By most measures, Steve Jobs is an incredible success. However, his goal was to make the computer for the masses and at 6 percent market share, up from below 3 percent at the beginning of the decade, he'll retire before the company hits 20 percent. Around 70 percent of the existing market is corporate purchases, where he has almost no share and the emerging overseas market is looking at systems that price out under $500. Apple, for good reason, doesn't play there.
This is my third post on Apple in the enterprise. The first looked at IBM's ability to drive the result; the second looked at Live Mesh and how it might help. Here is what I think is the more likely path.
Getting to Everyone Requires IT
If we just look at the consumer segment, which Jobs does target, he has somewhere between 20 percent and 25 percent. Impressive, but he enjoys better than three times this with MP3 players.
On cell phones, he is under 2 percent of available market with the high-volume classes priced significantly under his offerings for both hardware and services. Phones are largely purchased by individuals and that suggests another path. The goal of building the computer for the masses, which I'm pulling out of "Inside Steve's Brain," one of the most useful profiles of Apple's CEO, seems impossible, but "seems" and "is" are two very different things.
Still, selling directly to IT won't work because Apple would have to significantly reduce its margins and supply roadmaps, neither of which is acceptable to the company. And you can actually put the OS on Dell or HP hardware to get competitive bidding but not without violating Apple licensing. Apple just won't allow legal cloning because it would reduce its control over the result, and control is very important to assure the quality of its solution. So how could this be accomplished?
Dominating the PC Market: iPhone Is Key
With phones, users buy the vast majority themselves. And increasingly, phones are doing what used to be possible only with computers. Fast forwarding to 2010 and Intel's Atom platform, we start getting full laptop capability in that time frame.
Phones are much more personal and there are more and more of us using phones rather than PCs to do our day-to-day tasks. As we move applications into "the cloud," we increasingly live in a browser anyway. Even though we may still have a traditional PC, it is this new handheld PC we now call a smartphone that will be the bigger part of our lives.
Therefore, if Steve Jobs is to realize his vision of a computer for the masses, it seems most likely that it will be as a result of the future iPhone line, not the Mac line. But is Microsoft toast?
If Apple Wins, Does Microsoft Lose?
Not necessarily. I'm writing this from Microsoft's Management & Integrated Virtualization Summit in Las Vegas in a room cold enough to store meat. The company is talking about its Dynamic Desktop offering, which appears to be the corporate side of the Live Mesh product announced last week. If successful, this would put the Microsoft desktop into the cloud and available to anything that either has a browser and is connected, or supports Live Mesh and isn't. The MacOS is one of the initial targets for Live Mesh, suggesting that the future iPhone may actually be accessing Microsoft technology, allowing its dominance to co-exist with Apple's.
Apple has already licensed ActiveSync from Microsoft (in June 2008, the iPhone becomes much harder for IT to block), and Live Mesh is the technology that probably will eventually supersede ActiveSync, making it likely Apple will participate here. By fully integrating with the Microsoft back end, which this would allow, the future iPhone could become the dominant personal computer by 2015 and allow Steve Jobs to attain his personal goal without sacrificing control or causing margins to erode (though increasing competition will likely do the latter).
Can Apple Dominate the Truly Personal Computer?
Apple hasn't had a chance like this since the 80s. The iPhone may attain what the Mac and iMac never have -- mainstream acceptance in business. There are a number of competitors it has to overcome, ranging from platform companies and organizations like Microsoft, the Limo foundation and Symbian to hardware companies like Samsung, LG and HTC. But this is a vastly more level playing field than the traditional PC business market where IT has requirements that Apple simply will not be willing to meet.
Apple could dominate this new form of personal computer, but could and will are two very different words. The iPhone appears to be the only path that gets Apple to Steve Jobs' goal of personal computer dominance before Jobs himself retires. The only thing that we can predict for sure this time is that the folks who waited to buy the iPhone until the 2.0 version arrives in June will be much happier that they did.