|Apple and IBM|
Issue 03 (December 2004)
If you work in the computer industry, as I do, you are likely to have strong views about the epic struggle between Apple and IBM for the hearts and wallets of the microcomputer user.
IBM loyalists cite the company’s long-standing reputation for good, solid equipment, backed up by field support that seems to be everywhere. IBM computers are inherently the right stuff, because... well, because they’re made by IBM. How could the Jolly Blue Giant do wrong?
Apple aficionados have a more complex tale to tell. They talk about Apple’s really caring for the personal computer user in a way that IBM never can, and about leadership in innovation. They see the enemy as Goliath, trying to overcome Apple’s cleverness with brute strength.
At the risk of inviting a rain of brickbats from my professional peers, I am now going to enter the fray on the side of Apple. Moreover, I’m going to make a claim that even the most ardent Apple supporters may find farfetched. I believe that IBM is on the down side of an enormous product cycle, and that within the next ten years Apple will emerge as heir-apparent to the world’s vast information-processing industry.
This doesn’t mean that I think IBM is going to fold up. IBM will continue to serve some markets and make money. But they will cease to be the center of information-processing technology, just as the railroads are no longer the center of public transport. As a matter of fact, the railroad analogy is quite apt. At one time the railroads (taken as a whole) comprised the largest enterprise in America—a colossal network of property, technology, and skilled people dedicated to providing transport. In 1925, who would have foreseen their decline? Yet today it is clear that air and motor transport dominate the field. Trains hang on because they already exist. Were we to start building a national transport system from scratch today, it is doubtful that more than a few hundred miles of track would be laid.
The railroads lost out because their technology ceased to satisfy an evolving market, one that demanded quicker passenger transport and door-to-door service for goods. Similarly, IBM will find that mainframe computers no longer make sense in tomorrow’s information-processing world.
“Come now,” I hear you say, “No bank is ever going to maintain its accounts with one of those little desktop toys. No phone company is going to do its billing on a Macintosh.” Don’t be too sure. The ultimate user interface for a ten-million-dollar mainframe and a two-thousand-dollar Apple II is a keyboard of identical dimensions. What happens behind the keyboard is almost entirely a trade-off between cost and performance. And the performance-per-dollar of desktop computers is escalating at a prodigious rate.
The key is technology. No products have ever improved as fast and as radically as have microcomputers. Any computer is basically a routing and calculating system between memory and input/output devices (such as typewriters and display screens). Per dollar of cost, microcomputers do routing and calculating about as
well as mainframes—somewhat slower, perhaps, but very adequately. It’s in the area of memory capacity that they have lagged, gaining a reputation as toys. But no longer. For temporary data storage (such as a bank uses to keep track of transactions during a workday), magnetic disk units for microcomputers now rival those of the big boys. Permanent information storage (such as a bank needs at the end of each day) has leaped ahead. A new technique called “CD ROM,” using something similar to a videodisk player, can now record all the telephone directory listings in the country on $10 worth of plastic. That covers 90% of computing needs.
But even if mainframes dropped in cost, they would still suffer a fatal flaw. They are too centralized for today’s and tomorrow’s needs. Data processing is no longer confined to “computer rooms” in big office buildings. It has invaded every level of business and personal activity. What has made this possible, and what will continue to serve the industry, is many small computers everywhere rather than a few big machines. While small computers can link up to do big jobs, the reverse is no longer economically practical: Mainframes can no longer be shared at enough points to support all the different kinds of work that need to be done. In short, I believe that the jobs now done by mainframes will be increasingly done by micros, until the mainframe computer ceases to be the predominant data-processing machine.
“But even if all this is true,” I now hear you say, “Why shouldn’t IBM take over the new technology? After all, they’ve already sold more personal computers than Apple.”
My answer is based more on a feeling for the two companies than on hard facts. IBM’s entries in the micro field so far have displayed very little innovation; they have been miniaturized versions of mainframe technology. That’s why other manufacturers have copied them so easily. Apple, on the other hand, has broken new ground with every product. The reason for the difference, I believe, is fundamental to the two companies’ outlooks. IBM has traditionally sold computers to non-users—to businessmen who hire other people to operate their machines. Apple started out by selling computers to users: as a result, their market orientation has been fundamentally different from the outset. Their real product has been the “user interface,” while IBM has stuck to designing hardware. In a future where many people are interacting with small computers in many different contexts, I believe Apple’s approach will ultimately be the winner.
“Even so,” you may finally protest, “What’s to keep IBM from changing their outlook?” To answer that, you have to know why the railroads didn’t get into the trucking business. Companies are like people; they learn one thing well and find it hard to change. When a market shifts, obsolescence usually overtakes them on little cat feet.
The bottom line is that Apple can hire people who already know how to make IBM’s products, but it’s not in IBM’s blood to hire people who can invent Apple’s user interface. If, as I believe, Apple’s approach will ultimately take over the market, then they are on the winning track. From here on, it’s just a matter of time.
George Towner was born in Reno and grew up near Berkeley. As a teenager he began making gangster movies using an old 8mm camera, one of which featured a car being pushed over a cliff off State Highway 1. He has started and sold two successful technology firms, and currently works for Apple Computer, where he is the most senior in age. He lives with his wife in Sunnyvale. They have two daughters and a son.