Fake Steve Jobs on the Red Queens' Race that Is a Competitive, Contestable Market--and Why Dell Will Not Bounce Back

You know, I have forgotten whom Fake Steve Jobs really is:

The Secret Diary of Steve Jobs: Why Dell will not bounce back: love Charles Cooper of CNET... but I have to take issue with his latest effort (see here) where he tries to argue that while Dell looks like crap today, in fact Dell could bounce back just the way Apple did....

What people overlook is that the advantages that allowed Dell to prosper for about a decade were all fleeting advantages. Dell was for a while an innovative company, but its innovations did not involve product design. They involved manufacturing and distribution efficiencies. On the distribution side, Dell sidestepped the cumbersome... distribution model... wholesalers like Ingram Micro and Tech Data who in turn sold to retailers who in turn sold to end customers -- Michael Dell early on recognized that this was stupid and simply decided not to play ball.... The other PC makers knew they were caught in an abusive relationship with their channel but it took them a decade or so to unwind the old relationships and sell direct.... Game-changer here was the Internet which made it easy for anyone to set up their own Web store and build direct relationships with customers. Dell's advantage got erased.

On the manufacturing side, Dell figured out faster than the others in its space how to squeeze component suppliers... brought in loads of former Wal-Mart people... you, Mr. Parts Supplier, end up paying rent to Dell for the privilege of carrying its inventory on your books. Nice, right? Trouble with this "innovation" is that the advantages it creates are fleeting. What wiped this one out was a little place called China.... The rise of China means everyone can make PCs pretty much as cheaply as Dell does. And it's not just cheap manufacturing anymore. The real genius and power of China lies in its armies of low-cost and brilliant engineers. Seen a Lenovo box lately? Heck of a lot nicer than anything Dell is pooping out from its factory in Round Rock.

Bottom line is this: the only innovations worth making are the ones involving product ideas and product design.... To sustain an edge in any market you must make better products than your competitors, consistently, over and over and over again. Just making the same products as everyone else but taking a little friction out of the system can give you an advantage, but only a temporary one.

The other reason Dell won't rebound is that the company is yoked to Microsoft. Vista has hurt them tremendously. Don't doubt it. All of the PC makers know this and they are furious about it. But what can they do? They put their future in the hands of the Beastmaster. They figured they could deal with the Borg's evil nature; they didn't anticipate having to deal with the Borg's incompetence.... [I]nstead of putting our future in the hands of the MicroTards we undertook the massive effort of creating a next-generation operating system of our own. A lot of people, including some very smart ones, said this was crazy. Especially for a company with 2% market share. They said we were suicidal, ridiculous, old-fashioned, hubristic, doomed. The effort cost us huge amounts of time and money and was far from a sure bet. But my feeling is if you don't dare bet on yourself and your own people, you shouldn't be in business. So we made the bet. And now it is paying off in spades -- on Macs and iPhones and other devices which we have not yet announced but will restore a sense of childlike wonder to your lives, trust me....

Now as for Dell, well, you know what their big problem is? Dell doesn't have me. Or anyone like me. Mostly because, let's face it, there isn't anyone else like me. I'm one of a kind. Sui generis, as the French say. What Dell has is Michael Dell. Don't get me wrong. He's a nice guy. And a smart guy. But he's not a visionary. He's not an artist. The stuff he's good at -- squeezing suppliers, screwing distributors -- was very cool ten or fifteen years ago. Today? No big deal.... The truth on Dell? Dell is Gateway. Dell is Kaypro. Dell is Osborne Computer. It's DEC and DG and Apollo. It's a flower that bloomed and now must die. It's roadkill. It's mulch. Nothing wrong with that. In fact, it's a good thing.

Comments

[AmIDreaming]

Daniel Lyons, of Forbes. He's not exactly the sharpest knife in the drawer.

[christofay]

But considering where we are as Americans, your fingers would be off your hand if you don't watch slicing the carrots.

Also after all these years the book value of Dell is nothing or whatever a few billion dollars of book value is worth. And Dell puts figuratively nothing into product development; it's a danger when you depend on the CPU manufacturer and OS creator for innovation. In the long term there wasn't much value in this screw driver operation.

[Roger Bigod]

At one time, I noticed that Dell owners went out of they way to praise the support service. Then they started complaining that all the support people had Indian accents, were named "Steve" and more importantly didn't know anything about computers. It would be difficult to quantitate this, although some groups like CU try to measure it. At any rate, I suspect it was a more important competitive advantage for Dell than the production and distribution arrangements. They may have devoted special attention to technical support in order to make people comfortable about ordering direct, but it added value to the company well beyond that consideration.

There's probably some residual good will value, in the sense of disaffected customers who would buy Dell machines again if their reputation for service came back. But this might take a while. And if they didn't Get It the first time, they probably won't now.

[Matt]

Steve Jobs does the same.

A lot of his little devices are obvious extensions to cell phones and lap tops, but the competitors are caught in another distribution channel.

Like, I-Tunes, he invented the transistor radio?

Those impressed by the I Pod, remember, the I Pod only exists because of digital signal processing, for which apple had no part in. Take away the DSP and you have memory chips. There is nothing spectacular about their software.

[jerry]

"Those impressed by the I Pod, remember, the I Pod only exists because of digital signal processing, for which apple had no part in. Take away the DSP and you have memory chips. There is nothing spectacular about their software."

I have almost no experience with the Mac. But the iPod Nano with it's graphic UI and video capabilities is a device of beauty. I see that when I see my daughter using it as computers should be used, that is, without cursing the goddamned programmers and engineers that put this piece of crap together. And then to see how cover flow works, and how I've been able to put many of her movies and videos on the device. It's a sexy little device and they did a great job of it.

I really like my Treo. But I do tire of my 8 year old asking why it is rebooting when all she was doing was using its freehand sketchpad. My kids first words were "Dada", then came "Mama", and then came "Stupid POS!"

So kudos to Apple for every UI and device they get right. They deserve the fanboy attention and lurv they get from that.

Regarding Dell, I am happy with my Dell interactions, and very happy with Dell engineering, and disagree that they have little value add apart from the distribution channel.

The trick to Dell customer service is simple: buy from "small business" and not from home or large business. And always always always buy the "I can piss on this device in front of a Dell representative and you will fix it" repair policy. Either mail-in, or come to your home or business.

It may be the case that for lower end desktops and laptops there is not much Dell is doing apart from shoving mobos into plastic cases, but when the company I work for buys their higher end servers and higher end laptops, the products are very different from what seems to be available from other vendors. I'm not saying it is worth the added expense, just saying that Dell does seem to be doing more than just shoving bigger mobos and processors into their higher end boxes.

[christofay]

Ah, no, DSP exists in order to put into devices like ipods

[foo]

>Then they started
>complaining that all
>the support people had
>Indian accents, were
>named "Steve" and more
>importantly didn't know
>anything about
>computers.

Really ? Would you be happy with more traditional Indo-European names like Kiran or Arjen ? Those are about as Indian (Indo-European) as one can get.

Jeeze you are a retard.

>There's probably some
>residual good will
>value, in the sense of
>disaffected customers
>who would buy Dell
>machines again if their
>reputation for service
>came back

Really. So you would gleefully buy an entirely outsourced Dell computer, with all parts made by foreigners in foreign factories (no environmental standards), and stab the US worker in the back ? ...you know as long as the "service" for your outsourced computer was US based?

Not only a 'tard but a traitor as well.

[Matt]

Well, jerry's comment sent me searching, and indeed Apple is having success with the Ipod, though their desktop sales are still stuck worldwide at about 3.5%, in spite of the fact that Microsoft bungled Vista.

I found about the interface from their patent application:
http://www.appleinsider.com/articles/05/08/09/apple_fails_to_patent_ipod_interface.html

The competitive patents is Pratt as in:

"Platt discloses an apparatus and a method of assisting user interaction with a multimedia asset player by way of a hierarchically ordered user interface, comprising: displaying a first order user interface having a first list of user selectable items; receiving a user selection of one of the user selectable items; and automatically transitioning to and displaying a second order user interface having a second list of user selectable items based upon the user selection."

Now, let me point out to the original brilliant inventor of the hierarchical interface, has long since disappeared into the horizon.

Steve himself is trying to patent the thing. The problem for both Steve and Pratt is that the hierarchical interface was used on computers by Xerox prior to the conception of Windows or the Mac.

Hence, Steve worries that MP3 players use the same interface, often getting it for free from the Linux community. Apple has 70% of the MP3 market share, but they also had that much of the desktop market before Microsoft.

This is not innovative software, no matter how many times Apple executives congratulate themselves. Apple's ability stems from being first, exactly what Dell's advantage was. Apple's problem is that borrowing technology means that the big vendors eventually take over, the same problem Dell has.

[Roger Bigod]

The Dell users I know who soured on the support had mid- to high-range home setups. I don't know how big a part of their business it was, but they had an edge and lost it.

Apple's successes are due to Job's obsession with the user interface. His taste is a little quirky and sometimes there are mistakes, but it worked out better for the iPod and iPhone than the Mac. The Mac has always had a slightly playful, toylike quality that turns off a lot of people. It's like the computer language Pascal, which seems distractingly pretty compared to C in a way that's difficult to verbalize. I'm perfectly happy to put up with the cuteness of the Mac for the reliability.

[Roger Bigod]

Matt,

It's a straw man that Apple is claiming to be technologically cutting edge. They have a very stable version of Unix on top of which is a moderately flashy GUI which has evolved slowly over the last few years. I've watched them kill 4 advanced software projects over the years (MacBasic, Hypercard, MCL, Dylan). Apparently, they couldn't see how to make money from those developments, and they were probably right. People could have produced similar products for PC's, and have, but there's been no spectacular success.

Apple has increased market share a bit over the last few years, partly as a carryover from the iPod and iPhone successes, partly because of dissatisfaction with MSFT. But the will be marginal unless they can break into the corporate market. That has little to do with advanced technology. IT departments don't want to deal with two sets of desktop computers. If they decide that the practical advantages of the Mac are worth the pain of switching, things could change. But Apple's lack of cutting edge technology isn't decisive.

[MaryCh]

Geez, this entire threat is O/T -- this was intended as a trash Steve Jobs for being fake post, not tekvetchfest, I'm sure. And so:

The entire quoted piece felt like a set up for Jobs's line "Dell doesn't have me."

[Paul Camp]

Apple didn't invvent OSX. They pasted a flashy window manager on top of BSD unix, primarily because BSD was free. The heavy lifting of actually writing BSD unix was done by a lot of people not located at Apple. They didn't invent the windowed OS or the mouse (both products of a Steve Jobs tour of Xerox PARC and Doug Englebart -- Apple copied someone else's idea). Apple did not invent the portable music player. The first mass produced MP3 player was MPMan, created by Korean company Saehan and sold in the US by Eiger labs. This was followed by Diamond's Rio. Compaq was the first company to replace the flash memory with a micro hard drive. Then came iPod. Apple's sole "innovation" was to establish a business relationship with the music industry and create iTunes instead of getting sued. Apple's reputation for innovation rests primarily on hype and swoopy designs that, in fact, hide functionality. This is odd, since Don Norman used to work there. Apple's designs flagrantly violate his principles. Steve has some sort of fetish for not having buttons. In the Apple world, there is only one right way (or else no way at all) to do any task. You are to adapt your work habits to the Apple way. The machine declines to adapt.

Apple has been quite adept at creating the Cult of the Apple, and I give them credit for that. It is not insignificant, especially when you're a machine that, in the end, is no different from a lot of far cheaper machines. But it is too constrictive for me. I don't wish to be told what I should do. I want to be allowed to do things the way I imagine. And now that Microsoft seems to have lost the ability to write a "Hello World" program, I guess that leaves me with Linux.

[Maynard Handley]

"Well, jerry's comment sent me searching, and indeed Apple is having success with the Ipod"

Hmm. I think we can all agree that someone for whom it is news that the "Ipod" (dude it's called the iPod) is doing well really doesn't have much credibility on this subject. This goes double when his knowledge of the iPod UI is apparently based on reading patent applications rather than, you know, actually using one.

Sorry Matt, but how about you stick to the subjects you understand well, like how economics needs to be fused with quantum mechanics?

[Doctor Biobrain]

Shorter Paul Camp - Apple didn't invent innovations. They just showed us how we can enjoy them; the jerks.

How outrageous! Let's just give all our money to the people who invented the stuff, rather than the people who figured out how to get it to us in a way we like. And as someone who's stuck using a PC more than a Mac, I am DEFINITELY of the "Cult of Apple". I've never really understood the idea that people are idiots for really liking the products they buy. But I can assure you that we're the ones getting the last laugh.

Here's one big reason I like Apple: I bought my wife her iPod Nano at Target, it broke a year later. I made an appointment online for the local Apple Store, told them it stopped working, and walked out of the store fifteen minutes later with a brand new Nano...free. Not only did I not buy it there, but I didn't even have the receipt or any other proof of purchase. No matter, we got a new Nano, no questions asked. My wife was soooooo happy. That's customer service. I've bought three more iPods since then. But I guess that just makes me a stupid cult member who stupidly buys products that I like from a company I respect. How foolish of me!

[Bernard Yomtov]

"I bought my wife her iPod Nano at Target, it broke a year later. I made an appointment online for the local Apple Store, told them it stopped working, and walked out of the store fifteen minutes later with a brand new Nano...free."

A friend had a similar experience with a MacBook. New (better) one free, no questions asked, when his old one crapped out early. Warranty period? What's that?

[weichi]

"But they will be marginal unless they can break into the corporate market."

Yeah, just a marginal little company in the computer business. Sure, earning 3-4 billion dollars a year, people standing lines for days to buy their products, but they're just barely staying afloat, really, I mean, their stockholders must be pissed, what with the stock price only going up by 20x over the past 5 years.

[MattF]

Just for the record, OS X is a lot more than "a flashy windows manager on top of BSD Unix". See, e.g., Amit Singh's 1600+ page book "OS X Internals".

[Roger Bigod]

I didn't mean to injure anyone's delicate feelings, but Macs are indeed marginal. There's an extremely loyal customer base, so its future is solid. Without getting into cult wars, it's a defensible statement that the OS is the best one on a personal computer by several criteria. But that's been the case for a while, and it hasn't overcome the network effects. For many activities, e.g. private aviation, stock trading, the PC has software not available on the Mac OS. And there's a lot of specialized corporate software written for PC's. Presently, the advantages of the Mac aren't enough to make people pay the cost of switching, and it's difficult to see anything that would change the situation.

This has little to do with the share price. If Jobs went into a snit tomorrow and discontinued the Mac (and with Steve, ya nevah know), it would knock a little off the price. But nothing like music retail, in which Apple is the largest. Music retail is a business any child can understand, and computers still have some mystique. But money is money.

[jerry]

I have never used a Mac for more than an hour, but there is BootCamp for running your Windows programs (and other virtualization solutions.)

And I say this because in a mind blowing meeting last week, I encountered this giant cop with guns and tasers and handcuffs sitting in this "dfh" coffee shop last week listening to folk music while surfing on his Mac. I talked to him about this and he prefers the Mac, but uses BootCamp to use all the stupid PC software his job requires.

I thought it was really interesting and that he would make for a great I'm a Mac and I'm a PC commercial.

[Altoid]

The last thing any PC user can do legitimately is diss Apple for being derivative. Back in the day, Gates got his start by acquiring Qdos for a song in order to meet his contract with IBM, and he got the contract because Kildall wanted to snub the IBM reps who came to talk about licensing CP/M. He didn't have the product when he made his deal. Later, M$ stole the Apple interface which had been stolen from Xerox. Most of M$'s competitive strategy has been to trash the opposition so fast they wouldn't have time to go to the law.

I'm a PC user (since 1983) and I have the usual hate-hate relationship with M$ products. I don't use Apple stuff much. But I do admire the sophistication of its branding, and I know a lot of technically-minded people who prefer it because there's no guesswork and no farting around. Apple has also always been way ahead on the Victor Schreckengost factor, ie cool design. Doesn't necessarily make the stuff any better functionally, but that's a narrow view of what makes customers feel satisfied. Maybe what upsets a lot of people here about Apple's approach is that it's deliberately a niche marketer? Volume isn't everything, even though it's what most American businesses are taught to go for.

[Kaleberg]

A friend of mine always compares Steve Jobs to Lorenzo de Medici. His big asset is that he has taste. Lorenzo wasn't much of a painter or architect, but he knew what he liked, and the world is richer for it.

From the taste point of view, the computer software business has been amazingly conservative. It's a lot like the automobile industry, except that it doesn't have huge capital costs and government regulations to use as an excuse.

The look and feel of the interaction on a Dell computer, the flow of what you do, was set by Microsoft. I've used Dell computers, my sister likes them, and they always seem rather clunky. The machine was always asking me questions. It organized its network configuration in a totally bizarre manner, and I've had to deal with TCP/IP stacks at the kernel level. There was always something that felt a bit off, and that something did not feel off even when I was using an underpowered, antique SCSI bus Mac with a bad mother board. It wasn't the hardware. Dell did and does great hardware. It was the software.

Let's face it, the software in the typical modern computer makes the Augean stables look like a Silicon Valley clean room, or one of those modern conceptual sculptures that consists of a white cube on a white floor. The job of any system integrator who proposes to sell to the general public is to hide all of those pipes and knobs and intestines and gristly ugly Perl macros inside a container without having the container look just as ugly as the software inside. Choosing a good shape, so that the container doesn't look like UPS and Fedex were playing cross country dodge ball with it, while still letting people get a grip on it is a matter of cleverly hiding things.

We all shiver at those scenes in those horror movies when good friend Buddy, who spent a night at the deserted sorority house or whatever, suddenly starts oozing bugs or guts or something. Everyone knows something is horribly wrong. Whatever Buddy has turned into, let me assure you, you have much worse hiding inside your personal computer, and that goes for OS X and Linux too.

If you've followed any of those movies or have ever developed software, you know that during tests and demos, the Buddy monster hides. The container looks smooth and sleek and doesn't leave a trail of oozing gizzards. Steve Jobs is more sensitive than most to the slight wriggles and vibrations that the Buddy monster cannot hide. Most people just dismiss this stuff, the way a grad student ignores the scritchy noise when he slams the door on a good deal on a used car. Steve Jobs does not, and he encourages his people, and hires people, who can hear the faint slopping sound when Buddy comes up the stairs and tries to pretend that he is fine, just fine.

Steve Jobs and his team won't put up with this. Buddy is not fine, just fine. They'll rewrite the code. They'll redesign the entire duodenum if they have to, even if it was working fine, just fine. They'll make the container look prettier if it's right side up, so most people don't try turning it over. They'll add sound proofing, even it can't play WMV files like the other computers. It doesn't need separate holes for its eyes, mouth and ears, not with USB and Firewire.

This kind of stuff is amazingly hard, because most people can't tell when they are making it better, especially not in the laboratory. Linaeus didn't discover new animals so much as promulgate a method for organizing them. Newton lopped six arms off an octopus when he figured out that apples and planets fell the same way. Erdos didn't get his name on 1,500 mathematical papers because he was always breaking new ground. He got his name on those papers because he could say "warmer", "warmer", "no, now you're getting cold>' This kind of stuff looks simple in hindsight, but that's because no one likes to talk about the intermediate scenes when they cut open the Buddy monster, who looks just like their good friend on the outside, and start fighting and rebuilding the ball of evil that now possesses his core.

By the time Steve Jobs and his people are done with Buddy, he looks like George Clooney, or Cameron Diaz, or both, and he, or she, is just as good as the old Buddy, except better looking. Not only that, the new Buddy is also a still a great guy, or gal, to hang around with, and as far as you can tell, he is fine, really fine. It takes more than technical skill to do this kind of thing. You have to have someone with a good sense of taste.

[Roger Bigod]

But Buddy still has little lapses of staring off into space, refusing to answer questions and gutteral mumblings. And there's there's the occasional glimpse of a tentacle hanging out his nose. And why does he hum "Daisey, daisey" sometimes?

[David Lloyd-Jones]

"Whom he is"?????