In-depth: The good times have come back to Apple

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In-depth: The good times have come back to Apple

Since its humble beginnings in a garage in Cupertino, California in 1976, Apple has been no stranger to controversy, speculation and the highs and lows of a developing business, trying to do something different to the mainstream.

But it seems that some of its latest innovations are taking up a strong position in the channel, writes Linda Endersby.

Though its products were always innovative and impressive, often setting new standards in certain areas, it has been criticized for reasons of cost and adaptability of its niche products.

However when the initial stock was offered to the investing public in December 1980 it generated a larger IPO than the Ford Motor Company in 1956, instantly creating more millionaires (around 300) than any company in history.

The attraction to the company and its distinctive fruit logo had begun, and despite the troughs experienced since then, the organisation has maintained a loyal following from those it converted.

The Jobs Effect

One of the men who started it all back in that garage has had his own misfortunes within the company history.

Steve Jobs was working on the ill-fated Lisa, the first computer to be sold to the public with GUI (Jobs' own inspiration from a visit to Xerox) when he was pushed from the team due to infighting and took over Jeff Ruskin's low cost computer project, the Macintosh.

Launched a year after the Lisa, which failed commercially due to its high price tag and limited software titles, the Macintosh's debut was announced in January 1984 with the iconic advert directed by Ridley Scott.

The Orwellian Nineteen Eighty-Four style ad was screened first during the Superbowl of that year and is seen as a watershed event in Apple's fortunes. It is now seen as a masterpiece though the Apple board thought it the worst ad they had ever seen at its initial screening.

Because of its advanced graphics needed for the interactive GUI, the Mac was powerful in the creation of the desktop publishing market with products such as LaserWriter and PageMaker.

Another agreement led by Steve Jobs, along with LCSI who developed the LOGO programming language for the Apple II platform, to donate one Apple II and one Apple LOGO w package to each school in California.

Soon this agreement was replicated in Texas, and led to acquisition throughout the US and was critical to Apple acceptance in the home as parents wanted to give their children the help with homework.

Despite these successes the board saw the Mac as a failure and instructed the CEO John Sculley in 1985 to contain Jobs and limit his forays into expensive untested products.

The resulting power struggle saw the Board remove Jobs from managerial duties and he resigned to found NeXT Inc.

It would not be until 1996 when Gill Amelio replaced Michael Spindler as CEO that Jobs returned to Apple; after failed attempts to improve the Mac OS with Taligent, Copland and Gershwin, Amelio chose to purchase NeXT and NeXTSTEP OS and in the process bought Jobs back as an advisor.

Following crippling losses the board then ousted Amelio and Jobs took over as interim CEO.

As Jobs started to restructure the product line, the fortunes of Apple began to flourish. With new and more successful versions of the Mac and its new operating system, software purchases allowed Apple to branch out into other media

Then, with Jonathan Ives leading the design team, the iPod was born in 2001, and over the next nine years led to huge success with a range of classically designed mobile devices.

Looking at Apple's history, it does seem that Jobs' presence has coincided with the peaks and there is a train of thought that Jobs made Apple what it is today, though his absence arguably made him better able to do that when he did return.

Of course, speculation over his health and how long he will remain in charge has been rife over the last two years since he took a leave of absence in January 2009.

Though some still say that Steve Jobs is Apple and Apple is Steve Jobs, there is the view that Tim Cook and the team have internalized Jobs' ethics and inspiration and the Jobs effect is baked into the company; indeed, Tim Cook is reported to have been awarded a $5m bonus for his performance in Jobs' absence.

Jobs' sometimes controversial style and extraordinary success does excite both public and investors but it seems the company has such a strong structure and ethic due to his leadership, it could continue to be strong when he eventually takes a less prominent role or retires.

Whether that strength will last and who would reinforce it in the event of problems remains to be seen.

2010 position

In October 2010, Apple announced record-breaking results for its fiscal 4th quarter ending 25 September.

The Company posted record revenue of $20.34 billion and net quarterly profit of $4.31 billion compared to revenue of $12.21 billion and net quarterly profit of $2.53 billion, in the year-ago quarter.

It also announced the sale of: 3.89 million Macs, a 27 % unit increase on the same quarter in 2009, 14.1 million iPhones, 91% unit growth on the same quarter in 2009, 9.05 million iPods, 11% unit decline from same quarter in 2009, and 4.19 million iPads sold during the quarter.

Though there is no equivalent quarter to compare iPad sales, this market seems to be the most keenly watched by analysts. Research firm Strategy Analytics (SA) said that Apple controlled 95% of the emerging market for tablet computers with its iPads. The total market grew to 4.4 million tablets in the September quarter from 3.5 million in the previous quarter, the researcher said.

"The tablet wars are up and running. Apple has quickly leveraged its famous brand, an extensive retail presence and user-friendly design to develop the tablet segment into a multi-billion-dollar global business," said SA analyst Neil Mawston.

Forrester has gone further with its research and forecasts and have published findings on how iPads have entered the workforce to open doors to new mobile scenarios.

Says Forrester's Executive Summary: "IPad has exploded onto the scene. Who could have imagined that a tablet (a category introduced in 2001) would capture the imagination of employees and IT alike?"

But it did, and it has kicked off an arms race for smart mobile devices. Every day, a new tablet appears: Cisco Cius, Google Chrome OS tablet, Dell Streak, Samsung Galaxy Tab, RIM PlayBook, and HP's upcoming Windows and WebOS based devices. The list goes on.

Indeed, on 10 November 2010 Bloomberg cited a statement from RIM co-CEO Jim Basillie, who said: "The RIM Playbook tablet will be sold for under $500 when it launches during the first quarter in the US and Canada, with the international launch beginning later in the second quarter."

RIM also expects the Playbook to compete on the strength of its new operating system based around the QNX embedded real-time operating system which was acquired earlier this year, its support for multiple video formats, real-time multitasking, Java/OpenGL for app development and in-browser Flash content, with its sights aimed at Apple's iPad as well as corporate customers.

Forrester's report goes on to say: "No need to mince words: Apple's iPad has redefined what tablets can do. With an all-day battery life, a seductive form factor and user experience, and a rapidly expanding portfolio of business applications (although missing Microsoft Office), iPad has captivated consumers and employees alike.

"And it's pushed the device industry to innovate like crazy. Already, Apple has sold more than 3 million iPads and is on track to sell millions more by year-end. As of June 2010, Apple had sold more than 3 million iPads."

Forrester has already revised its tablet forecast upward to 13 million units globally by the end of 2010 and is ont rack to put 59 million tablets in the hands of US consumers by 2015.

Currently, 30% of IT shops are piloting or planning tablet apps. A further 43% of firms in North America and Europe are interested in tablets, and only one in four firms has no current tablet plans.

Their motivation is simple: Don't get caught flatfooted when employees bring in iPads.

"Employees and IT pros watch as device giants announce or ship their tablets. Every device maker has shipped, announced, or whispered its plans to build a tablet. Mobile phone makers, PC builders, and some new entrants like Google will compete for your tablet attention," says Forrester.

So how does Forrester see the device exploding as effectively into the workplace? Analysts state that tablets are entering the workplace by way of employees eager to prove the business use of new gadgets.

Having spoken to dozens of companies the categories of use are summarized below:

Displace

Use a tablet instead of a laptop or netbook

Use a tablet in a traditional selling situation (more intimate than a laptop for small group presentations).

Use a tablet in a conference room (no screen to block the face).

Use a tablet on an overnight trip and leave the laptop at home (lighter weight, get more done in coach).

Replace

Use a tablet instead of a clipboard or other paper

Use a tablet on a construction site or manufacturing plant to see drawings and schedules and log actions.

Use a tablet in the field to collect information and determine costs while on site with a customer.

New place

Use tablets where previously only a person was involved.

Use a tablet on a retail floor to customize a product or service, place an order, or educate a prospect.

Use a tablet in a hospital to access patient records and drug interaction database.

Source: Forrester Research, Inc.

Challenges in the enterprise

Along with any new hardware or software there will be doubts and challenges to overcome, security and support being the major challenges. A recent survey by BoxTone, expert in Mobile Service Management software, of nearly 1200 IT professionals suggests enterprise adoption of the iPad is accelerating.

The survey shows that 73% of respondents expect to deploy the iPad and other iOS devices within their organizations in the next 12 months, with more than a quarter expecting to rollout "immediately".

Furthermore, nearly 40% of those surveyed anticipate iPad deployment growth in the range of 20 percent or more over the next 12 months, and over 50% plan to deploy at least one iPad application in the next 12 months, with a quarter anticipating three or more#

When it comes to iPad management, a massive 87% of those surveyed cited the process for secure iPad configuration and deployment as their primary requirement, while 44% said readying their help desk for iPad support would be a major initiative.

However, some security experts, such as Jack Gold of J.Gold Associates, questioned whether encrypted data stored on the iPad would be safe from hackers.

According to Gold, some experts have demonstrated the ability to hack certain versions of the iPhone, which contains earlier versions of the operating system used in the iPad and also provides data encryption.

"Some of that encryption can be worked around, which means the iPad gets an F from any regulated corporation that must protect data," Gold said.

However other security experts give the iPad a grade B for overall enterprise readiness. One of them, Wolfgang Kandek, chief technology officer at security firm Qualys Inc., predicted: "The iPad will make its inroad into the enterprise just by force of users, and it's going to be a really interesting conundrum for IT managers.

"I don't think the iPad is ready today, but it will make its way into the enterprise even as it clashes with the typical enterprise IT mentality," he added.

It seems then that with Apple in such a strong market position and announcing new products and software updates on a regular basis, those employees lucky enough to find one of the tablets in their Christmas stocking will be putting CIOs under pressure to address the problems and embrace the technology.

It seems too that many are preparing already. But it remains to be seen if Apple will maintain the market share as businesses facing the economic crunch are faced with a widening competitive field.


This was first published in November 2010

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