Todd Biske: Outside the Box

I was just having a discussion with someone regarding Apple’s recovery over the last ten years and what the future holds for them when it dawned on me that there are parallels (sorry, no pun intended) between Microsoft’s efforts in the server-side space in the enterprise and Apple’s efforts in the home.

There’s no doubt that Apple’s strategy has always been about having end-to-end control of the entire platform, from hardware to software. There are advantages and disadvantages to this, with the clear disadvantage being market share, but the advantages being user experience. On the Microsoft side, when they entered into the enterprise market, and this still holds true today, it’s really about getting as much Microsoft software there as possible. They would like to own the software platform from end-to-end.

The parallel in this is that when Microsoft moved beyond the desktop, where they had nearly all of the market share, they suddenly had to deal with a heterogeneous environment rather than a homogenous one. Microsoft’s strategy is not one of integration, however, it is about replacement. Over time, they’ve had to yield to the fact that integration will always be necessary, and that many infrastructures are too well established to incur the cost of a migration to an all Microsoft environment. That being said, Microsoft would be happy to take your money and do it, and they still continue to position their products so that thought is in the back of your mind. I don’t know of anyone who would argue with the statement that Microsoft solutions work best in an all-Microsoft environment. That’s not to say that it doesn’t work really well in a heterogeneous environment, it simply says that if you want the best Microsoft has to offer, you have to go 100% Microsoft.

Now let’s talk about Apple. I’d argue that the state of the market for the integrated, intelligent home is around the same point (maybe a bit less mature) that enterprise infrastructures were when the whole middleware rage occurred in the 90’s. Companies were just starting to realize the potential and the importance of integrating their disparate systems. Today, consumers are just starting to realize the potential of integrating the technology in their houses. I’m not going to make any predictions about when it will become mainstream, as they’re usually wrong, but I do think it’s safe to say that the uptake is definitely increasing in slope rather than remaining flat. Apple is in a very similar position to Microsoft. The home is a heterogeneous environment. Apple works best in an all Apple environment. Will Apple take a path similar to Microsoft to where they integrate where they have to, but are really focused on getting a foot in the door and then it’s all about more Apple? Or will there be careful decisions on where the strategy is about integration and where the strategy is about extending the platform? To date, I think they’ve done the latter. We don’t see an Apple-branded TV, instead we have a set top box that talks to TVs.

The biggest factor may not be what Apple does, but what everyone else does. Microsoft continues to gain market share in the enterprise because integration of heterogeneous environment is still a painful exercise. As look as there is pain in integration, there’s always opportunity for platform-based approaches to gain ground. Integration in consumer technologies is certainly a different beast, as there are standards and a certain level of status-quo. It’s not a painful effort to hook up stereo components from multiple vendors. At the same time, however, it’s ripe for improvements in the experience, case in point, the 100+ button remote control associated with most receivers. Likewise, the standards change all too often. Back when digital camcorders came out, Apple had a big win with integration with iMovie that no one else had. Over the past 8 years however, the digital camcorder manufacturers have changed formats to the point where you can’t say whether a digital camcorder will work with iMovie or not. It just shows that if you don’t control the platform end-to-end, your entire strategy can fall apart quickly based upon those pieces outside of your control.

I think Apple’s taking a very careful approach on what problems to tackle and when. The one thing I’m sure of is that Apple’s presence in the consumer will make the next 10 years in the home very exciting. While one could argue that the availability of the Internet in the home started the process of the demand increasing at a faster pace, I also think you can that Apple’s products, more so than any other consumer products company, have enabled that pace to continue to increase.