Apple's Ascendance

For Steve Jobs, each Apple product - iPod, iPhone, iPad, iAnyThing - must not only be a marvel of technology but also a work of art. This confluence of function, design, aesthetics, software and hardware has captivated consumers around the globe and transformed Apple into the most valuable technology company in the world.

At the recent Worldwide Developer Conference in San Francisco, the visionary chiel of Apple unveiled another service – iCloud - that is likely to increase the company's lead over competition.

After some failed attempts, Apple has perfected the technology to eliminate the need for manually synchronizing content to smart devices. iCloud will allow users to store content - music, photos, backups, contacts, calendars, email and ebooks - on Apple’s remote servers (“cloud”) and have it automatically pushed to their iPhone, iPad, iPod and Mac or PC via WiFi.

iCloud is free. Each user gets 5GB of free storage, more than plenty for most consumers. More storage will require an annual subscription.

The term “automatically” is a critical differentiator. Apple users will not need to manually upload content to iCloud; it will happen, well, automatically. This is where Apple leapfrogs over its competitors. Both Amazon and Google have announced their own cloud services but they require manual uploading, a boring and time-consuming process that looks primitive compared to Apple’s.

The only “restriction” for iCloud to work seamlessly is that the devices will have to belong to the Apple ecosystem, that is, all the ‘i’ devices across the Apple universe. The company has ensured it by integrating iCloud technology into its operating systems – the iOS for the iPhone, iPod Touch and iPad, and the Mac OS for its laptop and desktop computers. All Apple devices will be able to “talk” to the cloud. Users will be able to move content to and from the cloud no matter where they are, as if they are communicating with their local hard drives. iCloud will also automatically backup all your mobile devices.

Will this lock current and future users into Apple products? Steve Jobs certainly hopes so. iCloud will become available in September with the release of iOS 5.

What does iCloud do to the current state of consumer technology? It profoundly disrupts it. As Jobs said: “We’re going to demote PC and Mac to just be a device. We’re going to move the digital hub, the center of your digital life, into the cloud.” The Post-PC world is upon us.

One company that Apple has completely overshadowed is Microsoft. Every time Apple releases a product or a service, Microsoft comes across as a plodding behemoth and a weak imitator. When Apple launched its wildly successful iPod in 2001, Microsoft followed with Zune in 2006 but withdrew it from the market in 2010. It was a no-contest: Zune was inferior to iPod in every way. When Apple introduced the iPhone in 2007, it took Microsoft 3 years before releasing a competitive product, Windows Phone 7. But the Microsoft phone is a distant third after the iPhone and Google’s Android phones. Microsoft’s purchase of Skype in May for $8.5 billion has left many industry analysts scratching their heads.

In May of 2010, Apple surpassed Microsoft as the world’s biggest technology company based on market value, after Apple almost went out of business in 1990. Apple now has a market value of about $320 billion, more than the combined value of Microsoft ($200 billion) and Intel ($115 billion)! The only other company in the world that has a greater market value is ExxonMobil ($390 billion), the oil company. Industry experts are speculating that Apple may overtake ExxonMobil in the near future.

While for the last 10 years, Microsoft stock has been stuck at about $25 a share, Apple’s stock soared from $11 a share in 2001 to its current value of $330, a rise of over 3000%!

The bulk of Microsoft’s revenue continues to be generated by its two cash cows, the Windows operating system and the Office suite. But as the digital hub moves from the PC to the cloud, and as the iPad relentlessly cuts into the sale of Windows PCs, the top technology company of the ‘80s and the ‘90s appears to be six or seven steps behind Apple.

There is no one with the vision and business acumen of Steve Jobs at Microsoft. Bill Gates, his closest competitor, left Microsoft in 2008, and while the current CEO Steve Ballmer is a talented manager, he is no Bill Gates and certainly no Steve Jobs. Recently, when a respected money manager asked Steve Ballmer to step down and pass on the torch to someone else, Microsoft stock immediately went up. Microsoft sorely needs a new vision and a new style of thinking at the top to regain the glory of its yesteryears.

Apple is on a roll. How long can this last? Just as empires rise and fall, so do technology companies. Today’s colossus is tomorrow’s also-ran. Yet Jobs seems to have found a way to keep reinventing Apple. He is currently battling pancreatic cancer but the vision he has laid out for his company and the creativity he has unleashed among his engineers will probably help Apple continue its dominance in mindshare and market share for several years to come.

As our gadgets become smarter and smarter, do we run the risk of becoming dumber and dumber? After all, if our smart devices can do our work for us and even think for us, what is left for us to do other than to scroll screens and push buttons for titillation and entertainment? Sure, we can create documents and post opinions and search databases and look up references and be connected to each other and to the cloud 24x7, but will our creativity be sucked out of us in that mode of mostly passive consumption? Smart devices may give us instant access to the world’s storehouse of knowledge but unless we set aside time for reflection and assimilation, it is difficult to see how intelligent gadgets can help produce a Fermi or a Tagore.