Newspaper article St Louis Post-Dispatch (MO)

Apple Story Is a Cautionary Tale

Newspaper article St Louis Post-Dispatch (MO)

Apple Story Is a Cautionary Tale

Article excerpt

Apple Computer Inc. for years was a model for entrepreneurs, inspiring anyone who dreamed about creating an innovative product, or perhaps even an industry.

But the company's current crisis and the questions about its survival serve as a cautionary tale for young businesses, providing lessons on what they should avoid to prevent going up in flames.

Apple, creator of the first commercial personal computer, recently reported a $69 million quarterly loss, cut 1,300 employees, canned its chief executive and reportedly sought a merger with Sun Microsystems Inc. that hasn't yet come off.

The company's board named a new chief executive with a reputation for turning companies around.

The actions were those of a desperate company, trying to protect what remains of its business after a series of disastrous missteps.

It's clear from Apple's history that technology - even superior technology - cannot create success. A company has to nurture technology with consistent business decisions to fend off aggressive competitors, even those with inferior products.

"Technology, innovation is not enough," said Clark Callahan, director of the Wharton Small Business Development Center in Philadelphia and an adviser to entrepreneurs.

"Everybody likes to look at Microsoft as a technology success story, but that's a marketing organization and I don't think Apple has those strengths," he said.

Apple for years had a business that most companies would envy - a unique, superior product line, ferociously loyal customers and steady innovations.

Customers were willing to pay a premium for the Macintosh operating system, which was widely recognized as easier to use than Microsoft's DOS-based operating system and its early successor, Windows.

But experts said Apple made a crucial misstep as the PC industry boomed: it kept its operating system to itself for too long rather than licensing it to others. In doing so, it lost the chance to make the Macintosh the PC standard.

It also failed to remain consistent in its aims. At the same time that it sought to protect and enhance its profit margins, it wanted to grab market share. With competition on the rise, the aims were inconsistent. …

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