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Tiny Apple has oversized influence
The company continues to set bold new standards for the PC and consumer electronics industries.
By Peter Lewis, FORTUNE senior editor


SAN FRANCISCO (FORTUNE) - What is it about Apple that makes customers so passionate? Perhaps they sense Apple's similar devotion to them. "We're all consumers [at Apple] and we know what consumers like," CEO Steve Jobs explained in an interview after his keynote. In other words, Jobs explained, Apple's engineers and programmers love technology and build products that they themselves want to use.

It's an approach that garners the company not just customers, but lots of influence.

The media, for instance, always flocks to any Steve Jobs appearance, on the mere hint that a new Apple (Research) product will be announced. If Dell (Research) or HP (Research) or Sony (Research) sent out cryptic invitations to an event in San Jose, as Apple did last fall, would dozens of the tech industry's top journalists drop everything to be there? Probably not.

So much fuss -- yet Apple's share of the computer market is less than 5 percent. Walk into a major corporation anywhere in the world and you'll have a hard time finding an Apple Macintosh computer, except maybe in the graphics department. Sony introduces as many new products in a week as Apple does in a year, but Apple's market capitalization (the value of all the shares sold to investors) is bigger than Sony's, clear evidence that investors, as well as customers, are enamored of the Cupertino company that was founded on April Fool's Day 30 years ago.

Tiny market share, big influence

So what explains Apple's oversized influence on the tech industry? "Apple is a product-driven company," explained Philip W. Schiller, Apple's head of worldwide product marketing. Most companies would say they are customer-focused. Others would concede that they're profit-driven. At Apple, Schiller explained, the focus is always to build the world's best product, whatever it is. If it builds the best computer, the best portable music player, the best online music store, Schiller said, customers will be happy and profits will follow.

At the Macworld keynote Jobs did unveil what may in fact be the world's best desktop and laptop computers, and, to go with them, the world's best personal creativity and productivity software.

Some companies build products that are beautiful, but hard to use. Others build products that are easy to use, but technically ugly. Apple, Jobs said, demands that all new products – and each and every component of those new products -- be powerful, beautiful and simple to use, whether it's a computer operating system, a click-wheel on an iPod, a video downloading service or the highly-machined screws on a laptop computer.

And there's always a desire to make every new product it even better than the last. One example: the power cord that plugs into the side of the PowerBook laptop sometimes gets snagged when someone walks by and catches it with a foot. In worst cases, the laptop gets dragged off the desk onto the floor, or the power port gets damaged. Solution: the new MacBook portables use a magnetic power adaptor called MagSafe, which attaches securely and but detaches easily.

Another example: Sharing digital photos with Grandma was still too hard, so Apple created "photocasting," allowing Grandma to receive new photos automatically on her computer when her kids drag the shots into a special folder on their computers.

Apple sets the standards

At last week's Consumer Electronics Show, a dozen PC makers announced support for the Intel Corporation's new dual-core Intel microprocessor, saying they would deliver Core Duo computers to consumers in the spring. Apple, which didn't start working with Intel until last spring, will beat them all to market with Core Duo-based iMac computers, which started shipping to stores as Jobs was speaking yesterday. (Full story)

The transition to Intel chips from the Motorola (Research) and IBM (Research) chips Apple has used for the past decade was a daunting challenge, not just in terms hardware but also because it required Apple to rewrite all of its software to run on the new chips. But Apple and Intel engineers got the job done six months ahead of schedule. And, in keeping with Apple's product-centered philosophy, the Intel-based iMac and MacBook computers unveiled at Macworld yesterday appear to be more powerful, easier to use and, yes, more beautiful than any of the rival machines promised by competitors last week at the CES show.

We won't know for sure until we've had a chance to test them, but once again Apple appears to be setting the standards for the rest of the PC and consumer electronics industries.

"Each year I see us come up with products we couldn't even make two years ago," Schiller said. "It's self-perpetuating, and the gap between Apple and its competitors is widening."

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Intel is making a major push into your living room -- full story here.

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