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Outlier’s Path

Week of Comebacks

Last week was a fascinating week. Tesla shareholders voted to approve Elon’s pay package, which Delaware courts had struck down. OpenAI showed it is not beholden to Microsoft by partnering with Apple. With a few announcements, Apple revealed that it knows how to leapfrog others, is still competitive in the AI race, and temporarily recaptured the title of the most valuable company on the planet. We love comeback stories.

Throughout history, Apple has had to come from behind. Apple fans tend to rewrite history about the company’s technology prowess and inventiveness, and loyal fans will even claim Apple was much more inventive under Steve Jobs when challenged on the facts. However, Apple was not the inventor of personal computers, downloadable music, MP3 players, mobile devices, chips, or GenAI. Apple was late to all of these technological trends.

In fact, Apple was a failing enterprise on the brink of bankruptcy in the mid-1990s. Steve Jobs was ousted in 1985 but returned in 1997 after Apple acquired his company, NeXT. Out of necessity, Steve had to call his nemesis Bill Gates for a $150m investment from Microsoft to bail out Apple. The humiliation was the wake-up call Apple needed to undergo a true metamorphosis.

Instead of competing head-to-head on technology, Apple focused on simplicity, design, and user experience. Steve cut product lines and introduced the iMac in 1998, which featured a unique design and friendly user interface. We used bulky portable music players with many buttons for years before Apple introduced the iPod in 2001. The iPod was simple and sleek and synced intuitively with your computer and later to the cloud through iTunes. The first brick mobile phone weighed 4 lbs and traced back to Motorola in 1973. The form factors became smaller, and network technologies improved over many decades. The mobile phone market became competitive, dominated by Nokia, Motorola, and BlackBerry, before Apple entered the market in 2007 with a much better-designed and intuitive product called the smartphone. If you think that was old technology coming of age, why would Apple want to make their own silicon? Is it about advancing technology with better performance and power efficiency? Or is it about enhancing the user experience because making your own chips permits better hardware and software integration?

Apple Intelligence is another example of Apple’s failure to be a technological first-mover; however, there is a difference between a first-mover and a long-term winner. Apple has demonstrated that it can come from behind and become the long-term winner by designing a much better user experience across various technologies. Time will tell if Apple can use its differentiated competencies of simplicity, design, and user experience to win the AI wars. At least for now, Mr. Market is projecting that Apple has more than a fighting chance.

The moral of the story is to know your core competencies, so what are your differentiated competencies that give you a fighting chance to become the long-term winner?