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A portrait of the late Steve Jobs, CEO of Apple Inc., is seen at the Macworld iWorld expo Thursday, Jan. 26, 2012, in San Francisco. Apple's phenomenal success comes from a deep understanding, 'grok-like,' fostered by Mr. Jobs, of the user experience married to an integrated tech ecosystem. (Ben Margot/Associated Press/Ben Margot/Associated Press)
A portrait of the late Steve Jobs, CEO of Apple Inc., is seen at the Macworld iWorld expo Thursday, Jan. 26, 2012, in San Francisco. Apple's phenomenal success comes from a deep understanding, 'grok-like,' fostered by Mr. Jobs, of the user experience married to an integrated tech ecosystem. (Ben Margot/Associated Press/Ben Margot/Associated Press)

eric reguly

Why Apple's success is out of this world Add to ...

Deep in tech land, where the English language is barely recognizable to native speakers, they refer to it as grok, as in “Apple groks the user experience.”

What does that mean? The word has actually been a counterculture fave for decades and first appeared in Robert Heinlein’s 1961 science fiction novel Stranger in a Strange Land. According to the novel, it means “to understand so thoroughly that the observer becomes a part of the observed.” In other words, to grok means you get it, big time.

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Apple Inc. , maker of the iPhone, iPad and iPod, groks like no other tech company, with the possible exception of Google. Nokia, Sony, Myspace, Research In Motion and Eastman Kodak, do not. Microsoft groks in computer operating systems and business productivity software, and is decidedly ungrokky everywhere else.

The proof of Apple’s grok-icity is in the numbers. On Tuesday, it reported a record quarterly net profit of $13-billion (U.S.) on sales of $46.3-billion, way ahead of expectations as the new iPhone 4S took off. The company is sitting on $100-billion in cash, equivalent to the economic output of Bangladesh or Vietnam. Apple shares soared, briefly making it the world’s most valuable company, with a market value of more than $400-billion.

Within days either way of Apple’s blockbuster results, Kodak filed for Chapter 11 bankruptcy protection, and Finland’s Nokia, the once unassailable leader in mobile phones, reported a net loss, including a fat write-down of €1.1-billion ($1.46-billion U.S.) in the fourth quarter as its new Windows-based phones failed to challenge Apple’s dominance. Its shares have gone from €25 to €4 in five years. And BlackBerry maker Research In Motion, another tech giant whose shares are on a Titanic run, replaced its joint chief executive officers Mike Lazaridis and Jim Balsillie.

Sony, meanwhile, continues to shed value. Its shares are down by more than half in the last year alone.

There is no assurance that any of the fallen tech giants will ever regain their once-formidable statures in spite of their suddenly heroic efforts to do so. How did they achieve beached-whale status?

It’s not so much that they recognized their faults too late; it’s that they seem incapable of changing quickly. They have the wrong corporate culture, the wrong DNA, the wrong talent for the wrong time.

Take Kodak. The story of its slow-motion suicide, repeated a million times in the last decade, is that it never moved with alacrity to embrace digital photography (unlike archrival Fujifilm of Japan). The theory makes sense if one considered Kodak a leader in the imaging industry.

Yes, it made digital cameras and film, but at heart it was a chemicals company and got bogged down by the chemicals industry mindset. Unlike Apple, for example, it never developed a user-interface and content system like iTunes, one that could have revolutionized the imaging and photo-sharing industry. Note that Kodak never attracted serious corporate or private equity suitors even though it owned one of the most recognizable brand names on the planet. That’s because it had little to offer anyone who wanted to make a splash in the imaging business.

To some degree, Nokia and RIM suffered from the same cultural logjam. Their sins were not just their failure to realize the vast potential of easy-to-use, lightning-fast, touch-screen phones; it was their failure to create ecosystems – the interface that can seamlessly deliver content from music to movies to the user – that could rival Apple’s. To be sure, Nokia and RIM had competitive products (for a time), but it seemed their overriding ambition was to protect the products that had given them gorgeous market share numbers instead of adapting to a fast-changing customer tastes.

Nokia is finally rolling out a family of Windows-inspired smartphones. The new Lumia 800 is getting good reviews. But why would you buy it? It is not just competing with the iPhone and the Google Android devices themselves. It is competing with the entire iTunes ecosystem, which is vastly deeper and richer than Nokia’s.

Even if Nokia develops an ecosystem of sorts, Apple is bound to leap ahead with the Next Big Thing, which may be Apple TV. Imagine a smart LCD-screen TV that’s connected to Apple’s content infrastructure. Using Siri, Apple’s voice-activated personal assistant software, the viewer could order any movie, TV show, game or song available on the Apple network. If Apple TV proves a success, TVs made by Sony or Samsung might seem suddenly primitive.

RIM’s future is equally uncertain. Note that the new CEO, Thorsten Heins, is the former chief operating officer. Promoting an insider, one who owes his livelihood to the outgoing co-CEOs, does not imply that a strategy and product revolution is in the offing. Instead, it implies that the old strategy was sound and just badly executed under the previous management. The market gets this – the shares sank after the management shuffle.

The lack of real change suggests a sore lack of grok.

Follow on Twitter: @ereguly

 
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