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The Most Disruptive Mac Yet

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Myth says that Apple's (Nasdaq: AAPL  ) competitive advantage is Big Ideas, and that 100% of this advantage flows from CEO Steve Jobs. After this week, anyone who still believes that is at least part ostrich.

On Wednesday, Apple previewed a new version of the Mac operating system called "Lion." Due next summer, the OS borrows heavily from the productivity enhancements introduced with the iPhone 4. It will be launched along with a new version of the iLife software suite and will also introduce a new App Store for the Mac.

Not big ideas, but big execution
What makes this OS important for investors is that it's anything but a Big Idea. No new product categories were created. No paradigms were shifted. Instead, Apple introduced enhancements that should make Macs more usable. In a word, Apple executed.

But this is also what Apple always does. Google (Nasdaq: GOOG  ) is the House of Big Ideas; Apple is where a handful of big concepts (i.e., personal computing, mobile communications, tablet computing) get made more usable.

Breaking this thesis down into a competitive advantage, Apple:

  1. Is willing to change everything if doing so makes the experience better.
  2. Focuses far less on ideas and far more on execution.

Let's put these concepts into context by digging further into Mac OS Lion.

This Mac roars
Most of the reporting about Lion focuses on the App Store's move to the Mac, and for good reason. Having a Mac App Store is likely to make things easier for users and more profitable for Apple.

Let's cover why it's easier first. With the App Store, most software upgrades will be automatic. It'll also be easier to find new apps for your Mac, and developers are sure to cheer over that. They've committed to the various iOS devices in large measure because of how visible the App Store is on these devices; it's a big market for them.

And it is for Apple, too. Total iTunes and App Store revenue grew by nearly 23% in fiscal 2010, to roughly $5 billion. For comparison's sake, consider that Adobe Systems (Nasdaq: ADBE  ) , one of the industry's more important software developers, produced $3.5 billion in revenue over the past 12 months.

Now think about the business impact of an App Store on the Mac. Why would developers keep producing packaged software when e-delivery is cheap and convenient? Apple takes a 30% cut to cover its distribution and maintenance costs, but otherwise, it's the same game-changing win-win that we've seen propel Apple's iOS devices to great heights.

With the Lion App Store, the Mac maker is positioning itself to massively disrupt software distribution while also luring developers to the platform. The possibility of such a paradigm shift may help to explain why Apple is investing in its own data centers -- not so much to disrupt partners such as Akamai Technologies (Nasdaq: AKAM  ) , but to make software delivery as seamless as any other retail experience.

The Mac App Store will go live in Snow Leopard within 90 days.

Making the little things big
Little additions in Lion are easier to miss, but I think they're equally important. For example, two new tools improve on a current Mac OS feature called Expose that hides and finds open apps. "LaunchPad" makes the desktop look more like an iPad and gives users the ability to stack applications into a folder. "Mission Control" allows users to see everything open on the Mac with a quick gesture and navigate within this abstracted view. (Get the full demonstration.)

Will users care about either feature? Some will, but I think the bigger point is that customers are more likely to love a system whose small touches make the entire environment more productive -- especially now, when quality manufacturing and design have taken a hiatus in too many industries.

Great execution also breeds loyalty. We know because users tend to love their Macs. Apple scored an 86 in the latest survey of the American Customer Satisfaction Index, its highest total ever and nine points better than Dell (Nasdaq: DELL  ) , Hewlett-Packard (NYSE: HPQ  ) , and Acer, which tied at 77.

As I said ...
I've written before that the Mac you know is no longer. We've yet to see the iOS and Mac OS merge and the A4 chipset become standard for all Apple hardware, but I still believe that day is coming. In the meantime, with Lion, we have more evidence that Apple is moving swiftly to put pressure on rivals -- not with Big Ideas. Nor with Jobs leading an insurgency, but instead with a passion for precise execution that, so far, competitors can't seem to replicate.

"Real artists ship," Jobs once said to encourage his pirate band of developers of the original Macintosh. In the years since, Apple has proved to be Picasso*. Lion won't change that.

Interested in more info on Apple? Add it to your Foolish watchlist.

True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community.

*Pablo Picasso is considered to be one of the most prolific artists of the 20th century.

Apple and Adobe are Motley Fool Stock Advisor selections. Akamai and Google are Motley Fool Rule Breakers recommendations. Google is a Motley Fool Inside Value pick. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers is a member of the Rule Breakers stock-picking team. He had stock and options positions in Apple and stock positions in Akamai and Google at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. You can also get his insights delivered directly to your RSS reader. The Motley Fool owns shares of Apple and Google and is also on Twitter as @TheMotleyFool. The Fool's disclosure policy has been falsely accused of being the class clown.

Read/Post Comments (5) | Recommend This Article (13)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 24, 2010, at 2:18 PM, gslusher wrote:

    "Apple introduced enhancements that should make Macs more usable. In a word, Apple executed."

    That's the difference between "invention"--the big ideas--and "innovation"--changing the world. Apple didn't invent the PC, the GUI, the music player, etc, but it made them all usable by ordinary people and, in the process, changed the world.

    One nit:

    "With the Lion App Store,"

    Apparently, the App Store will work with at least Snow Leopard (OS 10.6), since it will be available to the public within the next 3 months, while Lion won't be available until next summer. I don't blame the author, however, as Jobs, himself, gave the impression that the Mac App Store is part of Lion.

  • Report this Comment On October 24, 2010, at 4:49 PM, jz1492 wrote:

    "... instead with a passion for precise execution that, so far, competitors can't seem to replicate."

    Bingo! Steve Jobs just precisely.

    From the design aesthetics of the original AppleII to the latest MacBook Air, Steve is unparalleled in defining a vision and commanding its flawless execution with his team of geniuses who under any other leadership would feel like feline herding. Few people like him can take the best out of people like them, inventors.

    Inventors abound. Visionary leaders are few and far between.

  • Report this Comment On October 24, 2010, at 7:34 PM, Collaredkitty wrote:


    That's... not even remotely correct. It's revisionist history, certainly. Apple didn't do anything for the computer, they just dominated the gadget market, and by extension, gave people the impression they'd dominated the computer market. They really still only account for 10% of computers in use worldwide, and they've been slipping.

    If you would analyze their pricing schemes, you'd know their plan is actually to get as far from the "PC" as possible. OS X is a lame duck that can only survive by remaining niche. The second you get a significant user base on it, the security fails because it's a viable economic target for hackers, and its inability to multi-task at a processor level takes center stage.


    Hence the 10 years of epic failure at Next? If you'd read your history, he fires his 'geniuses' regularly; that is commonly known as milking, not leading.

  • Report this Comment On October 25, 2010, at 12:10 AM, wagaya wrote:

    Interesting article; thanks. Though for future articles, perhaps you could describe the new Lion features a little differently; as written, the features don't sound much different from current features:

    " "LaunchPad" makes the desktop look more like an iPad and gives users the ability to stack applications into a folder."

    Naturally, there's always been ability to see all applications (Finder windows, Dock Stacks, etc.) and to group applications in folders; nothing new there. What's new is an iOS-like way to view applications (as you note), which includes a more iOS-like way of creating and viewing folders containing applications. (Whether these LaunchPad-created folders become Finder-created folders as well, and vice-versa, is a good question.)

    " "Mission Control" allows users to see everything open on the Mac with a quick gesture and navigate within this abstracted view."

    That's not too clear on what differs from the current Expose. More specifically, I would say that Mission Control brings together Expose's view of per-application windows, Expose's view of all application windows, access to Dashboard, access to all Spaces (including any full-screen app views), and maybe more views, all into a single view. (Everything in one view! I think it'll be great for newbies and the non-technical. Frankly, I think they should also include access to LaunchPad's view within that Mission Control view, too.)

    Anyway, interesting ideas in the article.

    @Collaredkitty: Methinks you've got the collar a bit too tight. The company that brought the first home computer to the masses, then brought the first GUI computer to the masses, setting the paradigm for every competitor that followed... that company "didn't do anything for the computer"?

    OS X will fall to hackers if its market share rises? Could be – but where's your evidence?

    OS X doesn't multitask?? Are you thinking of the old OS 9 and earlier?

    NeXT an "epic failure"? The company that sold itself for $400 million, after creating the OS that became OS X, which in turn became the OS powering a zillion iPhones and iPads?

    Most of us can only dream of "failing" like that! : )

  • Report this Comment On October 25, 2010, at 3:47 AM, kariku wrote:

    Stupidest article on TMF in a loooong time.

    "After this week, anyone who still believes that is at least part ostrich." -- WTF ??

    "Google (Nasdaq: GOOG) is the House of Big Ideas..." -- that never make any money.

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