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Lessons From the Failure of Apple

Apple has a long history of producing winners: Apple, Apple II, the Macintosh, PowerPC, iMac, iPod, iPhone, and pretty much every laptop that they ever produced have met with almost universal praise.

There is a side of Apple that we rarely see, perhaps because of all the success, perhaps because they have learned from them, mostly because the vision and practicality of Steve Jobs have kept them out of the ditch.

There is one product in Apple's history of shining accomplishments that sends shudders down the spine of all Apple stockholders. Ladies and Gentleman, for your consideration, I present what seemed like a great idea at the time: The Newton.

In fact, the Newton was a brilliant idea, that was way ahead of its future competitors. What was it? Merely a personal digital assistant, with all the purported features of a future PalmPilot. The only difference was that the first Newton shipped nearly 4 years earlier than the first PalmPilot. It also tanked, whereas the Palm did not.

The problems with the Newton were many. It has been reported that Apple rushed the development of the Newton. They also tried to push the Newton at a price point that was too high for the average consumer. Some applications were buggy, and contrary to the Apple model of today, rudimentary compared to the other software available in the '90's.

Then, there were the marketing problems. Apple's propaganda department put forth the question "What is Newton?". Just genius, except they asked an open-ended question, and never really gave an answer. In addition, they promised features that could not be delivered via the technology of the time. In an interview I once read, one of the people who worked on the Newton project knew it was dead from the moment he read the marketing
brochure.

It said something to the effect of " The Apple Newton can read your handwriting." It could not, of course. The gloriously expensive hunk of silicon could interpret gestures and a few low-level commands, but nothing approaching intelligent interpretation of handwriting.

The main problem it suffered from was hardware pricing. Later, well received versions of the Newton went for upwards of $1100. At this point, the Palm had been introduced. The price point was a much lower $450, and any user with half a brain was willing to pay $650 less for a device with most of the same features.

When Steve Jobs returned, the Newton was on its way out. It has been projected that Apple spent over a billion dollars in development of the Newton project, and made less than one-fifth of that amount in returns. Not only were the expenses out of sight, but so were the chances of Apple leading the PDA market. Windows was on the scene with CE, Palm owned the market, and Handspring was on the horizon ready to make a run. Apple cancelled the project, and reabsorbed the spinoff that developed the Newton OS.

So what has changed in Apple's strategy? What has kept another Newton from haunting the company? It's a simple change in strategy:

The first part was bringing back Steve Jobs as figurehead of the company. Since his return, he has not made the mistake of asking a question like "What is Newton?". If he does, then he does not make the mistake of never answering it to satisfaction. Apple now defines what their products mean, what they will mean to the consumer.

The software was buggy on the Newton, and the product was rushed to market. Apple does not make that mistake now. They test their software, user interfaces, and everything else in the product to make sure it is at acceptable quality levels before release. Usability has been the center of Apple's success, and they aren't going to stop now.

Apple takes a grand idea, and then improves on it based on its success. First came the iPod, the iPod nano, the shuffle,then the iPod with video support, then iPhone, then the iPod with 802.11 g. On and on it will go, as Apple reduces prices of previous models, and makes a profit on its quickly obsolete inventory. This has kept stock prices high, and kept Apple fresh in the mind of consumers.

Lastly, there is the cool factor. Their has always been a hardcore group of Mac users who would buy anything that Apple produced. In recent days, Apple has expanded that group, via their promotion of Apple products as a lifestyle brand, rather than strictly a technology choice. Owning Apple products makes a statement about the user. They like trends, recognize them, and are a discerning consumer. Apple is now a proprietor of fashion and culture, like Gucci or Louis Vuitton. This status ensures that their products will be desired and bought for the forseeable future.

Apple is at its best when innovation, usability, and profitability meet. The pursuit of these three will keep Apple from producing the next Newton for the forseeable future. Hopefully, you will be able to apply the successes of Apple to your own entrepreneurial pursuits, and have some measure of success yourself.

About the Author

Kurt Hartman owns nothing Apple. Not a single thing. He uses Linux on a Sony Vaio, and works for Mobile Fleet Service, Inc, as their Head of Web Development. If you would like to read more of his thoughts, and find out about their business, you can read the
tire industry blog
that he contributes to.

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