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Where Does Apple Go From Here?

Apple's got room for future triumphs -- but it also faces threats from a battered economy, rejuvenated competitors, and a leadership crisis precipitated by Steve Jobs' illness.

Apple is the only company making PCs or smartphones for the end-user, Gottheil said. PC manufacturers have IT as the ideal customer, handset manufacturers are targeting cell phone providers, and Microsoft is targeting the PC manufacturers. Apple, on the other hand, is a consumer company.

After nearly three decades competing in the personal computer market, Apple brought the same simplification strategy to music players. When Apple introduced the iPod, portable music players were complicated devices requiring considerable configuration and installation of multiple software apps. Apple decided to simplify by providing the whole package.

Gottheil compared Jobs to Thomas Edison, who invented the gramophone more than a century earlier. Like Jobs, Edison realized he couldn't just sell hardware -- he had to own the whole experience. "When Edison decided to make a big business out of his music player, he knew he had to do the whole thing," Gottheil said. Edison sold gramophones, and also sold the music cylinders to play on the gramophone. Edison applied the same vision to moving pictures -- when he invented cameras and projectors, he didn't just sell hardware, he also made movies.

Apple sells music, videos, and iPhone apps via its online iTunes Store.

Likewise, Apple doesn't just sell the music and video player -- it provides the software and sells music and video through the iTunes Store.

An iPhone-Simple Netbook

The next step for Apple: back to the Mac. More specifically, take some of the simplicity lessons that Apple learned from the iPhone and iPod, and apply those insights to the desktop computer, Gottheil said.

"For all that the Mac is both easier and less troublesome than a Windows-based PC, it's still more of a hairball than most people want to deal with," Gottheil said.

The iPod and iPhone are far simpler to use and maintain. "Apple controls the whole experience -- which was always Apple's goal anyway. The reason why Macs are problematic is they have to run software from all over the place."

Microsoft Windows offers even more freedom of choice, supporting a wide range of hardware that the Mac doesn't support -- which leads to greater unreliability.

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