October 6, 2011

Path Dependency in Corporate America: Apple v. Microsoft products

Having been a personal computer guy for a typical corporation in the mid-1980s, one of the things we computer guys talked about a lot, both at the time and in hindsight throughout the 1990s, was whether we had made a big mistake going down the IBM PC/Microsoft path rather than the Apple path. I tended to think we had been mistaken because the productivity advantages of being on the Apple Macintosh path would have paid off over the decades. But it was very hard for me to identify a point where we should have made the switch. 

A stylized example of the typical situation facing us was that, say, after two years of introducing PCs into the company, we had 10% of the workforce on PCs. We could likely get a big enough budget this year to raise that total to 20% in 12 months, and if we executed correctly, an even bigger budget allotment to raise the percentage to 40% in 24 months. On the other hand, if we had switched to Apple, the higher upfront per user cost would have meant our budget wouldn't have stretched as far. Plus, there would have been a period of adjustment for us computer guys that would have slowed our ability to roll out computers to more users. So, maybe after 24 months we'd only be at 25% computer usage rather than 40%. And that would be hard to justify to management. And to ourselves.

Looking back from the perspective of 2011 when we would have had 100% computer usage for 15 or more years, well, then even small productivity advantages of a few percent per year for the entire workforce for using Macs over PC/Windows make Macs seem like a no-brainer. On the other hand, that long-term orientation assumes a low discount rate that's not really justifiable. We had a very short term orientation because we were competing in a rapidly changing three-company industry that only had room for about 1.5 competitors. We managed to survive because we drove one rival out of business, but still nearly went broke several times ourselves, so we didn't actually ever have much of a margin for an expensive switch.

Okay, now that I'm done writing this, I notice that Kevin Drum, who is about the same age and has a roughly similar career path (such as it is) as I do, has put up exactly the same post. But his is a lot better than mine. So, if you are interested in this topic, read his instead of mine.


Dr Ahmed said...

May steve Jobs r.i.p, nice post btw.

Mitch said...

Man, I just don't buy that. I was in corporate America IT departments for much of the 80s and 90s, and there's just no way Apple products worked in major corporations for most of that time.

Besides, productivity advantages? I don't want to get into a religious war, but if there's one thing that should be clear by now it's that productivity is in the eye of the owner, and most people felt more productive with IBM. I realize that those who prefer Apple think this is evidence of idiocy, but there you have it.

Anonymous said...

What productivity advantages?

RKU said...

Don't know about any real productivity advantages for typical number-crunching type office work. I think the strength of the Macs---for a decade or so before Windows caught up---was in graphic design work and desktop publishing.

And then once Windows had caught up, Apple started to fade away, until Jobs resurrected the company with a totally different focus on consumer electronics.

Wes ... son of Cass Sunstein said...

I worked at a computer store in the late 80s, and I remember the problem with Apple being the lack of business software for it. There were no serious spreadsheet programs, which was absolutely essential for business. I don't remember any nice accounting or database programs either.

Even now, isn't most of the serious software that Macs use derived from IBM/Windows? If you want to do business on a Mac, don't you pretty much have to get Office for Mac?

Nanonymous said...

productivity advantages of being on the Apple Macintosh path would have paid off over the decades

What exactly productivity advantages are you having in mind? The only thing I can think of are WYSIWYG Mac Classic versus text based DOS/Unix for secretaries and school reports. PC clones won long ago precisely because they answered consumer's needs more: cheap, flexible and relatively powerful. That was 20-25 years ago.

NeXT/OSX, being a polished Unix with a good GUI, leveled field significantly but even today, with Windows not standing still, it is still a wash. Where I am (heavy use of specialized scientific software), Mac OSX users require heavy IT support because many are lost when it comes to the traditional Unix. Windows users are left largely to themselves and they don't mind because they rarely need help with installation/maintenance.

David Davenport said...

As far as the desktop, Microsofty's Windows XP caught up with Macs about ten yeara ago.

Smart phones or tablets? Mr. Softy ain't got none.

Wes - of the Lizard People said...

I admire Steve Jobs, but this adulation from the media seems over the top. He didn't "invent" PCs or handheld devices or smartphones. His particular genius seems to have been in the area of user interface, which is very important. In fact, I suspect it is one of the frontiers of computer technology, but some of the claims being made are ridiculous.

Some say we couldn't even imagine the kind of devices he gave us back in the 70s and 80s. Well, anyone see the Jetsons? They could imagined them.

And most of Apple's devices (and I own a couple) are really toys - really cool toys - but not particularly productive.

$400 MP3 player said...

Did Jobs/Apple/Japple ever target the enterprise sector? If that happened I must have missed it. There was a big deal during the OS X roll-out about the Darwin BSDish kernel but even THAT was a superficial marketing ruse.

In one of Holman Jenkins's (numerous) columns on the topic he claimed the true takeaway was that they learned from everyone else's, mainly Microsoft's, mistakes (Bill was pushing tablets back in the mid-90s). Good takeaway: don't bother with large corporate and enterprise computing markets. Let HP and Dell and that obscure IBM company fight to the death over that. But the hippie journalists and filmmakers, well, there's gold in them thar hills

Anonymous said...

If only... As a science type, it was very sad to see something as lousy as Windows dominate. It really slowed things down.

Wendy Carlos/Dawn Draper said...

Wes: I think David Frum once wrote a book (somewhat poorly IMO) on that thesis

The argument went that most disruptive tech was pre-1965, and everything after was basically predicted by Fuller or the Jetsons or (token Canuck) Marshall McLuhan. Instead, it's the social/cultural changes that would knock 1965 Man off his feet. His opening anecdote was about the "Miracle on 34th St" scene where the competent postal employees stream in w/ letters for KK--a laughable mise-en-scene nowadays

Mitch said...

How is Kevin making the same post you are? You were saying "If we only knew what we knew now, Mac would have been worth the extra money" and that's exactly not what Kevin was saying. Kevin was saying what *I* responded, but more explicitly.

I am about the same age as you two (a bit younger), spent 15 years in IT, and every word of both of Kevin's post are dead on. But your post says exactly the opposite--at least me and your other commenters think so!

Elizabeth Warren, JD said...

What's important to realize here is that Jobs couldn't have gotten rich without lots of other rich people giving him their money (including Bill Gates once in '97)

Kaz said...

Nope, Macs use the SAME EXACT HARDWARE AS PCS. At a sometimes insanely huge mark up.

Let me say that again.

SAME EXACT HARDWARE. They buy that same processor from intel, same graphics card from nvidia, same standardized ram, not sure about motherboard but that's not a big deal, and so forth.

Now the only leg up that Apple has on PCs this day is the OSX software, and that just depends on who you are. If you're fairly proficient with computers (which most people aren't I understand), then you'll run into trouble on Windows.

Apple has the benefit of being smaller, that's the only reason they can make software that runs 'smoother' than Windows. Apple has uses a very restricted selection of hardware and they can make drivers/support to work very well for this specific hardware. While on the PC windows/vendors need to make drivers for hundreds of other different products.

Now let me get to the topic of viruses/spyware, OSX by the virtue of being OSX is not more secure software, it's only more secure as it stands right now because hackers don't feel it's worth the effort to create viruses/spyware for computers having only 5-10% of the total market share. Now viruses/spyware do still exist for OSX just on a significantly smaller scale.

Now Macs today do not do anything better than a PC, that's just silly, not graphic design, not hard number crunching, they're either equivalent or worse at a higher mark up. But Macs do offer higher stability (to the layman), better physical aesthetics, and better UI (that might be debatable).

Now if you're kinda good with computers (need to be savvy at troubleshooting) you can actually get OSX installed on a non-Mac computer, now this is dependent on the hardware in your PC, but there is a open source community that makes drivers for free. BUT Apple has some how made installing their software on non-Mac computers illegal, I'm not sure how they got away with that, while Microsoft got pounded for becoming a 'monopoly' even though the market at that time had a huge demand for standardization other competitors didn't meet.

Regardless, as Apple grows their market share in the PC department, they'll either suffer the same problems from the size, or continue to stay small in that respect and branch out in other markets like phone/tablets, and so forth.

Anonymous said...

Steve, I thought you were in marketing research, not a computer guy. You don't seem that into computers.

jody said...

cost wins, and PCs cost a lot less for the same capability. i see we are really, really overstating what effect steve jobs actually had on things, not just on computing, but as far as computing does go, wild overstatement. the revisionists are trying to say that back in the day, apple was this huge major deal. well i don't need to read a book on it, i lived it. i'm not the only person who personally witnessed commodore CRUSH apple, just absolutely smash them.

and that was with a COMMAND LINE INTERFACE. the thing which mac fanatics tell us over and over was "the barrier" to personal computers becoming anything serious. we're told the mac was so important for the GUI but in 1982 that $500 commodore began selling millions of units per year, far outselling anything apple was making. they sold like 2 million commodores a year for 500 bucks in 1980s money for like 6 years in a row.

after 1985, steve jobs went off to go spend the next 10 years doing jack shit with his NexT computers, heading towards total oblivion and certain footnote status, where wozniak is today. he did absolutely nothing important between then and 1997 (unless we're pretending he "invented" pixar instead of just throwing some money at them).

in between 1985 and 1997, when he finally went back to apple, lots of other real computer scientists and physicists had worked out new technology that steve could work with again in an industrial design capacity. certainly, he is a titan of industrial design, but he's no computer science genius, not even close.

if other guys had not developed spintronics and file compression algorithms and small good cell phones and liquid crystal displays and HTML and giant magnetoresistance and other stuff which jobs had nothing at all to do with, he would be steve jobs, that guy who kind of had interesting personal computers in 1979. let's not take away that he is a master marketer, perhaps the best EVER, and an awesome industrial designer. but he's no genius the likes of edison, that's just crazy.

Mark Presco said...

I believe the PC won the race because of its open architecture. Even though I knew the PC had inferior hardware and operating system, I preferred it because of its versatility.

The first test came when sound was introduced to the systems. If you had an Apple you were SOL, but if you had a PC you could buy a sound card. This encouraged third party vendors to provide hardware and software for the PC. With Apple, you were limited to what came in the box.

For one project I worked on, I designed an ISA card to plug into an open slot and wrote software to use the PC as a controller for a Remote Active Spectrometer. I was in hog heaven.

Anonymous said...

I was there too, and another problem the typical Apple fanboi forgets is that Macintoshes, up until the unaffordable Mac II in 1987 had tiny monochrome displays. I laugh at all the people who've substituted retro fantasy for memory complaining about the ugly colors of PC software--Mac software didn't have any colors.

Anonymous said...

Im no engineer or anything but I, with no particular training, could fiddle about with PCs, caniblise older ones, mix & match parts etc Plus new parts are cheap. Basically give me a pile of old PCs and I could probably get something working. Not so easy with Apples. So much as I might have liked an Apple G3, or whatever it was at the time, economy dictated PC.

The Anti-Gnostic said...

jody's right, in my non-technical opinion. I saw academe and the workplace hang on to MS command line interfaces to the very last.

Quattro Pro, WordPerfect and Grandview were my three good and faithful servants back in the day. (sigh)

California kid said...

PC's were wide open. Apples were "top down". It's all based on your mentality. Are you a Yeoman or a slave ?

Whiskey said...

The problem is, that corporate computing is by its very nature, not much of a margin-friendly business. A big Fortune 500 company, or even your small one, Steve, wants the cheapest computer it can get.

Jobs correctly saw that:

A. Apple was NOT that kind of company, focusing on the very beginning on the home consumer.

B. That wasn't a very big margin business.

Yes, Dell is struggling with low margins. Yes HP wants to sell its low margin personal computer AND Printer business (Big Mistake, but oh well). Yes IBM sold off its personal computer business. Yes its all a commodity made in China very cheaply and sold in netbook form now around $230 or so.

WHY would you want to be in that business? That is one dominated by scale, and totally vulnerable to big Taiwanese and then Chinese cheap-labor manufacturers, who if they do contract work for you become your competitor fairly quickly.

Jobs genius was recognizing that ... MARGINS BEAT GROSS REVENUE. Apple consistently had high margins, because hey it was Apple! Aimed at the upper middle class mom and dad, then yuppie journalists. Even though it had low gross revenue, it could come back from the dead by just selling better, more desirable consumer objects "branded" by Apple and with significant advantages (ease of use).

As for Office software, that's now open, with LibreOffice/OpenOffice/Lotus Symphony all free and competitive options to MS Office. Meanwhile most Business Intelligence sits on a server and is web/mobile interface driven.

dienw said...

Don't forget that after say four years, your company would have to update/replace the older models; in fact, at a certain point, your company would be replacing old hardware and adding new at the same time.

The Social Pathologist said...

People forget that computers were once an exotic piece of technology and most people had no clue how they operated. The thing is though, IBM was a respectable name in business, and for non-tech types (who controlled the purse stings), if IBM backed it then it must be good. That's how PC established itself.

Windows is the computer geek's version of a hot rod. He can tinker and tweak with it, and customise it how he sees fit. The problem with this is though, that malevolent people can get in there as well and tinkerer can stuff up the computers operation. Net result: system crashes and viruses as well.

The Mac Operating system, on the other hand, is like a modern engine: no tinkering allowed. As such, great performance and very reliable. This annoys the techheads no end.

I used to be a PC guy but it was crap: I've converted.

Jobs is also to be congratulated on recognising the aesthetic element of technology. Apple was way ahead of crowd in making computers/mp3 players objects of desire in themselves.

apple brown betty said...

"Man, I just don't buy that. I was in corporate America IT departments for much of the 80s and 90s, "

People like you are the reason I don't use my main computer on iSteve.

stari_momak said...

Windows vs. Mac.

One word -- Clippy.

epobirs said...

Keep in mind that choices that kept Apple from winning large enterprise adoption is a major part of why Jobs was ousted from the company he'd founded. The Board of Directors saw the company being locked out of the biggest revenue stream for PCs because of the same choices that made the Mac better in several ways than what anyone else then offered.

What Jobs wanted to do needed a lot of years of further advancement and development to really work and was a hard sell for a company that having a hard time realizing the rewards that the critical praise seemed to assure.

By the time the NeXT-based OS X could finally provide Apple with a desperately needed modern OS after almost a decade of trying to internally do the job it was too late to be taken seriously by enterprises who were now invested up to their eyebrows in Windows.

A critical thing Microsoft did was develop NT on a separate track from mainstream Windows as used on consumer and small business systems. NT 4 got huge adoption in the enterprise after IBM ruined OS/2 with internal divisional infighting. NT lacked the qualities needed for the consumer sector until Windows 2000. There was originally a consumer oriented version of Windows 2000 planned but it fell badly behind schedule and retailers demanded an update to Windows 98SE, resulting in Windows ME. This was good in that the driver database was more up to date but very bad in that a lot of code intended to live on top of an NT system got ported and the Win9x base just wasn't up to the task.

Apple lacked competent leadership and the scale to manage a separate OS track within the company while preparing a transition between the old and new. The talent was there but nobody in charge with both the strength and the technical understanding to say, "The hell with it, we're going to break X, Y, and Z for the sake of getting the new system in place. There is too much to be gained to let perfect compatibility hold us back."

The transition between OS 9 and OS X was painful and ugly in parts but was critically necessary and could have been over and done with years earlier if the right man had been running things.

By the time Jobs was getting Apple back on course it was obvious there were limits to what the company could offer and be effective. They did have some nice small enterprise offerings in terms of servers and OS but the new ventures into consumer electronics were far more lucrative. OS X Server has its fans but did it make sense for the company to really give it the needed resource at this point?

Anonymous said...

OK, I‘d give about same remarks as Mark Presco, but with a bit more on soft “feasability” details :

During the 80’s, I was in charge of a team to develop new Instruments Controllers, for Temperature, Pressure, etc… Monitoring continuously, night and day, mainly Highly critical Plants.
We had the choice : Apple’s or anything else, with some Office piece of software, but moreover and first, with reliable and efficient multitasking, real-time interfaces, compiler, etc
Finally and after long and hard comparisons, we choiced :

1 ) For the simple applications, to do it with third parties hardware (real-time manufactured) on a carefully selected range of PC-s clones, not expensive but well supported by manufacturer.

2 ) For the High end (Chemical Plants, Defence Applications), it was on a specific Controller, running Concurrent-DOS with a nice multiple-Windows GUI, on top of … Motorola 68000 CPU.
And all that worked perfectly without viruses, and without iTunes or iSoft to play with …
Because (and Thanks to Schlumberger environment) it was NOT a GAME !!
So, My feeling now is clear :
Don’t try to discuss Apple or PC’s productivity : it’s like a religious choice for most part of people.
But TRY to Design Develop, Test, Support a Complete Application up an down to the End User …
Here you’ll understand why the PC’s track was cheaper, open to partnership, and coming with a lot of compilers (C, C++, Turbo-Pascal, etc…) able to give you the Complete Developer and supporting set. Not only ASCII Polices.
Nice Blog for that part of Computers History. Go on, please