Saturday, October 8, 2011

Jobs' biggest mistake: he forgot about complements

Although Steve Jobs is rightly remembered for the innovative products he brought to market, he is also responsible for one of the biggest business blunders, ever.  Like Michael Porter, he forgot about the importance of complementary products and the Macintosh platform almost died on his watch.

In 1984, the graphical user interface on the Macintosh computer gave it a huge advantage over its rivals who had command line interfaces.  Mr. Jobs exploited this advantage by charging a high price to buy the computer, but also to develop software for it.  Meanwhile, Bill Gates, with his inferior product, was doing everything he could to encourage developers to make software that ran on his operating system.

Gates' strategy was the right one because the demand for an operating system increases with the availability of programs that run on it.

Steve Jobs learned from his mistake however, and when he developed the iPhone and iPad, it was an open system, designed to make it easy for App developers to design and make software for it.   

1 comment:

  1. In fact, he learned his lesson double plus well: While development of apps is easy and open, distribution is limited to the App store, allowing Apple to monetize some of the network externalities.