Erikka Askeland: Can stand-in Apple chief survive invasion of the Androids?

Published on Thursday 20 January 2011 22:05

WHEN the smart phone wars come, which side will you be on? Personally, I love my iPhone with a slightly unseemly passion.

Although, unlike many, I resist the temptation to take it to bed with me - I am old-school enough to prefer the ancient technology known as a book.

But in the United States, phones that use the Android operating system are now outselling iPhones, which will be a worry to Steve Jobs, chief executive of the iPhone-maker Apple. Except Jobs already has quite enough to worry about, having this week announced he is taking leave for health reasons.

Jobs has in recent years had a liver transplant and a serious bout of pancreatic cancer, which makes his departure ominous, particularly at a time when his baby, Apple, is facing its biggest threat since Bill Gates retired from running rival Microsoft.

Jobs' convalescence comes at a time when Apple has never been stronger - last week, the firm shocked the markets with the sheer size of its 70 per cent growth figures on the back of those must-have gadgets, iPhones and iPads. Plus, the firm has lots of cash on its balance sheet to ward of the threat of deprivation imposed by any barbarians at the gates.

But barbarians there are, particularly in the smart phone market, where the new breed of open-source and user-friendly Android phones are doing serious damage to the iPhone's pre-eminence. The cool kids are telling their mums to buy an iPhone but buying Androids for themselves.

Without Jobs, Apple loses the visionary whose Machiavellian leadership and dedication to developing stylish, market-leading products has led people to predict it will soon become the first trillion-dollar company. Although his deputy, chief operating officer Tim Cook, is good, he fails only in that he is not Jobs.

It was Jobs who saved Apple when he returned to the company he founded, bringing out the revolutionary iPod weeks after 9/11. But an earlier move, to stop licensing the Apple operating system to other manufacturers, was a major turning point in the firm's fortunes. By doing so, Jobs effectively stamped out the market for Mac "clones", which threatened the firm's then puny and declining hardware sales.

Since then, Apple has had a stranglehold on both its hardware and software. It was a lesson Jobs learned from one of the biggest mistakes made in computing history, when IBM failed to buy the copyright for an operating system from a Harvard drop-out named Bill Gates. Instead, they merely licensed DOS, which Gates then made into the formidable Windows operating system that made him one of the richest men on the planet.

Back in the 1980s, at the height of the Mac vs PC wars, when Apple was fighting Windows for market share, Jobs was also behind the firm's most unforgettable advert. The depiction of a rebel smashing the screen depicting an Orwellian, Windows-powered Big Brother (the advert was launched at the 1984 Superbowl, after all), became part of the company's brand DNA. This lasted more than 20 years, to inspire the hip, countercultural appeal of iPods and iPhones.

Apple lost the Mac/PC market war of the 80s and 90s. Yet it is now Apple that is the behemoth in the market for smaller, more clever phones and tablet PCs.

But the trouble with becoming the dictator is that rivals and customers start to believe they must be toppled. Instead of Apple's iTunes, users have been turning to Spotify. And instead of iPhones, there are those made by Korean firm HTC or even Google, which promise greater flexibility and a range of "apps" that rival those exclusively used on iPhones.

The question for Apple is how to maintain its dominance, which mirrors that of Jobs' bitterest rival at Microsoft in the past decade. Windows remained largely impervious to competitors because it became the de-facto business tool. Nor have things changed much since someone coined the phrase "no-one ever lost their job for buying Microsoft". But consumers are more fickle and adventurous than your average corporate IT department. Apple will need to maintain both the maverick innovation and sheer, steely determination to strangle competitors at birth that is Jobs' legacy.