Each of these firms is or was a leader in their respective industries and IBM, in particular, has had some significant bounces over the last couple of decades. At this moment, if you were an investor, youd likely favor IBM and Apple over Microsoft and Google. Its interesting to note that, as a tech buyer, youd also likely trust IBM and Apple over Microsoft and Google as well. And I think that partially speaks to the core of what is going on in the market.
What I think is also interesting is that Google has positioned itself as the heir apparent for Microsoft. But I doubt Google realized that the crown they would likely get is the one tied to the firm believed to be the most evil.
Lets look at these companies this week against current events.
Currently the environment which seemed relatively simple, much healthier, and much more focused in the 90s is largely a mess.
Youve got proprietary and Open Source platforms competing with a variety of economic models ranging from Free to nose bleed. And the Gartner TCO model, which helped significantly to bring order during the last decade, has proven to be ineffective in this one.
This means that buyers are having a significant difficulty in getting funding to justify technology purchases, and this difficulty ranges from corporations to individuals. Even with individuals you used to be able to see benefits from buying new gear because the old gear was always slower then you wanted.
But now system performance seems to constantly exceed requirements, and bottlenecks and issues seem to have more to do with network capacity than the speed of any one component. Complexity has grown to a point where its largely unmanageable.
As a result, technology purchases are not competing very well against other choices. And the general economic conditions have all types of buyers building larger cash reserves against what appears to be a rainy day without end.
For both Apple and IBM, approaching different ends of the market, the common strategy is to eliminate complexity and focus on what buyers are looking for in products.
IBM was a vastly more complex company before entering this decade and Sam Palmisano drove a significant reduction in that complexity. One of the first things Steve Jobs did in taking over Apple was to massively simplify it.
The result is both companies generally compete in the market as companies when they need to, rather than the more typical divisional focus. This is largely why Apple has recently been so successful at growing cell phone and PC market share while maintaining dominance in the MP3 space. And IBM was able to focus their company better than anyone else on the opportunities that came from the Sun collapse and the stimulus spending bill.
Even if you look at the acquisitions announced by IBM recently, SPSS and Ounce Labs, both enhance IBMs ability to sell a wide variety of products they already have in their portfolio. This is in contrast to Microsofts Yahoo attempt which is more of a Hail Mary effort intended to close a gap that likely should have never been allowed to exist in the first place.
Apples rumored new product, the iPad, is designed to address a price point they dont have covered, a category of product (Netbooks) that represent a risk to their market share growth, and Googles Chrome OS initiative that could do them harm next year.
In both cases the firms are able to move rapidly to enhance both their defensive and offensive company postures. Their financial performance in these really bad economic conditions showcases the benefits of this focus.
While this hasnt always been the case with either firm, currently both companies CEOs can fight using their entire company while their competitors often can only counter with a portion of the available resources.
When Microsoft first took on and beat IBM it was because Microsoft fought as a company, albeit a much smaller one, while IBM could only focus a small portion of the firm on Microsoft. In fact, one division, the PC Company, was actually on Microsofts side through much of the fight. The result in favor of Microsoft is history.
Now Microsoft mirrors what IBM was and often appears at war with itself, with internal battles between Open Source and proprietary groups, competing divisions, and a complexity that appears from the outside to be virtually unmanageable.
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