By Georges van Hoegaerden

Apple is fundamentally different from any other company in Silicon Valley, but certainly not perfect. Its photography strategy is flawed (in the same way its competitor's are) and its iTunes Store needs to adopt true meritocracy if it does not want to alienate the record labels (movie subscriptions anyone?), its wireless Networked Storage strategy needs work as well as Apple TV and the MobileMe service. But in many ways Apple is ahead of the pack but not immune to the inherent risks.

Here is how technology companies, such as HP, Dell, Nokia, Symantec, Cisco need to change in order to compete:

1/ Innovate from the top, then continuously out-innovate themselves
Innovation is about taking a look from the outside-in with a fresh perspective and the purity of a new-born. The way to innovate is using my mantra of "believe nothing you hear, believe anything you see" (SM), meaning, the only thing that matters is how many people that you want using your product, are using your product. Analysts are useless in this assessment, as they simply use artificial market definitions to tell companies what they want to hear. Once you define real innovation, the next step is to continuously out-innovate yourself, ensuring that the pace of innovation is untouchable by others, and thus sustainable.

2/ Build irresistible products
Many of the aforementioned companies are in the technology commodities business. I wouldn't want to be in the business of building a car where the rest of the auto business is forced to use the same engine. There is only so much a pretty exterior can do to hide the ugliness of aging underperformance. As the dependency on operating systems shifts from the desktop to the web, now is the time for these vendors to escape commoditization and build their unique web-operating-experience.

3/ Develop a unique experience and maintain it
Too many technology companies in the Valley are "stocking stuffers", they stoically stuff a "market" (see markets don't exist) as defined by analysts and predecessors with incremental point products to eek out a larger percentage market-share than their competition. They "trade" market-share numbers as if they are the currency, that is - until "market" definitions change. But products don't sell, the experience does. People buy an iPhone, iPod because of the ecosystem behind it. Additionally with the lifecycle of many technology products being so short - around 3 years - renewals by recurring customers are vital to sustain growth. A one off product that made a promise and told many lies is devastating to the renewal rate and even the return to the brand. So, the emphasis should be on the experience -say music or photography - and innovate from the top around those.

4/ Change the culture: incent continuos innovation, punish stability
Corporate culture is fundamental to creating sustained innovation and for many large companies that means the CEO needs to exhibit that exemplary behavior. (it is somewhat humorous to see how VPs often mimic even the dress code of their CEOs). CEOs whos core competency is operational efficiency (HP, Cisco, Dell) need a right-hand man with executive privileges to cut through the bureaucracy and fundamentally realign the company along new macro and micro economic differentiation. Divisions need to be realigned to match customer experiences (not product groups) and be reduced into a one-level hierarchy. That ensures there is no place for employees to hide.

5/ Invest in innovation
Innovation as defined by bullet 1 is sustainable, spending money on stuffing markets is not. But the advantage large companies have over external innovation sponsored by Venture Capitalists is that they can think big, they are in a unique position to redefine customer experiences that ties seemingly disparate products into a cohesive offering that is much larger than the sum of all parts. Unlike startups, large companies are uniquely positioned to focus on the value of disruption rather than be restrained by the cost of entry. Large companies can build solid platforms upon which an ecosystem of independent software vendors can thrive.

Most of Apple's competitors are now simply chasing the iPhone strategy or music strategy, as they've chased market leaders for so many years. But that will never work. Every company has its own core competencies and its challenge is to become the innovator in the category they can make theirs.

Tough choices lie ahead for the technology titans. Those that change will survive.

Tags: HP, Dell, Nokia, Symantec, Cisco, Apple, Markets, Apple TV, Eco-systems, VC, IPhone

By Georges van Hoegaerden

I am not going to add to the craze about Steve Jobs (Apple CEO) health rumors on the internet, and I seriously hope he recovers quickly and in excellent health.

Anyone trying to sue Apple or its board for inconsistent information, should back-off and be glad they are not faced with a similar diagnosis. One of my friends (much younger than Steve) was recently diagnosed with the same type of (a rare) cancer and is apparently being treated by the same doctor at Stanford. Having heard his stories first hand, I side with Steve that he cannot project with accuracy what is going to happen as 1/ what causes cancer is still fairly misunderstood (follow the cancer series on Charlie Rose and you’ll understand) 2/ his rare type of cancer (with about 8 known derivatives) is even less understood. So, give the man some space.

Steve has proven to be the best guy to ever run Apple, but that doesn’t mean the company can’t improve. Here is what I would do, given the chance:

1/ Making the current OS work “as promised”.
Snow leopard is on its way and without knowing any of the details the OS needs some fundamental improvements in Expose and Spaces that are simply not working correctly, those (and many other) flaws have been in OS X for quite a while and since it affects the user experience, that is simply not acceptable within Apple standards. It is clear, in many other areas, that the rapid pace of innovation in other areas has taken its toll on the focus on the OS. In addition, the OS needs an Applications Store similar to the iPhone App Store.

2/ Consumer OS, major OS overhaul.
It is time for Apple to define a new trajectory for the OS. The current OS trajectory is too technology centric and focuses primarily on local operating capabilities. Today’s use of computers requires a transparent blend between offline and online capabilities. I have formulated new specifications of what this new hybrid OS should look like, that is more powerful and easier to use (and gesture ready) than any of its predecessors. This new OS is a continuum of the iPhone experience yet dramatically exposes the increased power of a personal computer platform. This OS will provide similar experiences across the Apple TV, iPhone and computer platforms.

3/ Increased focus on digital photography.
Music and photography are the two most important applications consumers use. Digital photography needs fundamental new focus and a new application that manages photographs across offline and online repositories. Think of iTunes and the iTunes Store for digital photography. We have formulated the specs for these new capabilities. In addition, Apple should explore new camera technologies as well (for inclusion in later devices), the current dSLR vendors are leaving behind unique software opportunities that can improve the quality of images dramatically (even without changing the hardware).

4/ Put support in product group P&L.
Apple’s support is better than other vendors’, but a little better is simply not good enough. The organizational structure of Apple separates support from product groups, which, in every company, disconnects the product promise from its realities. I would make product groups responsible for their own support P&L, ensuring implementation of innovation is a closed loop. No longer will product groups be able to ignore the 5000+ complaints about a single bug in Apple TV, for example.

5/ Network backup (Time Capsule) needs an overhaul.
The Airport wireless base station is a fantastic, no hassle, device that just works. The backup capabilities with Time Machine that uses a USB connected disk (to the Airport) is fundamentally flawed. These networked storage devices have no fsck (file-system-check) built in that prevent disks becoming unstable because of lost network connections or other aberrations that can occur. Based on the documentation I assume Time Capsule also does not include fsck and is therefor also unreliable as a backup drive.

6/ Broaden adoption of Professional Applications.
Most of the professional applications for photography and movie editing simply provide tools to edit, requiring the operator to understand the often complex language and methodologies involved. But the power of professional tools becomes really obvious when the application provides methodologies that hide the underlying composition of tools. Through the use of styles, derived from a marketplace, both Aperture and Final Cut Pro can be dramatically enhanced to provide new capabilities that expedites new editing techniques for experienced users and enthousiasts.

7/ Implement movie rental subscriptions.
The iTunes store needs a movie rental subscription model to adopt the ‘old’ Blockbuster and Netflix model, many americans are used to. A fixed monthly rate allows you to watch a certain number of movies per month, perhaps with rollover credits to compete with alternative distributors that can’t follow due to their dependence on low-usage profits.

8/ Apple TV needs a tuner, make that two.
Apart from a new “front-row” user interface (supported by a new OS as described in 2), the Apple TV needs to embrace DVR capabilities. Similar to the iPhone and AT&T, Apple should take a swing at giving customers a better end-user experience (and integrated with iTunes content) with Comcast, or else threaten to take the business from under their noses. The cable-card mandate makes it possible for virtually any vendor to displace the current set-top-box and DVR experience, and I would bet customers would pay a premium to get rid of the Comcast experience.

9/ Build Apple TV server.
Longer term (preferably after a deal with Comcast) I would like to see an Apple TV with tuner capabilities feeding all my TVs, rather than having individual AppleTV and DVR tethered to each to TV. Record once, playback anywhere (for traditional and new media).

10/ Deep dive into enterprise server sales.
The enterprise server strategy of Apple is a mystery to me. Having built a couple of new business revenues in large business (Oracle, HP) and SMB segments (Symantec) I don’t see Apple apply the pressure that warrants building products for this segment.

Again, as a 15-year empathetic Apple user I would like nothing but to see Steve return soon and hope this blog will consequently void itself.

Tags: Apple, IPhone, Apple TV