If you had told someone five years ago that Apple would someday have a rapidly growing business in the server market, a huge share of the Unix desktop market, and commanding mindshare in the digital music business—so much so that Hewlett-Packard licensed its hardware—that someone would have probably asked what kind of irrational exuberance you had been smoking.
Yet somehow, Apple turned into one of the biggest success stories in the computer industry. The company more than doubled its server sales this year, and introduced 64-bit servers. Apple can now claim an installed base over 12 million Unix-based Mac OS X desktops. And the iPod has helped move Apple into the consumer electronics and music distribution markets in ways that no amount of irrational exuberance could have predicted back when the company was killing the Newton.
While much of the attention of technology media has been focused on Linux, Apple has been using its consumer success to slowly build its own case as an alternative to Windows. At the Apple World Wide Developer Conference in June, CEO Steve Jobs and company mocked Microsoft with banners that read, “Redmond, start your photocopiers,” and claims that Mac OS X 10.4, code-named Tiger, was “years ahead of Longhorn.” With Longhorn having since been trimmed back by Microsoft, Apples claims seem to be holding their water.
The iPod has become Apples ambassador to the world, showing off the companys leading-edge industrial design. Apple continues to lead the industry in creating computing products that people just have to have. For example, theres the latest revision of the iMac, which riffed on the designs of the iPod and another innovation out of Apple this year: the Apple Cinema desktop displays.
Coupled with Apples aggressive management of its lead in online music, protection of its DRM lock on iTunes, and continuing innovation on the iPod itself, this focus on creating objects of techno-lust has put Apple in a pretty attractive financial position, and has turned the company into a Wall Street darling. With yet another highly anticipated revision of its operating system just over the horizon—and packed with features targeted at Apples creative professional and consumer constituency, as well as its loyal developers—theres a lot for the Apple faithful to look forward to as this year ends.
Thats not to say that 2004 was without its potholes for Apple. Being a leading-edge design operation means that sometimes, you fall off the edge. PowerBook battery recalls and a very visible customer uprising over the life cycle of iPod batteries both drew attention to what remains one of the weak spots in the companys portable computing dominance. And while the G5 processor has edged up to 2.5 GHz, the architecture has thus far fallen short of the 3GHz promised by CEO Steve Jobs last year.
Apple also picked up more visibility in the malware community, as the first “real” Mac OS X Trojans and exploits found their way into circulation. A scripting feature of Apples Safari browser raised some security concerns as well, and there were several security patches to the OS X operating system. But when viewed in relation to the trials that Microsofts users have been through in the last year, these gaps seemed, well, trivial.
Apple has also lost some key players recently. The departures of Apples hardware engineering chief, Tim Bucher, and AppleCare head Mark Wilhelm havent exactly shaken the company to its core, but they may be symptoms of some internal struggles within Apple as it tries to keep its momentum going into 2005.