Does Apple defy the laws of economics?


An article in Wired this morning talks about Apple's seemingly surprising ability to stay afloat, innovative, and mostly profitable while the world is mostly Microsoft.

He credits a number of factors, including the Clinton justice department, control of the hardware, and the now-tight links to the open-source Unix movement.

I largely agree with his assessment, except when it comes to the relative innovations between Apple and Microsoft. Mostly, Apple still innovates the user experience, and Microsoft has been focussed trying to go after the corporate market.

Fortunately for Apple and unfortunately for Microsoft, individuals can justify using tools because they are easy to use, but most corporations justify the purchase of tools on the basis of price and organizational administration. In this case, Apple has lead for the ease of use, still keeping and gaining loyal customers where individuals are choosing on the merits of the systems. Microsoft, on the other hand, has continued to cement its gains in the corporate arena and has taken up some of Apple's slack in the home market (from 10 years ago, and certainly 20 years ago), by appealing to users whose needs are dictated by work environment compatibility.

However, this has also mushroomed and as Microsoft's successes in the corporate markets expanded (replacing the mainframe terminals of yesteryear), the push to use the same type of computer at home and school as in the office continued.

Now, the split is mostly stabilized, Apple eeking out a nice little 5% market share with some profits and Microsoft looming over 92% of the market and raking in the cash.