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Apple's Many Successes, and a Few Failures


This is WEEKEND EDITION from NPR News. I'm John Ydstie.

It's a product that you won't be able to get your hands on until June, but the Apple iPhone was introduced this week. Doing his classic super salesman act, Apple's CEO Steve Jobs tried to convince the world that the iPhone is the next big thing, a worthy successor to the iPod as a breakthrough pop product.

Will the iPhone seal Apple's reputation as the innovator in personal digital technology? Here to talk about that is Mike McGuire, a technology analyst with Gartner, Inc. He joins us from Stanford, California.


Mr. MIKE MCGUIRE (Technology Analyst, Gartner, Inc.): Good day. Thanks for having me.

YDSTIE: So there are lots of other devices out there that are less expensive and do many of the same things as the iPhone, from fancy cell phones to personal digital assistants like the Blackberry. Is Apple on the right track here, or are they too late to this market?

Mr. MCGUIRE: I don't think it's ever been too late for them when they are able to pull off that kind of magic that they have, integrating software and hardware, and more importantly creating unique and compelling interfaces, right, the things that allow us to work with the technology. Keep in mind, they weren't the first MP3 player out there either, and they seemed to do fairly well in that segment, at least the last time I checked.

YDSTIE: Mm-hmm. So do you think this product can have the same affect as the iPod did? Can it vault Apple to the top and make it a dominant player?

Mr. MCGUIRE: Well, it certainly has that potential. However, out of the gate, the pricing on the device is relatively expensive compared to what most people are used to paying for a mobile phone, or even a communicator, or something like a RIM Blackberry device. This is expensive, so they're carving out a segment at the high end, if you will, of the smart phone category. But again, if we look at history with them, this isn't going to be the only product we'll see from them. The iPod, when it first came out, was not the cheapest MP3 player available at the time.

YDSTIE: Mm-hmm. During the same presentation where the iPhone was presented, at the MacWorld Conference, Steve Jobs said that Apple Computer has now dropped the computer from its name. What does that signify?

Mr. MCGUIRE: Well, I think what it signifies is they are a technology company. They're now moving into a whole area of wireless communications. It's rather limiting, I think, from their prospective, to have a company name that has got computer in the middle of it. Because one of the things that we often don't talk about with what they and others are trying to do is remove the specific references to specific technologies. Right? It's - is the iPod really just an MP3 player? Well, no, it's evolved into something more than just an MP3 music player.

YDSTIE: Mm-hmm. I wanted to make a comparison with Sony. You know, when Apple introduced the iPod in the iPod stores, it vaulted itself to the top and its dominant position in the digital music category. And it sort of reminds you of the moment back in 1979 when Sony released its Walkman portable stereo players. It made it look like Sony was going to be unassailable for a long time, but they stumbled. Does Apple face comparable dangers, do you think?

Mr. MCGUIRE: Oh, potentially. Right? I mean, there are a number of companies out there with a lot of their on core technology assets that are, have been, and will continue to be focused very clearly on Apple. So you cannot dismiss them. I think what the company's shown in the last several years is their ability to focus innovation, rather than letting it get defused into a lot of different areas, that the technology direction might allow them to go in that product direction, but they're not, because it's not focused, it's not core to what they do.

Whereas, I think when you see and look at a lot of companies with broad and deep technical or technology assets, they tend to go to areas where they can simply because technology will allow them to. In other words, they're not creating a product that, you know, solves some problems or enables a new form of entertainment or a type of entertainment.

YDSTIE: That's sort of what happened to Sony, didn't it?

Mr. MCGUIRE: That's exactly what happened to Sony, that this massive company with massive technology assets and, you know, virtually owning the television market. I think a lot of what happened is their focus got defused. I think they started to get complacent in a lot of areas.

YDSTIE: Let me quickly ask you another question and that is about the lessons that have been learned by this management team in the past. Are they key to its effectiveness now and its ability to focus now?

Mr. MCGUIRE: They were important, those past experiences. And I think they've been, you know, taken to heart by a lot of the management team. And what you're seeing is focus. You don't see - you see focus on a couple of core areas. Obviously, their computer and hardware and software groups, the iPod and now the iPhone. You don't hear them talk about going after the, quote, "business market," or the, quote, "enterprise market." They're very squarely aimed at individuals and consumers.

And when you have that kind of focus, I think, it allows you to maybe expand into new areas like the mobile phone market. But they do - I noted it seems they've become much more careful in not spreading out into these areas too quickly.

YDSTIE: Mike McGuire is a technology analyst with Gartner Group. He joined us from Stanford, California.

Thanks very much.

Mr. MCGUIRE: Thank you. Transcript provided by NPR, Copyright NPR.