J. Bradford DeLong’s article “So Much for Economic Principle,” in Wired Magazine’s June 2003 issue, has hit the newsstands. DeLong writes, “I have been buying Macintoshes since 1984. And except for the very first one, I thought each Mac would be my last – that Apple Computer would soon be out of business, or at least in a clear death spiral.”
DeLong explains that despite commonly-held economic principles that should have dictated Apple’s demise long ago, “…here Apple stands, still making money, generating buzz, out-innovating its competitors, and otherwise defying economic expectation… And I’m still buying Macintoshes… Apple Computer’s persistence defies the law of increasing returns.”
DeLong vastly overstates the economic importance of Microsoft’s token investment of $150 million back in 1998, perhaps not realizing that Apple had billions of dollars on hand at the time, by putting that largely symbolic investment in non-voting stock at the top of his list why Apple is still here today. However, the impact of the deal on the general media and Wall Street was of real importance (including the promise of Office for Mac for five years) and came at a crucial moment in Apple’s history.
Another important reason why Apple continues to defy economic principle, according to DeLong, “Apple has managed to stay even with, or slightly ahead of, Microsoft in system software… By setting design and performance specifications of Macintosh hardware, writing system software becomes easier. There are fewer variables to contend with and less testing and debugging required. Such a controlled environment produces excellent code quickly at a lower overall cost.”
DeLong describes why Apple’s embrace of the open source movement and the Unix core of Mac OS X are contributing to its success in the face of what should be daunting odds. “Today, the latest and greatest software is as likely to be an open source project, or a for-profit effort built on top of open source code, as it is a commercial application built to run on Windows. And if its native language is Unix, the second-class implementation is now more likely to be on Windows than on Apple.”
“As long as the world’s programmers continue to speak Unix, Apple’s economic future… is secure. I doubt that my current Mac will be my last,” DeLong concludes.
The June 2003 issue of Wired is not yet available online, but is available on newstands now.