Apple: The new/old Pirates of Silicon Valley?


Noah Wyle as Steve Jobs and Anthony Michael Hall as Bill Gates

A few months back, I noticed a bunch of folks tweeting about the 1999 made-for-TV-movie “Pirates of Silicon Valley.” I remember hearing about the movie just as I was moving to Silicon Valley that year, but never got around to watching it. I had heard mixed things about the movie, and its accuracy, but the tweets seemed pretty positive, so I decided to rent it and see for myself.

It exceeded my tremendously low expectations. Though as far as factual accuracy, it’s hard to say where truth ends and creative license takes over. The movie hits some of the high points of the emerging battle between Microsoft and Apple as told through the stories of Steve Jobs and Bill Gates. And narrated by their wingmen: Steve Wozniak and Steve Ballmer.

There’s an amusing scene, about 20 minutes in when Wozniak and Jobs walk out of the famed Homebrew Club in 1976, having triumphantly demonstrated a version of their personal computer:

Jobs: “IBM is going to be loading in their pants!”

Wozniak: “Steve, I don’t think IBM even knows who we are.”

Jobs: “That’s okay. Because they’re the enemy.”

And later, in a conversation with John Sculley:

Sculley: “Steve, I’m worried. About what’s happening. All the “them versus us” stuff. Macintosh versus Apple II.”

Jobs: “You don’t understand, John. People need a cause.”

Creative license aside, back in the late 1970s, and the early 1980s, Jobs had enormous power and the ability to impose his will. If you wanted to play with Apple, you did things Jobs’ way. And he wasn’t afraid to define his enemies and go after them (IBM, Microsoft). That is, until he was ousted in 1985 and Apple began its long, slow decline. And even after Jobs’ return in 1996, Apple was just happy to still be around, even striking a deal with Microsoft to invest to keep it going.

Apple’s clout has grown steadily over the past decade, thanks to the success of the iPod and the iPhone. With the iPad announcement a week behind us, it seems the the gadget itself may turn out to be less interesting than some of the things it tells us about the state of Steve Jobs and Apple. With the iPad, it appears that Jobs is confident that he’s once again in a position to dictate terms and define the opposition in a way he hasn’t been able to since the early days depicted in Pirates of Silicon Valley.

You could feel this renewed swagger when Apple announced it recent earnings. Jobs said in a press release:

“If you annualize our quarterly revenue, it’s surprising that Apple is now a $50+ billion company,” Jobs said. “The new products we are planning to release this year are very strong, starting this week with a major new product that we’re really excited about.”

That was a not-so-subtle reminder of Apple’s financial strength. Consider that Apple has closed the gap in terms of market capitalization with Microsoft. This is from Silicon Valley Insider last November:

“In May 2000, Apple’s market capitalization was $17 billion. Today it’s $182 billion. Meanwhile, Microsoft was around $356 billion in May 2000. Today it’s around $261 billion.”

By the way, Google’s market cap is $171.73 billion as of mid-day Wednesday.

Since the release of the iPad and iTunes, Apple has had the music industry under its thumb. And with the iPhone, Apple was able to change the balance of power between device makers and phone companies. But with the iPad, let’s look at the new ways Jobs is flexing those growing muscles:

1. The chip: For the first time, Apple has built it’s own chip for a product. For years, the company has worked with others, first Motorola and then IBM, to build its processors. But for the iPad, the company debuted its A4 chip. The chip came via its acquistion of P.A. Semi in 2008. Building its own chip reportedly was one of the key reasons Apple was able to bring the cost of the iPad down. But early reviewers have also noted the iPad’s speed at rendering Web pages. The A4 potentially puts Apple in a position to build more of its own chips, and it also sets up a new rivalry against Intel for the mobile computing business.

2. Flash: One of the most talked-about missing features of the iPad was its lack of support for Adobe’s Flash. This has turned a somewhat obscure discussion that started with the iPhone into a full-blown geek fight: Why doesn’t Apple like Flash? We got the answer indirectly thanks to some leaked remarks from an Apple town hall reported by several bloggers, including Wired’s Epicenter:

“They are lazy,” Jobs says. “They have all this potential to do interesting things but they just refuse to do it. They don’t do anything with the approaches that Apple is taking, like Carbon. Apple does not support Flash because it is so buggy, he says. Whenever a Mac crashes more often than not it’s because of Flash. No one will be using Flash, he says. The world is moving to HTML5.”

3. Phone companies: With the iPhone, Apple managed to re-define the relationship with carriers by carving out an exclusive deal with AT&T that gave Apple favorable financial terms. With the iPad, he’s taken that sway a step further by securing a 3G wireless plan from AT&T for $29.99 per month, about half what it costs from rivals. We’ll have to see whether AT&T’s network is ready for another surge of traffic.

4. iBooks: Amazon has recently been fighting with book publisher Macmillan, which wants to charge more for e-books. Part of the issue appears to be that Apple’s new book store, announced with the iPad, will let publishers charge more. And they’re using that option to leverage concessions from companies like Amazon which would prefer to keep the price lower.

5. Google: During the town hall, Jobs also wasn’t afraid to define Google as the enemy:

“We did not enter the search business, Jobs said. They entered the phone business. Make no mistake they want to kill the iPhone. We won’t let them.”

So, Apple has defined the opposition: Adobe, Intel, Google. And they still have Microsoft in their scope. And Apple using its power to affect wireless plans and possibly e-book prices. Apple maintains a tight grip on the music business and calls the shots when it comes to building applications that run on the iPhone and iPad.

The question now is how successful Apple will be as it seeks to assert itself even more. It still hasn’t managed to get all the TV networks and movie studios to agree to its terms, and as a result, selection on iTunes for video content is still weak.

And we’ll have to see where else Apple will wield its power. And whether that will be good for consumers or not. But for now, Apple employees have plenty of new causes and enemies to battle to keep them busy on several fronts for years to come.


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  • delete me

    “release of the iPad and iTunes” [?]… iPod, surely.

  • Sour Apple

    “We did not enter the search business, Jobs said. They entered the phone business…”

    Hypocrite. Steve should be called “The Backstabber of Silicon Valley”.

    Who was it that teamed up with Motorola to create a phone with ipod capabilities then 2 years later release their own phone?

  • Kunle Fadiora

    It’s amazing how stuff develops…defining the enemy could really be a viable business strategy..a guerrilla tactic for survival.

  • So do we have the iPad version of the movie in iTunes yet?

  • Adeboye Thompson

    Nothing but utmost respect for Steve Jobs. I like the war like attitude. Business is all about survival and you have to define your enemies before you can effectively strategize an attach

  • Alexis

    A lot has happened since this article was written. I would have to say the ipad was a success, Apple acquired more money than Exxon mobile, and sadly Steve Jobs passed away.