Sunday, June 25, 2017

Steve Jobs, The IPhone, and the Creative Destruction of Capitalism

Steve Jobs unleashed the IPhone3 on the world ten years ago. Great success in the marketplace can create new industries and opportunities. Capital flows to the winners and away from the failing and flailing companies. Success can also leave in its wake the detritus of failed companies. Civilization improves through the adoption of new technology and ideas. Henry Ford neither invented the automobile nor the assembly line, mass production of cars, but his Model T revolutionized America. It also put the carriage makers and buggy whip manufacturers out of business. It led to highways and suburbs and the demise of downtowns. Walmart’s success has put many retailers out of business. Kmart and Sears did not adapt and are headed into economic oblivion. Thousands more will lose their jobs. Google has shattered traditional advertising. Amazon is hurting traditional retail. Steve Jobs has been one of the greatest innovators of our generation. He and Steve Wozniak in a garage created the Apple computer, which led to the collapse of the large minicomputer manufacturers, Digital (DEC), Data General, Prime, Wang and others, after they in turn took substantial business away from the mainframe computer companies, IBM and the Bunch. Who remembers Burroughs, Univac, NCR, Control Data, and Honeywell? GE and RCA earlier failed in mainframe computers. After the Apple desktops and laptops in their various iterations survived the brutal Microsoft-Pc competition, Apple introduced in 2001 the IPod, a sophisticated MP3 Player. The SONY Walkman became history. Apple’s ITunes allowed the downloading of songs for $.99. The App store allowed independent software programmers to provide apps for downloading onto the Apple devices. The IPod led to the ITouch, a miniature computer with internet capability, including wifi capability and email, a great tool while traveling. The IPhone3, released on June 29, 2007, built on the ITouch, adding the phone service to the pre-existing ITouch features. The days of the dumb phone were numbered, while land lines are disappearing. In addition, pay phones are increasingly hard to find. The IPhone 3 was primitive compared to today’s IPhones, but it took off like Henry Ford’s Model T. Telecommunications will never be the same. Say goodbye to Nokia, Motorola, Siemens, SONY Ericsson, and a host of others, and soon Palm Pilot and Blackberry. Amazon and Microsoft failed in cell phones. The IPhone also included a mapping source and a camera. Future IPhone models substantially improved upon the camera quality and GPS capabilities of the map services. The digital camera on the phone and subsequently IPads shattered the 35mm SLR markets. I still love my digital Nikon phones, but that’s unusual these days. Digital photography sent the once great photo giant Kodak into bankruptcy. The map apps include voice directions. Drivers no longer need separate Garmin or Tom Toms in their cars. (Tom Tom is the basis of the Apple Map app). Traditional map sales are in the tank. The IPhone followed by Google Android phones are miniature computers absent a DVD drive. Apple did not stop with the IPhone. It released the IPad, a tablet, opening up yet another market. The mini computer lacks some of the features of the larger PC’s, but has caused a substantial drop in PC sales. Tablets have become ubiquitous in many commercial operations. All the while during the past decade Apple PC sales continue to grow while the sales of the other manufacturers have dropped. All the while Apple draws upon its cachet to price its products higher than competitors. Consumers, myself included, are willing to pay more for more. Apple hands-on service is outstanding, especially when you have an Apple Store nearby. We have three in Orange County, and have been quite satisfied when we’ve had to use their services. Apple’s products and competitors have revolutionized American society, but have left a trial of failed companies behind. That’s destructive capitalism! Those that couldn’t successfully innovate or respond to competition fell by the wayside. Apple, Amazon, Facebook, Google, or Microsoft could also fail someday.

No comments: