Apple’s Biggest Gamble: Why the iPhone Has to Be Great

by Chris Seibold Feb 08, 2007

Apple’s Biggest Gamble

Since the beginning, when Steve jobs borrowed money to produce 50 Apple Is, Apple has been a gambling company. The chances the company takes aren’t always innovative, as eWorld was a classic “me too” venture, but the company seems determined not just to remain a stable business but to be a major player in a major sector.

Apple has had moments where the company is the behemoth (at least temporarily) in the struggle to be the next big thing. When the Apple II was hot, for a few years everything was measured against the Apple II as though it were some sort of computer standard traceable directly to NIST, and Apple was the tech company every entrepreneur went to bed dreaming of.

That changed when the IBM PC came out; it was as if Apple had ignited the personal computing revolution, stepped away for a quick smoke, and returned to find the movement mainstreamed and led by generals in blue suits. Later attempts at recapturing computing dominance ended in either derision (the laughable Apple III), landfills (the unusable Lisa), or a perpetual (some would say unannounced death) coma for the Mac. The Lisa and the Mac weren’t huge hits but both were influential: the Lisa for influencing the Mac, and the Mac, well, Microsoft called it Windows and made sure everyone uses a copy.

The Lisa was an unquestioned market failure where the Mac was arguably a success. Calling the Mac a success is technically true, as the line has been profitable over the years, but few would say that the Mac has ever had the amount of success that the platform “deserved” for all the conventions the computer gave to the industry. But those are shallow criticisms, breaking everything down to dollars, cents, and opportunity cost. True value isn’t measured so easily.

What Apple has done over the years wasn’t always putting dollars in the bank, but its unstopping drive to innovate something, sometimes anything, has had an effect. When people think of Apple they think of a company that created very cool things. The iPod is a prime example of Apple cashing in on this perception, but the story is better told by a semi-ancient joke:

If Microsoft built cars

1. Every time they repainted the lines on the road, you’d have to buy a new car.

2. Occasionally your car would die on the freeway for no reason, and you’d have to restart it. For some strange reason, you’d just accept this and carry on.

3. Occasionally, executing a maneuver would cause your car to stop and fail to restart and you’d have to reinstall the engine. For some strange reason, you’d just accept this too.

4. You could only have one person in the car at a time, unless you bought a “Car 97” or a “Car NT,” but then you’d have to buy more seats.

5. Macintosh would make a car that was powered by the sun, was twice as fast, twice as easy to drive, but it would only run on 5% of the roads.

6. The Macintosh car owners would get expensive Microsoft upgrades to their cars, which would make their cars run much slower.

7. The oil, engine, gas, and alternator warning lights would be replaced by a single “general car default” warning light.

8. New seats would force everyone to have the same size butt.

9. The airbag system would say, “Are you sure?” before going off.

10. If you were involved in a crash, you would have no idea what happened.

The joke isn’t particularly accurate or funny but it does provide a glimpse into the perception of the world at large of Apple.

That sort of gravitas can’t be overestimated. In the current world of computing, trying to explain the advantages of OS X over Windows in an understandable sound bite is nearly impossible. Trying to illustrate why the iPod is superior to the competition in under five minutes is just as hard. What Apple sells now isn’t technology, but belief that Apple can make a better product by virtue of being Apple. Apple is betting on the company’s reputation to sell the phone before consumers even get a chance to touch one.

And that is where the gamble comes in. The iPhone is being offered to a larger market than iPods, a market far beyond those who care enough about computers to learn the differences between competing OSes or chipsets. For most folks the iPhone will be their first real exposure to an Apple product and Apple’s chance to reinforce positive beliefs while erasing negative preconceptions.

This explains why the iPhone has to be great. An awful product like the Apple III will have serious repercussions company-wide while damaging the Apple brand for years. An innovative phone with severe limitations (a la Newton) will reinforce Apple’s role in the marketplace as a manufacturer of products for the quirkier among us. A slam dunk, a phone that really works for the internet, for pictures, for e-mail, and for all the tasks phones can do now but suffer from such overly cumbersome implementation that people don’t bother trying, will cement Apple as the go-to tech company for products that just work.

Winning the gamble means being the tech company that makes products focused not on what the product can do but rather on what the average user can get the product to do for them (a non-subtle difference) and would make Apple the mainstream producer of consumer electronics. No gadget would be “real” until there was an Apple version.

A few caveats: a world where Apple replaced Sony wouldn’t necessarily be any more enjoyable, who the hell is passionate about Sony? And, every bit of news remotely concerning Apple is always the reason Apple is going to take over the world (Quicktime 7.1? IT IS OVER MICROSHAFT!!!!!). That said, the iPhone is either Apple’s opportunity to truly break out to the mainstream or the company’s chance to squander a carefully built legacy.


  • I contend that eWorld wasn’t so ‘me too’.
    I checked on Wikipedia to make sure I wasn’t completely wrong about this before I wrote it, but Apple did, pretty much, develop the original AOL in tandem with Steve Case, a long time before eWorld. It might have been late to the party (and kinda sucky) but really it is an implementation of an idea they had a relatively long time ago.

    yoharryo had this to say on Feb 15, 2007 Posts: 9
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