21st 2010).

          Lastly, the XBOX business is profitable – has been for almost three years now. Yes, one of the XBOX console generations sure had some reliability problems – we set aside $1B to cover the problem – business still profitable. I checked on reliability and you are correct, the XBOX is suffering there – which is a bummer.

          Regards
          -Foredecker

          foredecker

          January 24, 2010 at 8:18 pm

  9. I am not sure, if you watched the All Things D special with Bill Gates and Steve Jobs being interviewed by Mossberg/Swisher.

    Jobs mentions that Apple is at heart a software company that sells software in exquisite hardware boxes.

    Don’t forget that.

    Sandeep

    January 24, 2010 at 3:14 pm

  10. Hi Student Rights,

    You seem to keep re-illustrating my points. I was clear that Bing’s growth is slow – I never claimed it was massive. That’s perfectly Ok. We’re in this for the long haul and nobody expected massive market share shift from Google to Bing in a short period of time.

    So, I’m not sure why you think the Tablet is a failed product. HP, Dell, Lenovo, and others have been happily and profitably selling them for years. Are you saying that since the Tablet PC hasn’t become the dominant form factor that its somehow a failure?

    Zune is an interesting story. There is a huge difference between failure, and not having yet reached success. I have no insider knowledge (I don’t even know anyone in the Zune group). But look at the product reviews for the latest crop of Zunes. They are very good. The hardware is slick and the software smooth. Its big problem is that it’s not a phone. Have you compared the Zune Software to iTunes? It’s day and night… As much as I respect Apple (see my other posts and comments) iTunes sucks. Let’s touch base again next holiday buying season and see where Zune is.

    My point about Microsoft sticking with products is this: Microsoft has the corporate and cultural fortitude to stick with things that need to be strategically successful. We may not get 1.0 right, or 2.0, but we most often get 3.0 right, often very right. We nailed 2.0 with the XBOX and XBOX live for example. Yes, we have failed products. I’m not sure what point that makes. So do all big companies, including Apple, Google, HP, IBM and many others. Apple tried for years with hand held computing things. Remember the Newton? They have had other bombs too like the Cube, the Motorola Rokr, the Pippin (game console), EWorld, Apple PowerCD, Apple Powered Speakers, How about apple TV? Is that a failure or is the Jury still out on that? Have you used it? Its pretty lame. XBOX live is way better – and has more content. They also failed completely at the productivity software market – remember Claris Works?

    Best regard
    Foredecker

    foredecker

    January 24, 2010 at 4:46 pm

    • @foredecker “You seem to keep re-illustrating my points. I was clear that Bing’s growth is slow – I never claimed it was massive. That’s perfectly Ok. We’re in this for the long haul and nobody expected massive market share shift from Google to Bing in a short period of time.”

      You say your in it for the long haul. Microsoft has had a search engine since 1997; MSN Search, Windows Live Search and Bing. You’ve been losing marketshare for 13 years. If anything Bing has been on life support since birth with a $80 million advertising campaign to back it up.

      Microsoft’s “Third Era” Of Search Begins
      http://searchengineland.com/microsofts-third-era-of-search-begins-with-departure-of-search-chief-christopher-payne-10690

      Microsoft to Invest $80M in Advertising “BING”
      http://www.tomshardware.com/news/microsoft-bing-kumo-search-google,7890.html

      @foredecker “So, I’m not sure why you think the Tablet is a failed product. HP, Dell, Lenovo, and others have been happily and profitably selling them for years. Are you saying that since the Tablet PC hasn’t become the dominant form factor that its somehow a failure?”

      Bill Gates predicted it would become the dominant form factor and he was wrong. As an IT manager in Chicago I’ve never even seen a tablet outside a store. Hell, I don’t even remember seeing one in a store. Windows powered tablets are right up there with the success of the Zune.

      Ghost of Gates’ tablet haunts Microsoft’s future
      http://www.theregister.co.uk/2010/01/07/microsoft_tablet_pc_slate/

      @foredecker “Zune is an interesting story. There is a huge difference between failure, and not having yet reached success. I have no insider knowledge (I don’t even know anyone in the Zune group). But look at the product reviews for the latest crop of Zunes. They are very good. The hardware is slick and the software smooth. Its big problem is that it’s not a phone.”

      The Touch is not a phone and Apple sells nearly as many of those if not more than iPhones. So I don’t think the Zune’s big problem has anything to do with it not being a phone.

      Apple’s iPod touch sales double, nearly on par with iPhone
      http://www.appleinsider.com/articles/09/04/23/apples_ipod_touch_sales_double_nearly_on_par_with_iphone.html

      iPod Touch’s Holiday Sales Spike Likely Beat the iPhone’s
      http://www.businessweek.com/magazine/content/10_02/b4162022078079.htm

      @foredecker “My point about Microsoft sticking with products is this: Microsoft has the corporate and cultural fortitude to stick with things that need to be strategically successful. We may not get 1.0 right, or 2.0, but we most often get 3.0 right, often very right.”

      On the flip-side Apple almost went under from mismanagement when Jobs was not at the helm. Jobs returned and turned Apple into a juggernaut of consumer electronics while making money hand-over-fist. Your up against a company that came back from the dead. That’s a bad sign.

      studentrights

      January 24, 2010 at 6:04 pm

      • Hi Studentrights,

        Well, it’s pretty clear you and I are going to agree to disagree. Like I said, our partners have been selling Tablets for a while now. If they were not making money on it they would have stopped a long time ago. Ok, so you’ve never seen a Windows tablet – since when did the anecdotal experience of one person become indicative of the status of a worldwide business?

        Again, I’ve said time after time the iPhone (and of course the touch) are awesome game changing products. I’ve also lauded Apple often. Super company. Jobs is a genius. I’ve never said anything different. OSX is quite groovy too. I know some of the folks that work on it – we have beers from item to time when we are in the same city. Spiffy people. For a long time, my goal was to work at Apple or Microsoft. I ended up at Microsoft.

        Your points seem to be “See! Microsoft isn’t number one in every market and isn’t always amazingly successful! Oh and see one of Bill’s predictions didn’t come true.” Okey dokey.

        Remember, we’re up against several companies that are incredible competitors. It’s not just Apple. How about Google, IBM, Oracle, Linux, Apache, Mozilla. We’re not dead yet – far from it by almost any measure.

        Best Regards
        -Foredecker

        foredecker

        January 24, 2010 at 10:34 pm

  11. Apple just raked in $15 billion of revenue last quarter according to the earnings report today. Just set a record. That’s $3 billion above the Street’s consensus. They just blew the numbers out of the water. Also, sold 3.3 million Macs. Also a new record.

    They will match or beat Microsoft’s annual revenue by Q1 2011. It’s going to be a tight horserace this year.

    Who’s not so big anymore?

    Apple obliterates the Street with the all-time highest revenue, profit, macs and iphones sold ever…
    http://macdailynews.com/index.php/weblog/comments/23799/

    studentrights

    January 25, 2010 at 10:09 pm

    • Hey Student,

      As I mentioned before (more than once…) its not about revenue. Its about people. The revenue examples I used were clear to illustrate the points I made about business model.

      I’ve also been repeatedly clear that I think Apple is a fabulous company. Kudos to them on their recent results!

      -Foredecker

      foredecker

      January 26, 2010 at 3:03 am

      • Apple is a software company at it’s heart, as Steve jobs has stated himself. They write the operating system for Macs, iPhone, Touch, AppleTV, iSlate (or whatever its called). The fact that most of Apple’s revenue comes from hardware sales is deceptive, since their business model is the reverse of Microsoft’s.

        Microsoft makes money by developing software to sell on PCs. Microsoft makes no money from the hardware. Apple makes software to sell hardware, both of which they make money from. But if you look at Apples software pricing, historically they’ve continually discounted software well below their competitors to drive software prices down and give buyers an incentive to buy into the Mac platform. Or in the case of iTunes they developed the service almost exclusively to drive hardware sales, not to generate profit from music sales.

        The bottom-line is that Apple’s hardware subsidizes Apple’s software development with the purpose of driving hardware sales.

        So the revenue and profit numbers to reflect Apple’s efforts accurately, since the business model is so different from Microsoft’s. Unlike Microsoft, Apple sells the hardware, OS and applications under a vertical development model.

        studentrights

        January 27, 2010 at 2:55 pm

    • Hi Student 🙂

      I never said apple wasn’t big, just not big enough to build their own search engine. Let me repeat myself again – I have a TON of respect for apple. Great company.

      I’ve been waiting to reply to you as I knew that Microsoft’s numbers were coming out today.

      Here is a short summary: Today the Microsoft announced record revenue and earnings for the second quarter of fiscal 2010. It was an exceptional quarter with revenue growing 14% to just over $19 billion, primarily driven by strong Windows 7 consumer demand.

      Windows PC’s continue to out sell MACs by an order of magnitude.

      Also, why do you keep posting the same comment multiple times? I’ve been deleting the duplications…

      Best Regards
      Foredecker

      foredecker

      January 28, 2010 at 10:00 pm

  12. Hello – just a little note to say thank you for this entry. Very good.

    Damian Lapidus

    January 26, 2010 at 11:51 pm

  13. Correction… “So the revenue and profit numbers DON’T to reflect Apple’s efforts accurately, since the business model is so different from Microsoft’s. Unlike Microsoft, Apple sells the hardware, OS and applications under a vertical development model.

    studentrights

    January 27, 2010 at 3:04 pm

  14. Hi to every body, it’s my first visit of this web site; this website carries remarkable and genuinely excellent information in favor of visitors.t00wiqp…

    troplolop

    May 18, 2013 at 2:48 am


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