Hello iCloud, Welcome Future
On eve of the iCloud launch, I am reflecting on the past to predict the future.
Apple is currently the most valuable company in the world, the most valuable to have ever existed, with a cash balance larger than most industries, $0 debt, and an invincible combination of differentiation and low cost.
And yet, its market share is tiny.
The future has never been brighter for Apple. Go long, very long, Apple.
And if Apple's future is bright. So is the world's.
For the past three decades, Apple has been focused on one goal: to make our lives better.
In our terminology, Apple's mission is to help people get jobs done better.
Jobs are the tasks and goals we need to accomplish to make our lives better.
Learn a new skill, teach a child, cure a disease, build communities, collaborate, inspire...
Make our lives better.
It is a simple goal with enormous complexity. And complexity creates opportunity to simplify.
In honor of my Dad, on the launch of iOS 5 and iCloud 1.0, here is a list of every Apple product I have owned since 1979:
PowerMac G4 Quicksilver
iBook Dual USB
PowerBook G4 17 inch
iMac G5 20 inch
MacBook 13 inch
iMac G5 20 inch
iMac 24 inch
iPhone 4 ATT
iPhone 4 Verizon
and now, iCloud.
Apple's Success and Ours
What is the secret to Apple's success? And how will it make the world a better place?
The secret is simple: two platforms, an almost infinite number of jobs satisfied.
And now, a third platform, iCloud.
The result is low cost differentiation.
Add in a direct-to-customer business model, negative working capital and you have an infinite sustainable growth rate that generates enormous amounts of cash with $0 debt and zero need for growth equity.
Compare this with Dell (and every Windows and almost every Android manufacturer).
Dell's only competitive advantage was price. It combined a direct model and negative working capital with low price. It could generate cash with 0% margins, which it did exceptionally well.
Apple, however, is growing using differentiation, not low price.
Apple combines a direct model and negative working capital with premium price and low costs. The combination is almost unstoppable.
To competitors, it is lethal.
Apple vs. X is very instructive. X = entire traditionally-defined industries (e.g., "mobile phones").
So why will this make our lives better?
The reason is not hope, it is math.
Why can our lives get better? We live better than 2000, 1000, 500, 200, 100 and 50 years ago.
This is the solution: make companies compete to make our lives better.
Apple makes products that make our lives better.
Our lives will get better.
And iCloud will be a enormous part of the reason why.