Ben Thompson, writing for Stratechery:
I do believe that Apple’s products — their devices anyways — are superior, particularly if you value the finer details of industrial design, build quality, and little UI details like scrolling and responsiveness that seem so simple but are so hard to get right. And, frankly, it’s not surprising that Apple is good at this stuff for the exact reasons laid out above: everything about the company is designed to produce integrated devices that don’t sacrifice perfection for the sake of modularity.
But…
The problem is that everything that goes into creating these jewel-like devices works against being good at services.
Apple is set up to share their expertise across product lines, in what’s called a unitary organizational form. Knowledge is centralized in functional areas, such as marketing, finance, engineering, with this expertise spanning all products. Great for creating products that integrate well. Not so great for running services, like iCloud or advertising.
The strength of integration is its mass of specifics, building for an incredibly complex tangle of devices and demands. Services, on the other hand, tend to be more general purpose. To succeed, a service should serve the widest possible customer base.
As you make your way through the post, ask yourself whether Apple is an integrated product company or a services company. Interesting post.
The Thompson piece is simply wrong. First of all, he gives no coherent reason why Apple’s organization is not well suited for services. He simply repeats, in different words, that the integrated approach does not work for services. That you cannot “build everything from scratch.” There is no evidence that Apple tries to build their services from scratch. They purchased what became iTunes. They purchased what became Siri. They have used AWS and Azure from day 1, and continue to expand outsourcing. Second, many successful services companies do build many things from scratch. That’s how Amazon developed AWS. Facebook and Google make their own server hardware (not all but a meaningful percentage).
Thompson also goes on about accountability and separation of hardware from services. Eddy Cue is responsible for services. He is not responsible for any hardware. So where is the confusion?
If Apple’s organization cannot work for both hardware and services, Thompson has given a poor rationalization of why. Really poor.
Can we please stop writing: “Ben Thompson, writing for Stratechery”
It’s his bloody blog with a fancy name.
AWS wasn’t built from the ground up as AWS. AWS was initially just renting of excess server capacity for their ecommerce business. So they knew it worked well because it already worked for their business.
Didn’t say it was built from ground up. But they developed new technologies doing it.
You said, “Second, many successful services companies do build many things from scratch. That’s how Amazon developed AWS.” And they didn’t develop new technologies to do it. The technology they developed was used to run their core business, they just were able to scale it up and resell it.
This is Mo, writing for Disqus. I heartily agree.
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