So, Is Apple Cheating?

Last week, another iPad competitor bit the dust, and so far no vendor has even come close to bothering Apple in the tablet space. In the smartphone space, the only thing that seems to hurt Apple is the carrier and the anticipation of its next phone, which is due shortly but rumored to be delayed.

If this were a poker game or any kind of sport, this kind of winning streak would have us wondering if the winner were cheating. I’ve joked about Apple’s 5th column before, but doesn’t it seem like Apple’s competitors are increasingly doing brain-dead stupid things?

Don’t get me wrong — Apple is executing brilliantly, but in any competition, you rarely get just one good player unless someone cheats. Now if Apple isn’t cheating, some of these companies need to reassess their practice of hiring idiots for key positions, because that simply isn’t working. I’ll explore that.

I’ll end with my product of the week: one of the first AMD Fusion-based laptops on the market, the sweet HP Pavilion dm1z, a product that does a nice job of signaling what is coming this year.

Is Apple Cheating?

My 5th column theory — granted, tongue-in-cheek, at least initially — was that Apple had infiltrated competitors with people who interviewed well and found their way into key spots where they made crippling decisions.

This was based on an experience I once had: An executive I worked with turned out to be working for a competitor from his position as head of sales. He slipped that competitor confidential information, and it was clear in hindsight that he was making decisions that crippled our efforts. He got caught leaking the information, which initially appeared accidental, and was fired for poor performance. He ended up as head of the intelligence unit at the competitor he was leaking information to, which seemed to confirm our suspicions.

Since then, I’ve seen unconfirmed reports that Oracle, which is run by one of Steve Jobs’ closest friends and an ex-Apple board member, at one time placed people in competing companies. Their mission was largely to feed Oracle information on the competitors’ future products and confidential bids, suggesting this practice may still be alive in the tech industry. (As I was writing this, news broke that HP found one of these folks.)

Given the absolute failure of companies ranging from Microsoft to Motorola to field competitive offerings over an extended period of time, it seems at least likely that there has been some improper activity. From the iPod through the iPad, no one has created a credible competitor.

The most heavily funded attempt was the Zune, and Microsoft initially fielded a product that looked like a square brown turd. Now, in that case, I did look at the cause extensively, and I concluded it was the result of some of the most incredibly stupid decision making by now ex-Microsoft employees I’d ever seen.

However, there was a predecessor at HP that was so secret, even my community didn’t know about it. Somehow, Steve Jobs found out about it, though, and convinced HP to license his iPod instead of building its device. In the process, HP signed a deal with Apple that locked it out of the market — a deal that no competent attorney would have approved. After it collapsed, there was some executive movement from HP to Apple.

Or Are There Too Many Idiots?

Let’s look at two of the most recent contenders to knock Apple off its perch — the Palm Pre and the Motorola Xoom. Now follow the pattern: Both products owned CES the year they were launched; both had massive marketing budgets.

The Pre was largely brought to market by ex-Apple employees who hated Apple, and the introduction of the product was done with near Apple-like precision at CES. The Pre wasn’t tied to AT&T, the iPhone’s biggest weakness. The Pre had a keyboard, making it far more attractive to BlackBerry users who had made up the majority of the first smartphone wave. The Xoom had both 4G and Flash, which the iPad lacks, to its detriment. Both of these products, on paper, should have done at least some significant damage to Apple’s dominance.

But what happened? Well, the marketing team for the Pre gave secret exclusives to reporters who had historically been owned by Apple and put those of us who were far more positive about non-Apple products on the second tier, deeply upsetting the very people most likely to review the product positively. As a result, most of the initial reviews were moderately to extremely negative.

They then rolled out a very expensive high-concept advertising campaign in the face of massive historical information that campaigns like this are incredibly expensive and unsuccessful. They did an exclusive with Sprint, the only carrier that people disliked more than AT&T. That turned their biggest competitive advantage — not being on AT&T — into a disadvantage. In short, they effectively threw the fight, and the company ended up being sold to HP.

Now let’s look at the Xoom. The iPad is perceived as a premium product with high brand recognition. For most, it represents the ceiling, in terms of price, of what they would be willing to pay for a similar product. The Xoom was priced substantially above the iPad, which alone should have caused the product to fail to sell well — but someone wanted even more assurance.

The two big advantages it had — 4G support and Flash support — didn’t ship with it, and the software load wasn’t complete with regard to video, forcing buyers to find applications to get a complete experience.

Now let’s jump to the RIM PlayBook. What is the one thing you would think RIM would get right on its tablet? Email, right? That is what it is famous for; it is the mobile email king. So what do you think the PlayBook will launch without? Email. Apple did apparently cause this product to be delayed, in a brilliant move.

Wrapping Up: Is Apple That Smart or Are Competitors That Stupid?

Is it really more credible that people are so colossally stupid, or has Apple stacked the deck? What are the odds of every Apple competitor being an idiot vs. a very smart company having an incredibly proficient and active intelligence organization?

I really think every Apple competitor should step back and decide to either compete aggressively or give up competing with Apple. It matters to me less whether Apple and Oracle have advanced intelligence-gathering organizations and have placed people to torpedo competitors than it does that there are people who seem to keep their jobs making horrid decisions that someone should be reversing before they are executed.

In the end, it matters less why these firms are failing than it does that these firms are failing. In short, I think every tech company should regularly review important decisions for obvious idiocy and — I don’t say this lightly — fire the idiots who are making them before they kill the company. Then watch them to see if they end up at a competitor, like Mark Hurd did. Finally, if you are playing a game that seems rigged, and you don’t either correct the game so you can compete or leave it, well, to quote Bill Engvall, here’s your sign.

Product of the Week: AMD Fusion-Based HP Pavilion dm1z

Product of the Week

The notebook market is kind of amazing, because you can increasingly get a ton of performance for less than most pay for an iPad. The AMD Fusion-based HP Pavilion dm1z is a case in point.


Rob Enderle

Rob Enderle is a TechNewsWorld columnist and the principal analyst for the Enderle Group, a consultancy that focuses on personal technology products and trends.


  • I don’t know about espionage, but Apple does weild huge advantage both in economies of scale the inherited from the iPod and their willingness to bet huge on logistics. That gives Apple inherent price advantages.

    But beyond that, Apple is simply executing better than anyone else. Apple does not often release half-baked products. It took two years before Android phones worked well enough to really be viable, for instance … But they were selling them anyway. If Apple had not been locked into a deal with the devil (their only way to break into the business at all) and could have sold multi-carrier the Droid would have done much, much worse.

    We’re seeing what happens when Apple is not restricted by carrier lock with the iPad, and it’s looking a lot like the iPod … a product that no one can argue did not win on its merits, against all expectation. The iPad, like the iPod, was conceived in secret literally years before launch, and not released until it worked well. Can we say that about even one of the would-be usurpers?

    Jobs is legendarily viscious about product quality, something very rarely seen in business. It certainly shows in the products, and when Apple is able to achieve economy of scale they leverage that for all its worth to keep the competition from killing them on price.

    Are the other guys idiots? Well, yes. They’re releasing me-too products long before they are ready. They’re not willing to commit to large component purchases so they’re getting lousy prices and that keeps prices high and margins low. They have bought into constant product updates that mean high R&D and production set-up costs relative to product run time whereas Apple’s annual refresh keeps those costs to a minimum … but at the cost of the competitors getting next-generation products out several months earlier (like 3G, and dual-core processors), so the products have to be able to compete on function rather than specs.

    You mention the Pre, and claim lousy reviews. I don’t remember it that way at all – most reviews of the Pre seemed positive to me, and the software was certainly well done. Product quality, though, wasn’t — the warranty rates were horrible (well into the double digits!) and people remember having to get their phone fixed the next time they get to the store. Then, as you say, there was also the suckage that was Sprint, but that may well have been the fault of being so late to market — with AT&T betting on the iPhone and Verizon on Droid who was left for Palm? That’s the phone business for you — if Apple hadn’t been locked to AT&T, don’t you think it would have seriously blunted Android? Especially in the early days when Android was pretty lousy?

    It doesn’t take conspiracy theories. It’s easy to see, just looking at the execution of the various companies, how bad Apple’s competitors’ approaches have been. The products are released way too early, missing major features and with significant stability problems, at the wrong price points, pushing specs over function, with no long-term or even medium-term commitment to supporting any particular product. This is mediocrity at best, and incompetence at worst. That works fine as long as you can beat the other guy significantly on price, and your product works well enough, but if you can’t … it’s a recipe for those disasters you’re seeing.

    Apple really doesn’t have to sabotage the other guys’ efforts. I mean, have you used these other products? Mostly they just suck, seriously, and often in ways that are obvious to even naive consumers.

    jim frost

    [email protected]

  • Apple is trendy with loyal customers, And that combined with the mentality that if it cost more its better. Has made them rich, if your willing to venture offbrand and not look as cool. You can get better hardware with more storage ect for a fraction of the price. But no one wants to oppose the cool, honestly I worked with a no name company for while that actually had a much better phone more user friendly on a 4g network for half the price and released almost a month before the iphone. But the iphone got the in points and stomped the little company into the ground. Most people by stuff cause of the people around them. And never base it of logic,

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