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October 9, 2011
David Warsh, Proprietor


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Our Gutenberg

I didn’t read everything about Steve Jobs last week, but I read a lot. Bloomberg BusinessWeek and Time both dropped what they were doing and prepared instant covers.  Time’s package included a six-page essay by former editor Walter Isaacson, whose biography of Jobs, due to appear October 24, is already the number one best-seller on Amazon.com.

The single best thing by far was the short appreciation by Stanford economist Tim Bresnahan, who was the Justice Department’s chief economist for a couple of key years at the climax to the browser wars at the end of the 1990s.

In a thousand words, Bresnahan spells out why, against all odds, Jobs is the name likely to be associated in the centuries to come with the advent of the computer in our everyday lives, not Thomas Watson (of IBM) or Bill Gates (of Microsoft).

Jobs built markets, not companies, he says. As an indefatigable entrepreneur, he staged the greatest business comeback of all time.

Oh, never mind the click.  Here, in its entirety, from his webpage, is Bresnahan’s take:

Steve Jobs has died. We should remember his accomplishments and the vision of American entrepreneurship he embodied.

The PC business was founded by a ragtag band of outsiders. Steve, a lotus-eating less-than-successful Atari employee, was as much an outsider as any entrepreneur ever. But he and the more techie Steve (Wozniak) brought us a usable computer, the Apple II, you didn’t need to solder together, moving the industry from hobbyist kits towards a real business. What a powerful commercialization idea that was, and what a great collaborator he was, not only with the very different Woz but with all the different people writing applications. Most of the kids in the industries made technologies they themselves would like to use. Steve Jobs made a computer real customers could use and went to work to sell it, yes, to SELL IT to us.

Steve Jobs, master commercializer, thought the PC was going to be mostly important for customers as consumers at home. But Apple didn’t try to control applications developers, leaving things open to developers. It wasn’t so much that Steve was committed to open systems, but it was real entrepreneurship and they had no resources, so they had to rely on others. The most important applications developers invented the spreadsheet and the word processor, setting the PC on a growth path to be used mostly at work. Rather than viewing this change as a disappointment, Steve pushed his company toward making machines that white-collar workers could use to run those applications.

He didn’t quail when the switch to a work PC gave IBM the opportunity to enter and compete with him. His balls and bravado were right out there when he put “welcome IBM” in huge type in The Wall Street Journal. And but for a tiny problem of computers overheating and microchips popping out of the Apple III, IBM would have had no chance, and we’d have an Apple PC standard today. Entrepreneurs in those days had no resources, had to do it all, design, build, sell, recruit applications developers. One better quality control decision in manufacturing….

In the IBM PC era, Steve drove innovation forward with the Macintosh. This, like the Apple II, was squarely aimed at expanding the use of PCs to everyone, the “computer for the rest of us.” Everyone now knows that this was innovating too fast, and that cheaper, duller IBM machines running Microsoft’s dull clone of an earlier operating system would become the standard. But do you know how Steve changed when he realized that “the rest of us” were not going to buy the Mac? He learned that the most important early customers for Macs were corporate marketing departments (those graphics!) and worked hard to create, as he told me not long after, “the best computer company for those corporate marketers we can.” Real entrepreneurs don’t wallow in vision, they sell product.

There’s so much loose talk about “entrepreneurial vision.” Steve Jobs was the real deal. When his vision for the Mac didn’t work out, he responded to what the market wanted. Earlier, when his vision for the Apple II didn’t work out, he responded to what the market wanted. It is one in a billion humans who can both drive forward a vision — like his vision for the Mac — and then flexibly adapt to what customers want. The floor is littered with visionaries and marketers, it is the rare individual indeed, Steve Jobs, who can do both, who is the one in a billion.

After losing the standards war to IBM — and worse, after the super-cool Steve Jobs lost the race for PC industry leadership to the super-geek Bill Gates, came the dark night of the soul. You’ll read a lot about “being fired from Apple,” but as Steve later said, that was a blessing in disguise. The real blow was losing the standards war.

Fitzgerald said there are no second acts in American lives. Steve Jobs had the most American of lives, and created his own second act, at first more or less by accident. Having lost the standard-setting war to Bill Gates — what a bitter thing, the overheated chips popping out, innovation not being the answer, then the super nerd beating his own super cool self — he made a huge fortune more or less by accident in, of all places, the movie business. And that funded the best second act of all time.

At last, in our century, it was technically possible to design and sell a cool device to “the rest of us.” It was anything but easy, for, while there were some consumer-oriented innovators running on the Web, like Google, the direct distribution of PCs to consumers was blocked. A direct attack on Fortress Microsoft would not work. But Microsoft was not the only dinosaur to slay. What a briliant indirect route to take back the PC Steve designed!

He started, innocently enough, from the perspective of the computer powers that be, with a portable music player. He’d noted how lame Hollywood’s reaction to the Internet era was, and took the opportunity. Then he morphed it into a smart cell phone, also an entertainment device and something of a computer. He’d noted how lame telephone companies’ reaction to technical change was, and took the opportunity. And now, last, he’s built — and SOLD — a tablet which is both an entertainment device and a real computer, launching an assault on Fortress Microsoft. Once again, the insiders did not take advantage of technical change, and Steve Jobs seized the opportunity.

Steve died before that final assault could be carried out — hell, he dragged himself back to work from his deathbed to launch that final assault — but he can rest with the knowledge that in his second act he came from the outside and made a huge change to three industries. Platform innovations are extremely difficult and extremely rare. No one, not Watson, not Gates, not Zuckerberg (though there remains hope for that pup) has made as many brilliant platform plays as Steve Jobs.

xxxxx

EP bit off more than it could chew last week and postponed the weekly it had planned. Now it has the rest of the weekend off – at least until Monday morning, when the Nobel Prize will be announced. About that, more next week.

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One Comment

  1. ESS wrote:

    Thanks for sharing the good find about Steve Jobs.

    Saturday, October 15, 2011 at 8:43 pm | Permalink

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