Apple business strategies

As the upcoming CEO of Apple, John Ternus is surely getting deluged with advice, and I do not have the hubris to tell him what he should do. But my decades of reporting on the tech business have shown me that there’s something he absolutely must not do … because it could ruin the company.

Do not ship anything before it’s finished. You’d think that would be obvious, but it’s a mistake companies make over and over. Even Apple has done it a time or two — and that includes with a product still in its lineup today.

April 22, 2013: The world gets its first Apple car. Well, kind of. In reality, the iBeetle is a collaboration with German automaker Volkswagen that offers a car “stylistically linked” to Apple.

This means Apple-inspired colors, a built-in docking station for your iPhone, and a special app that lets you control the car’s features.

Want a MacBook Neo? Better order it soon. It’s possible Apple will sell out of the affordable notebook … and not just for a few weeks. It’s not impossible that the laptop will go completely off the market until Apple can solve a shortage of a critical component … and it’s not RAM! Alternatively, Apple could be forced to raise the price.

And it’s all because the Neo is so wildly popular. Here’s what’s going on.

April 7, 1997: Apple’s System 7 operating system receives its last update with the shipment of Mac OS 7.6.1.

The update brings a few bug fixes and support for Apple’s new PCI Power Macs and the PowerBook 3400. Most importantly, it marks the end of the System 7 era, which dawned way back in 1991.

March 28, 1996: In a dire message to Wall Street, Apple warns that it will report a $700 million after-tax loss for its most recent quarter.

Apple’s biggest quarterly loss in history, the shocking news reveals a company in far more financial trouble than previously thought. More than half the loss comes from $1 billion of unsold products.

March 15, 2004: The iTunes Music Store hits a crucial milestone, having sold an astonishing 50 million songs in less than a year. The achievement cements Apple’s place at the center of the rapidly changing music business — at least for the moment.

“Crossing 50 million songs is a major milestone for iTunes and the emerging digital music era,” Apple CEO Steve Jobs says in a statement. “With over 50 million songs already downloaded and an additional 2.5 million songs being downloaded every week, it’s increasingly difficult to imagine others ever catching up with iTunes.”

March 8, 1997: Apple renames the forthcoming Mac OS 7.7 update, calling it “Mac OS 8.” It’s more than just a name change, though: It’s a sneaky sucker punch that ultimately knocks out Mac clones.

Unfortunately for Mac users, the updated operating system does not deliver the total top-to-bottom rewrite promised by Apple’s Project Copland. However, the renaming strategy turns out to be a brilliant (if underhanded) way of getting Apple out of terrible licensing deals.

March 4, 2014: Peter Oppenheimer, the Apple chief financial officer who presided over a decade of skyrocketing growth, steps down from the company.

After becoming Apple CFO in 2004, Oppenheimer saw the company’s valuation soar from $8.8 billion to $471 billion. Luca Maestri replaces Oppenheimer in this crucial position.

February 28, 2006: Apple introduces an upgraded Mac mini, an affordable computer powered by an Intel processor.

A “headless” Mac for entry-level users, it’s the third Apple computer to switch to Intel chips. Oh, and it makes one heckuva media player when plugged into a television set.

February 26, 2008: Less than five years after launching, the iTunes Music Store becomes the No. 2 music retailer in the United States, second only to Walmart.

In that relatively short period, iTunes sells more than 4 billion songs to more than 50 million customers. The rapid rise to prominence stands as a massive achievement for Apple — and for the revolutionary digital distribution model Cupertino helped pioneer.

January 4, 1995: Apple signs a deal with third-party Mac accessory-maker Radius, allowing the company to build Macintosh clones that run on Mac OS.

Radius is the second company to license the Macintosh operating system. (Power Computing did the same thing a month earlier.) However, Radius will become the first licensee to bring a clone to market when its System 100 ships in March 1995.

December 22, 2013: After months of false starts, Apple finally secures a deal with China Mobile to bring the iPhone to the world’s largest telecom company.

With 760 million potential iPhone customers in the offing, the deal shapes up as Apple’s most important yet for growing its brand in China. In fact, Apple CEO Tim Cook says the country will soon become the company’s biggest market.

December 18, 2006: Apple fans mourn the death of the iPhone before it even launches. Linksys begins selling a new handset called the “iPhone,” and Cupertino watchers must come to grips with the fact that Apple’s rumored smartphone probably won’t bear that name after all.

How did this happen? Linksys’ parent company, Cisco Systems, owns the iPhone trademark. While Apple previously released the iMac, iBook, iPod and iTunes, Cupertino didn’t own the name “iPhone.”

December 16, 1994: Apple Computer inks a licensing deal with Power Computing, for the first time allowing a company to produce Macintosh-compatible computers, aka “Mac clones.”

With falling market share, and longtime rival Microsoft steaming ahead thanks to its software licensing strategy, Apple executives think the only way to compete is for the company to allow its operating system on third-party Macs. Of course, it doesn’t turn out exactly like that.

December 5, 2002: Cupertino says it served its millionth unique customer in the Apple Store online, marking a significant milestone for the company. It is a benchmark worth celebrating for Apple, which launched its online store just five years earlier.

“Reaching our 1 millionth customer is a major milestone, and is proof positive that our online shopping experience is second to none,” Tim Cook, Apple’s executive vice president of worldwide sales and operations at the time, says in a statement. “The Apple Store is a popular way for a growing number of consumers and businesses to buy Apple products, and with extensive build-to-order capabilities, easy 1-Click shopping and free shipping on orders, it’s never been easier to buy a Mac online.”

November 22, 2005: Two-and-a-half years after opening its virtual doors, the iTunes Music Store enters the list of top 10 U.S. music retailers. While iTunes sales numbers can’t yet match the selling power of established retail giants like Walmart, Best Buy and Circuit City (or fellow tech company Amazon), this milestone nonetheless represents big news for Apple — and digital music distribution as a whole.

November 20, 2007: In a milestone for iTunes movie distribution, Purple Violets becomes the first feature film to launch exclusively on Apple’s platform.

A romantic comedy directed by Edward Burns, Purple Violets stars Selma Blair, Debra Messing and Patrick Wilson. With limited offers from Hollywood’s traditional players, the filmmakers pin their hopes on iTunes distribution as an alternative way to get their movie in front of viewers.

November 12, 1996: Apple lays out a wild plan to get into the restaurant business, saying it will open a chain of Apple Cafes with a touchscreen point-of-sale system. A bit like the company’s future retail stores — but without the computers and iPhones for sale — the Apple restaurants would open in cities around the world.
The first, Apple says, will be a 15,000-square-foot restaurant in Los Angeles, opening in late 1997.
Spoiler alert: None of this happens.

The Mac isn’t carrying its weight. In fact, it’s Apple’s lowest-selling product line, sitting behind even the Apple Watch. And despite macOS being a standout platform, it lags far behind Windows where it matters: worldwide adoption.
Apple needs a fresh angle, and the rumored budget MacBook might be the first real chance to rewrite the Mac’s trajectory.

November 6, 2003: After porting iTunes to Windows, Apple sets a new record for digital music sales: a massive 1.5 million downloads in one week.
Bringing the iTunes Music Store to PC users opens up a new, lucrative market for Apple. The record-breaking sales clock in at five times more than the 300,000 downloads that peer-to-peer file-sharing service Napster achieved in its debut week (remember it?). And 1.5 million is more than double the 600,000 iTunes downloads per week Apple reported selling to Mac users prior to the Windows release.

November 4, 1997: Apple unveils its plan to open small “store within a store” areas inside CompUSA outlets around the United States. Apple-trained employees will staff these mini-stores and sing the praises of the Mac and other Apple products.
The move gives Cupertino more control over the way its products are displayed and demoed to consumers. While ultimately disappointing, Apple’s CompUSA experiment paves the way for the flagship Apple Stores that will launch four years later and become the world’s most profitable retail outlets.

November 2, 2012: The first iPad mini goes on sale, shrinking both the size and the price tag of Apple’s groundbreaking tablet computer.

With a reduced screen size of 7.9 inches – instead of the then-standard 9.7 inches – the original iPad mini is the fifth iPad to be released by Apple. Critics hail Apple’s most affordable iPad ever, although some people complain about the tablet’s lack of a Retina display.

October 30, 2009: Two years after launching in the United States, the iPhone finally goes on sale in China, giving Apple a chance to reach the world’s largest market.

Regulatory hurdles previously blocked Apple’s access to China, including restrictions on Wi-Fi functionality. With those problems solved, Apple offers the iPhone 3GS to the country’s 1.3 billion people, most of whom do not yet own smartphones.

October 27, 1999: Dell Computer overtakes Apple in the educational market, stealing Cupertino’s crown as the top company selling computers to U.S. schools. Dell’s cheap Windows PCs make sense for schools looking to buy computers without breaking the bank.

Apple CEO Steve Jobs, still in the process of rebuilding Apple after its near-collapse in the 1990s, faces heavy criticism for ignoring one of the company’s strongest markets.

October 3, 1994: Apple CEO Michael Spindler reassures the world that Apple “is not a lame-duck company.”

Why would anyone suspect that it is? The answer lies in collapsing Mac sales, massive layoffs and Apple’s $188 million quarterly loss. At 15 months into his stint as CEO, Spindler wants to reassure everyone that the worst is over.

Sadly, things will decline further before they start to turn around.