Apple will Fail, Microsoft to Come Back?

In a boring conversation over Christmas, a friend of mine said that Apple will take a dive this year as, in his theory, they have saturated demand for their tablets and smartphones and their PCs will never get taken seriously by corporates. Meanwhile Microsoft will resurge back to normal growth rates, was his other prediction.

Of course, he's right on all counts.

Or is he? Having been recently converted to Apple, first via tablet, then iPhone and now the Macbook Pro, I have suddenly realised that as workers we have been held back from many productivity aids and better software over the years. As a for instance, this year over the Christmas period, I recorded and published a talking book of bedtime stories for my young boy which he can now read and listen to at his leisure from an iPad or one of our iPhones or any device that reads ePubs.

Apple Pages, at £13.99 for the software on a Macbook Pro (full end user licence cost), allows you to write the document while the free GarageBand software on the Mac allows you to record an audio file. You just add the media file to your Pages file and then export to ePub format. The recordings took 15 minutes each and the rest was done in minutes. The look on my little's boys face to see his pictures in the book and hear my voice telling the story? Well, priceless.

But this has nothing to do with business, has it? Oh yes it has. This week, my firm will use my Macbook to write several briefing and training documents about Cloud Computing which we will add audio files to and then export them to ePub format. We can then make them available to all tablet users as a multimedia document which they can listen to on the fly. Imagine you are an IT salesperson awaiting a first appointment with a client to talk about Virtualisation or the benefits of Cloud, these documents will be 15 minutes long as audio files to give first, invaluable briefings to make salespeople sound authoritative. And they can leave them with their clients.

What my friend fails to realise is that the PC market is plummeting - even servers - but Notebooks in particular are nose diving at over 50% per quarter. Vendors like HP, Dell and Acer question the viability at the low end as they can't make products cheap enough for the corporate market. Meanwhile, the software is still buggy and expensive and it does much the same as it always has done with precious little innovation over the last 5 years, particularly from Microsoft.

In the face of this, smartphones and tablets are rising at an exponential rate as the phenomenon of Bring Your Own Device (BYOD) takes off at work where our own devices are attaching to secure networks. And people using these devices buy their software in a different way - over the Cloud and for a few pounds a shot. And there's tons of it.

The revolution is here, have no doubt. And Apple PC's, in the face of the PC decline, are growing at 27% per annum in terms of shipments and revenue. Yet you can't get a bean of discount for love nor money on these expensive products.

Why are companies now paying top dollar for Apple when they are forcing PC vendors to crumble? Simple, the PC market never has really been about price. If you want capability to do a job, people are prepared to pay. The Sony Vaio is touted as the pinnacle of PC's in terms of graphics and portability but have you seen the Apple Mac Air? There's no real comparison.

But Apple is an island in the world of computing dominated by Microsoft so corporates will never buy, will they? Oh, but they will. Microsoft Office for Mac is vastly superior to the PC version and it's half the price. You can now get it as a client for MS Office 365. If you want full PC compatibility then for £67 you run Parallels virtual machine and then port all your MS licences across, automatically by wifi - Apple does it for you.

Of course, I don't think Apple will dominate the corporate market but I think the PC has had its day in the current form. The way in which companies invest in software will change as the Cloud drives prices down and multiple devices will be used to run the same piece of software with files sourced from one spot for all.

This is not a world described by PCs or Microsoft and so either these companies will have to adapt or get left behind. Apple may not win the end battle but they have shown that end or client devices can be anything going forward and users are defining what is paid for them against the corporate mandates. 

Steve Jobs said it before he died, we are in the post-PC era and you don't have to look far to see executives and consumers using the same devices running lots of software that has been suppressed for years by the narrow minded view of the world by mammoth software companies.

2012 will be a year of innovation and the year that the PC market accelerated its decline at the cost of new devices. Apple will get a share but look out for more innovative products and lots of great software at affordable prices. 

If Apple has done this one thing, then it has put value back into the valueless object that was once a PC.

The Cloud? Nah, it'll never take off

The Cloud? Nah, it won't happen. People still want to have their cosy Microsoft Office environment on their tight knit and safe Corporate network.

In less than two years something odd has happened. In more then one major quoted company I have worked with, over 10% of the user community now use Apple Macs as their PC of choice. These companies are not fuzzy designers or lovey media types they are plain old IT companies with rules and regulations on what PCs they buy and what applications the company network runs. They even have rules and regulations on internet use and social media restrictions during work hours. They are completely normal.

So how the heck did these Apple Macs get in there?

That Steve Jobs is a canny sort. He reinvented a company that was almost dead, out of cash and ideas and not just saved it but turned it back into a being vibrant, successful company again. And in doing so he changed the Corporate world. Central to all of it was The Cloud - without it he could never have achieved it. You see, Jobs took gadgets and made them the must-have devices of choice of businesspeople. First iPods - no threat to the IT status quo there. Then came iPhones and suddenly we had a funky device that linked to a shop online that also backed up your data and you could buy tons of applications easily - and cheap as chips.

It was first in the wave of clever smartphones that we all wanted. But surely these things were leisure devices? These were not serious contenders as business productivity tools? By the time the iPad came and the new wave of mobile innovative computing had took hold, many vendors had woken up and smelt the coffee. Via the back door, Apple had set a new agenda for computing. By getting executives and workers alike to buy effectively gadgets with their own money, an upsurge of revolt against the IT rules occurred in companies across the globe. IT managers wept as CEOs relented and allowed iPhones and iPads to be bought and for users to express choice and buy Apple Macs as their PCs of choice.

Apple came back into mainstream Corporate computing via the back door - from left field. And nobody saw it coming. Using the Cloud as the tether not the network, Apple totally revolutionised the way in which we bought applications and the price which we paid.
Executives not only had Macs and iPads but they had tens of small applications running on them, some business, some leisure which helped them to do what they wanted. You could now just flip open your computer and quickly dash off an email wherever you may be via the phone or WiFi network while listening to music and without all the rigmarole of linking to the home network. The Cloud made it all happen easily.

Computing has got innovative, exciting and sexy again. Luddites and Victorian minded companies like Microsoft are trying to pour scorn on these upstarts like Apple and Google. They can never challenge Microsoft on business-grade computing. People love and need Microsoft Office on their PCs, USB ports to tether to devices and strict rules governing what productivity tools they use. They need Office because that's the Corporate standard across the globe. Don't they? The Cloud is what Microsoft will define it to be and it's just a bit of extra connectivity but the good old lumpy, maxed-out PC is still the business workhorse.

The revolution has already started. The Cloud - no - the internet is the platform and it's giving people the power to do things unimaginable. All those years ago, Microsoft gave us that power to be individuals in a business world full of rules by opening up possibilities. Now it's being the matronly old lady that tells us that we cannot have fun and do business at the same time. The Cloud and companies like Google and Apple say that it's different and people - business people - agree.

Apple is back in mainstream computing. Google is on the business scene. A whole new raft of exciting new companies are innovating as if we have emerged from a computing Dark Age. The future is new and exciting and it's fun.

On the same device a 16 month old kid can have fun with a 70 year old man swiping through photos and playing the virtual drums while the same machine receives corporate email and be a mobile computer. Suddenly, the world of business and leisure has merged and laptops need not be left to whir forlornly over weekends as the family goes for a picnic. The computer gets invited along too.

The Cloud has opened up the corporate network. The next logical step is for companies to reassess their use of business productivity tools in the light of what is going on around them. The Cloud isn't for everyone but every small business in the world today will be thinking how to maximise their sales not run their IT. The Cloud gives them the freedom to do just that. Being fast moving, agile, accessible, innovative and competitive is what business is all about not being restrained by networks and rules. Using The Cloud will help small businesses be leaner and win. It helped a big company like Apple to flourish again.

It's a competitive world out there and technology is changing by the minute. Companies can now share in the freedom of making decisions about IT that are not about 3-5 year windows but 6 months or less - they can adapt to the changing world much, much quicker. They can embrace social media on the fly to maximise business, they can answer phone calls on a virtual PBX while sitting in cafe at the Station just the same as if they were in the office. The power of what can be done is no longer limited by the purchase of a server or dedicated device to do it.

Just do it.

You see, The Cloud is being made out to be some mysterious, ethereal intangible plume of vapour into which data descends and gets lost. It isn't. It's a high grade network into which companies have poured billions to make it the communication vehicle for everything from voice to data for the future. It allows us to not just do business with people everywhere and make small companies look big but has given us a voice and platform to increase our personal footprints. It has also done the same for business. It has also allowed us to share in the economy of scale of expensive hardware and software by not making us purchase the whole caboodle to do it but join others who have knowing there is plenty of capacity for us all.

The Cloud has given people and small businesses scale. Use it to make yourself bigger and pay for only what you use. The Cloud is like having a high speed train service that doesn't just stop at stations but stops at your door step or wherever you are and takes you exactly to wherever you want to go, and is cheaper than buying and using your own car and getting caught in jams.

The Cloud is not just the superhighway for the future, it is the future of computing for small businesses.

iCloud, You Cloud

On a day when IDC revised their PC sales figures in Europe down, on the US West Coast, Steve Jobs came off sick leave to unveil Apple's iCloud strategy. It's a sunny day for the industry.

As a dedicated iPad user the one fatal flaw I have been aware of is that the device is entirely dependent on contact with a PC or Mac running iTunes. From a static device, the iPad gets its OS updates, it gets backed up and can be restored (twice in my case after crashes when updating the OS - rule 1: never interrupt a Sync) only when in contact with a host PC or Mac running iTunes.

So will transferring that dependence into The Cloud, the iCloud no less, make the iPad any the better? Yes.

It means that I no longer have to be situated close to a PC or Mac to back up and interact with iTunes, the mother program. I will now be able to do this anywhere thanks to iCloud. And that goes for the iPod and iPhone too. In fact, Apple will automatically update all devices via synchronising from the iCloud. This means that if you add an event in your calendar, all devices will be updated to reflect it. Immediately, if you like. The same will go for documents, contacts and emails.

This is ace. I am a user of the excellent Evernote application, a far better version of MS's OneNote product. Automatically, via The Cloud, it updates my iPad 2, PC and Android phone with changes to every Note I write - immediately, automatically and wherever I am. It is, at last, one of the few programs to really make this possible. Apple now proposes this with all products.

Well you have to remember there is a Mac and a PC world so I would suggest we will not see ALL products reflecting this. But the proliferation of new devices has brought many new developers into play and we are at last getting the kind of innovation we last saw when the PC went open architecture for the first time. It does mean that the rich software companies will gobble up small players as we have seen in the past but there is a hope that we no longer all have to adhere solely to Microsoft's agenda.

And that's good news for us all as they have stifled the stuffing out of the application market on PCs. The world of Mac and Android is where the innovation has been.

The iCloud is a great step forward and what it illustrates is the massive benefit that The Cloud can bring. All devices synchronised, everywhere.

Now isn't that a reason to get excited?

Cost Savings Actions in Isolation

I read a recent snippet by an academic, Mitchell Lee Marks of the San Francisco State University, who said of the vogue policy by US CEOs in the face of the recession to enforce pay cuts rather than redundancies on staff that, 'Initially, this sounds good to people because we're all chipping in. There's a sense of loyalty. But what if you don't win the war?'

It's a great point. It was illustrated recently by US giant, FedEx, who, in December, asked senior Executives to take a 7.5% pay reduction and US based salaried workers a 5% cut in salaries. It affected 36,000 staff in all and CEO, Fred Smith, promised that it would see them through the bad times. By April, things had got worse and sure enough, FedEx let go 1,000 staff this month.

Fred Smith was dutifully trying to save jobs by avoiding making redundancies. He stripped out a good portion of the payroll cost and still it was not enough to save the jobs. In fact, Mitchell Lee Marks would argue that this actually has a bigger destabilising and demoralising effect on the company. It leaves staff with the rightful feeling, 'Why did we make that sacrifice? What did it achieve? Do management know what they are doing?' Further, studies have shown that while salary cuts are termed as short term measures, too often the money is not given back at a later date.

Cost Cutting in Isolation

It's a noble thing to join staff into the problems that business face particularly in the recession. It is also a noble thing to avoid redundancies if at all possible and asking or even forcing staff to take a pay cut is better than losing jobs.

Or is it?

The problem here is what is trying to be achieved. When executives abdicate responsibility for their actions to accountants and cost-cutters, then only numbers hold any credence. The role of the cost cutter is to 'cut the cloth to fit' and that's exactly what they do. But there is a problem here. If all that you do is cut cost and do not adjust or re-align your business then you are only risking prolonging the inevitable - either you sink or you have to make bigger cost reductions or the dreaded 'death by a thousand cuts'.

What I mean is, if you do not change the goals of your business, then all you are doing is reducing your capabilities which becomes a self-fulfilling spiral downwards in terms of the business. There is a real risk that you bring on more bad news rather than avoid it.

Aligning Your Business in a Recession

There is a risk of repeating myself from past blogs but there is a lesson to be learned even from a clever giant like FedEx of how to do things poorly.

The very first step you need to make before you make decisions on costs is to know your business thoroughly and that means to have a handle on every deal, every customer and to properly understand how your market is performing, what the salespeople are doing, what the marketing effort is achieving and where it is targeting, and how the business is set up to support it. You need to be clearly aware of what your Value Proposition is to every client in a recession and why they should buy form you.

The biggest competitor to any sale in a recession is NO DECISION and this arrives when either your Value Proposition is weak or the way you articulate it is.

There is zero point in having a salesperson selling into a batch of clients where, say, over 50% of them are struggling in the face of recession and the Value Proposition does not deliver instant impact to their business, preferably to the bottom line. Think about it - if you are asking someone to pay incrementally for something it has to have a positive and instant impact to the business.

You would not try to sell a Ferrari to person laying off staff.

The very first thing that will come out of a detailed analysis of your business is that you can instantly see if the current forecast pipeline of customers are going to buy from you or not - you will see if they are open to the Value Proposition - talk to them personally to reassure yourself. You need to understand who is buying from you and when, then clone that success in more clients who match their profile. Make sure your salespeople are ACTIVELY changing their focus away from clients you have identified will not buy and refocus their efforts on the profile you know that will.

Make sure that your marketing effort is 100% aligned to the goal of the salespeople. The PR, collateral and lead generation engines need to be targeting the customers you believe are open to your Value Proposition so that there is a ready supply of warm leads - and shut down all ancillary marketing efforts which do not support these goals.

Changing Strategy

Sometimes a recession will smack you straight in the face and your realise that the good times are over.

'What we are selling is simply not what the market wants'.

I remember back in the late 90's a company that had made a fortune on the back of detecting issues relating to the mythed 'Millennium Bug' issue of embedded dates in software. They did extremely well. But after the date changed, they simply did not have a business. It seemed pretty obvious to me but they honestly thought that major problems would still exist and their clever software would continue to sell in the same volumes. The senior executives were really surprised when it didn't.

Kudos to them. They recalled all their key executive staff from all over the globe, they shut down their marketing machines and kept a skeleton salesforce and then sat in a building and quite literally re-invented the company with a new set of products, a new set of problems they could solve and an entirely new strategy. They had accrued enough reserves to get by while they did this but then they took their new plan to their VCs and because they had delivered previously, they got more money and started again. Utilising pretty much the same people with a few attritions from those not used to having to sacrifice commissions because of no sales, they not only started sales up again but they actually became a profitably, fast growing company again.

It's an extreme example but when markets change, there is no point in trying to keep doing what you have always done if it is no longer as compelling to clients. It's why many old businesses who fail to adapt to changing markets quite literally Hit the Wall and whither or get bought, if they are lucky.

As I blogged yesterday, recessions can be rewarding in that they can force change, make people think, cause innovation and creativity and can set a business on a new, more lucrative and sustainable pathway. That takes courage and determination and what many businesses will find in such times is that their management are simply not capable of thinking that way and taking those sorts of risks.

For them, cost cutting is simply the only option - batten down the hatches, survive the storm and all will be ok.

New Recession, New Opportunities

It comes as no surprise that many clever start ups arise in the middle of a recession - Facebook, Cisco and my own client, Theorem Inc, did so. Jay Kulkarni, CEO at Theorem, will tell you that the Value Proposition he trades on was honed during a recession. His business supports online marketing and guess what, it is one of the few areas of the Hi Tech market enjoying real growth during this recession. Theorem, because they were born with a recession in mind, are thriving because their Value Proposition resonates with every major business in their market right now.

There are plenty of examples of how companies have re-invented themselves in the rocky grounds of downturns and you do not have to look for to see Apple. Here was a company stuck in a war with Microsoft and Intel and had only a clique of marketshare at around 9% for arguably the best computers in the world. But they were addressing specific needs best and not the broad market where harmony of applications and cost were the vital selling factors. Steve Jobs, on his return to the company, set a new course and looked at how the whole market for mobile media was going to change and bet everything on it. The iPod and iPhone are now almost history but Apple could not be doing better as their strategy has changed to support the whole market.

Strong Message

So the message is clear - do not cut costs just for the sake of it whether that is just switching off lights to salary cuts to jobs. Make sure you are addressing your customers and that your Value Proposition stands the test with clients before you go down that path. If nothing else, you owe it to your employees.

If you do not have the internal creativity, innovation, skills, courage or appetite to do this then it should be your management that suffers first but get help in fast. All that I blog about depends on your understanding of your customers - how and why they buy, how they have changed and their new needs - then aligning your resources to servicing these needs or to find new clients where your products and services resonate.

For those with the courage and energy to do this, cuts will be the last resort while re-aligning your strategy and resources will set you fair for the future. Further, for those with the strength to do this, there is more than enough cash in the market to support you. You just have to know where to look.