Three decades and over $500B later, Apple still fights like an underdog

By Nathaniel Mott , written on October 23, 2012

From The News Desk

“Scrappy,” which we’ll define as “relentlessly resourceful and combative,” isn’t a term that’s often used to describe companies worth hundreds of billions of dollars. Often, as a company’s valuation and number of employees continue to rise, the general sentiment shifts from “look at this startup grow!” to “well, looks like ‘The Man’ is having another decent quarter.”

For all its size and $574 billion (roughly) market cap, Apple fits that description just as well now as it did when it was nothing more than Steve Jobs and Steve Wozniak operating out of a garage in Los Altos. The company has spent its existence scavenging for talent and resources while simultaneously thumbing its nose at anyone that didn’t agree with its vision or methods. Though the company (obviously) operates on a different scale now, the overall concept – that the most resourceful, combative company will win – has remained the same.

This was made evident during today’s event announcing the iPad mini, the next generation of the iPad, and a slew of other products. Though most of the event was spent talking up its new products, Apple wasn’t afraid to use its platform to throw a few punches in its competitor’s direction.

Apple’s penchant for scrappiness began, as many of Apple’s core philosophies did, with Steve Jobs. In the only authorized biography of the late Apple cofounder, Walter Isaacson relays the story of a young man that had dropped out of school, subjected himself to strange diets, and managed to build a company out of a product that he didn’t develop. Jobs happened to be in the right place at the right time when he met Wozniak, and Apple evolved from what might be described as dogged serendipity.

The original Apple computer was built with parts that Jobs and Wozniak purchased for as little money as possible. Its microprocessor, built by MOS Technologies, cost just $20, and Jobs was able to “score” some dynamic random-access memory chips from Intel for free. Wozniak assembled the parts, and Jobs made his way through as many computer sellers as possible to convince them to purchase a computer built by two kids in a garage. After raising some startup capital, they sold each board for $500 a piece.

Though the company operates on a slightly different level today, it is still working to be as resourceful as possible. Tim Cook, who acted as interim CEO when Jobs wasn’t able to hold the position and assumed the job full-time following Jobs’ death, is exactly the right person for that job. As Daring Fireball’s John Gruber put it:

So let’s be lazy for a second here, and attribute all of Apple’s success over the past 15 years to two men: Steve Jobs and Tim Cook. We’ll give Jobs the credit for the adjectives beautiful, elegant, innovative, and fun. We’ll give Cook the credit for the adjectives affordable, reliable, available, and profitable. Jobs designs them, Cook makes them and sells them.
Tim Cook, in effect, became the businessman to Jobs’ product visionary, just as Jobs had done with Wozniak during Apple’s founding. Without Cook, Apple arguably wouldn’t be the hundred-billion dollar company that it is today – he was able to match Jobs’ (and, now, Jonathan Ive’s) commitment to perfection with fiscal responsibility and profitability.

Consider the iPod touch. Long heralded as an “iPhone without the phone,” the iPod touch is a prime example of Cook’s ability to use everything at his disposal to turn a profit. The premise behind the iPod touch is simple: Take the parts from last year’s iPhone, put them in a new(ish) chassis just in time for the holidays, and watch as the cash flows in. Though the iPod line’s revenues continue to fall each year in favor of higher iPad and iPhone revenues, the company continues to make money selling established products, often with last year’s parts.

Apple has continued this tradition with the iPad mini and the other products that it announced today. Many use the same parts or, in the iPad mini’s case, use a part (the A5 chip and probably a fair number of other parts) from older devices. None of this is meant to cheapen what Apple has created – it’s clear that the company put a lot of effort into each product that it announced – but instead highlights Apple’s ability to take old parts, present them in a new product, and (if the past is any indicator) make a boatload of cash.

Being able to use its resources wisely, however, isn’t enough to make Apple “scrappy.” The other part – combativeness – is just as important.

There may not be anyone else as good or better than Steve Jobs at creating, perpetuating, and escalating a rivalry between two companies. (Remember that Jobs is the one who said Apple would go “thermonuclear” to wipe Android off the map, because he felt that Google had stolen Apple’s ideas.) That isn’t going to stop Apple from trying, however.

As evidence, I present today’s announcements: Apple decided to announce a new Retina Display MacBook, the next generation of the iPad, the iPad mini, and updates to its desktop computers just two days before Microsoft is set to unveil the final version of Windows 8. Then, as if that weren’t enough, the company will begin taking preorders for the iPad mini on October 26, the same day that Windows 8 and Microsoft’s Surface tablet become available. It isn’t hard to imagine Microsoft CEO Steve Ballmer punching his computer screen at this news.

Or instead, consider the way Phil Schiller, Apple’s senior vice president of worldwide marketing and the company’s new announcer of choice since Jobs’ passing, compared the iPad mini to Google’s Nexus 7. Apple has compared its products to competitors in a loose way – “we’re growing faster than PCs,” “Android devices,” etc. – during these product announcements before, but  this is the first time that the company has directly referenced and trash-talked a competitor on stage. Whether this is because Apple’s worried about the Nexus 7 or because it just felt that the Nexus 7 is the closest comparison point isn’t clear, but Apple’s message is: “It’s on.”

It seems counter-intuitive, but Apple's willingness to make enemies with some of the technology industry's biggest companies actually helps it stay on its toes. We saw this with Microsoft and Windows; The company, at the top of its game, was once worth more than Apple is now. Unfortunately, all that size came with unnecessary cruft and a series of missteps – Windows Vista and the Kin phones come to mind – and Microsoft's market cap now is less than half of Apple's.

By constantly claiming that its products are better than anyone else's and sticking with its iterative design process that reuses old parts in new form factors, Apple might just be able to keep its competitors at bay. Finding new ways to use the tools at your disposal and jabbing at anything that comes to close has worked well thousands of years, and Apple seems content with operating under the assumption that it needs to fight as intelligently and fiercely as possible.

[Illustration by Hallie Bateman]