counternotions

Suppose you were the CEO of Apple in 2005 when a couple of intergalactic visitors with time-warping technology offered you this bet:

Design and manufacture a small mobile device that seamlessly combines the functionalities of a cellular phone, a web surfer, an audio/video player and a small PC, and your company will double its market cap and establish a third mass-market computing platform after Windows and Macintosh.

Would you take it?

Before you say, “Are you nuts, why wouldn’t I?” ponder just a few of the issues involved:

1. It won’t be possible to enter this market quietly or modestly and hope to grow slowly (like with Xserve a few years earlier). Yours will have to be a blockbuster entry. You are good in raising awareness and expectations around a product but that raises the consequences of failure exponentially.
2. If you fail, it would be a public fiasco of the first order, likely lopping off at least a third of your market cap and seriously eroding financial sector confidence in your company’s ability to grow and diversify beyond the Mac and the iPod businesses.
3. You will have to enter a highly-regulated, highly-contested, large-scale and capital-intensive industry of established players with deep pockets that you have never been involved with.
4. You don’t have an operating system designed for mobile devices and adopting someone else’s OS doesn’t make business or technical sense.
5. You’ll have to solve a very long list of vexing technical problems for mobile devices including power management, radio efficiency, miniaturization, storage, display, CPU utilization, multi-tasking, cloud computing, advanced graphics, data/sensory input, etc.
6. While you’re beginning to appreciate logistic and component pricing advantages on volume-based products like the iPod, you won’t have similar advantages with this device especially at the start and against players like Nokia that sells hundreds of millions of units around the world each year.
7. You may have thought dealing with music labels wasn’t much fun, now try changing handset acquisition and revenue sharing models of entrenched and oligopolistic carriers here and abroad to an extent never tried before.
8. You may think Jonathan Ive can easily design the hardware, but you’ll have to invent a stunning UI and a truly innovative interaction paradigm so that it’ll give you at least a two-to-three year competitive cushion against other players, as you will surely need it.
9. This device will likely require a bunch of proprietary service and content components (maps, email, media, games, etc) beyond your core competency, requiring lengthy negotiations and strategic partnerships.
10. In order to create a sufficiently large and attractive platform you’ll have to entice developers with an array of inexpensive development tools and create a highly-lubricated marketplace unlike any other.
11. As with the iPod, you’ll have to sell this device to a mostly Windows-oriented world.
12. In order not to be quickly marginalized, you’ll have to distribute the device in most countries around the world, even where you have little or no Mac or iPod penetration.
13. If you want to achieve iPod-scale (and you must) you’ll have to implement and operate a different, dedicated and larger sales and support network on a global basis.
14. Clearly, this is a bet-the-company move and the anti-Apple brigades are ready and armed.
15. Incidentally, you’ve recently been diagnosed with pancreatic cancer.

Often, the anything-but-Apple choir doesn’t quite appreciate the immensity of the risks Apple took with the iPhone.

So it’s 2005, will you still take the bet? Steve Jobs did: