By Charles Haddad I'm not superstitious, but I still keep an eye peeled for omens. That's why I sat up when Michael Dell recently dissed Apple during an interview with BusinessWeek (see BW, 4/16/01, "Q&A: The Tech Slump Doesn't Scare Michael Dell").
There's nothing new in Dell's disdain for Apple and its chief executive officer, Steve Jobs. But why would Dell attack Apple now, when the company is struggling? Then it hit me. Three years ago, Dell did the same thing, publicly suggesting that Apple liquidate the company as a lost cause. Shortly after Dell's comment, Apple came roaring back -- under Jobs's guidance -- with the successful iMac.
Could Dell's disdain be signaling once again that Apple has hit bottom and is on the rebound? Think about it. There's no sport in kicking a competitor that can't get back up. But you might want to pile on if it were beginning to regain its footing.
"AGAINST THE TIDE." For those of you who don't know Dell, he's the CEO of Dell Computer, one of the most successful makers of personal computers. In the BusinessWeek interview, Dell said Apple has too small a customer base to survive: "The economic factors here are so overwhelming, it's very hard for them to swim against the tide."
True enough. Apple has always swum against the tide and always will. The company is like a surfer struggling to keep his nose above water until the next big wave. That Apple would again find itself in rocky seas after the iMac was only a matter of time. For me, the real meaning of Dell's comments was in what he didn't say.
So let me fill in the blanks.
Dell and Jobs are like media moguls Ted Turner and Rupert Murdoch. They love to hate one another. Publicly. One day Dell pronounces Apple DOA. The next Jobs ridicules Dell's boxy PCs. Why do they bother -- other than to entertain us?
In part, the heat comes from the fact that Apple and Dell -- and their chiefs -- represent opposite ends of the spectrum. Apple is the showman that excels at innovation and style. In contrast, Dell is the repackager, brilliant at ever driving down the cost of computers. Dell wouldn't dare be the first to introduce any new computer, and Apple will never be the low-cost producer.
TIED TOGETHER. But Apple's and Dell's differences explain only some of the tension between them. The real heat comes from the fact that Apple and Dell are so dependent on each other -- and they can't stand it. They're like mischievous kids who've tied their shoelaces to one another and now can't get them undone.
Here's how the companies' interdependence works. Like any consumer-product company, Dell needs a continual stream of new features to get people to buy its computers. But the company doesn't want to finance research and development. That would wreck its economic model as the low-cost producer. Dell executives march to the mantra of "technology is tomorrow's commodity."
So Dell lets other companies, such as Apple, finance R&D. Then Dell figures out how to incorporate Apple's innovations inexpensively into its own next-generation of computers. I can already hear Mac fanatics crying "thief," but it's not nearly that simple. You see, Apple benefits greatly from Dell's success. As a giant in distribution and marketing, Dell helps to popularize both Apple's innovations and the company's reputation as an innovator.
OUTSIDER. That image is critical to Apple's success. And it has neither the distribution network nor the marketing budget to reach a critical mass of users. Dell, Compaq, and the other repackagers do that for Apple. They've created the expectation that Apple is the stylish outsider everyone better keep an eye on.
The truth is there's room enough for both Apple and Dell in the computer industry. In fact, the two represent a pattern common in most industries. It's like what happens in television, where the big four networks finance the production of most original programming. That hasn't stopped Time Warner from making a pretty penny running those shows on its cable-TV channels.
Yes, Dell and Jobs are like Mutt and Jeff. It's fun to watch them quarrel, but we shouldn't take it too seriously. They need each other too much. Haddad, Atlanta-based correspondent for BusinessWeek, is a long-time Apple Computer buff. Follow his weekly Byte of the Apple column, only on BW Online