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How Apple Does It

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This is partly a story about a company called Apple Computer. It's also partly a story about a fancy new iPod that plays videos as well as music and that could dramatically change the way people entertain themselves. But it's mostly a story about new things and where they come from, about which there are a few popular misconceptions.

Stop and look at Apple for a second, since it's an odd company. It has been around long enough and has a high enough profile that it's easy to forget that. While most high-tech firms focus on one or two sectors, Apple does all of them at once. Apple makes its own hardware (iBooks and iMacs), it makes the operating system that runs on that hardware (Mac OS X), and it makes programs that run on that operating system (iTunes, iMovie, Safari Web browser, etc.). It also makes the consumer-electronics devices that connect to all those things (the rapidly multiplying iPod family), and it runs the online service that furnishes content to those devices (iTunes Music Store). If you smooshed together Microsoft, Dell and Sony into one company, you would have something like the diversity of the Apple technological biosphere.

Why would anybody run a business like that? If you follow conventional wisdom, Apple is doing it all wrong. Try to do everything at once, and you won't do anything well. Worse, the way Apple operates is not how you're supposed to foster innovation, or not in the U.S., anyway. Under the traditional, capitalist, Adam Smithian model, new and better things arise as a result of freedom and open competition, but Apple is essentially operating its own closed miniature techno-economy. What is this, Soviet Russia? Why not license Mac OS X to Dell, see what hardware it comes up with and let the market decide whose ride is flyest? Is Steve Jobs afraid of a little healthy wrasslin' in the great American bazaar?

And yet ... this is the company that gave us three of the signature technological innovations of the past 30 years: the Apple II, the Macintosh and the iPod. In the past six weeks alone, Apple has shipped three impressive new products: an ultra-tiny iPod called the nano, the video iPod and a nifty feature called Front Row that lets you run your computer from across the room, lying on a sofa, clicker in hand, without crouching over a keyboard. That is cool stuff. So, where does it all come from?

Ask Apple CEO Steve JobsĀ about it, and he'll tell you an instructive little story. Call it the Parable of the Concept Car. "Here's what you find at a lot of companies," he says, kicking back in a conference room at Apple's gleaming white Silicon Valley headquarters, which looks something like a cross between an Ivy League university and an iPod. "You know how you see a show car, and it's really cool, and then four years later you see the production car, and it sucks? And you go, What happened? They had it! They had it in the palm of their hands! They grabbed defeat from the jaws of victory!

"What happened was, the designers came up with this really great idea. Then they take it to the engineers, and the engineers go, 'Nah, we can't do that. That's impossible.' And so it gets a lot worse. Then they take it to the manufacturing people, and they go, 'We can't build that!' And it gets a lot worse."

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