How Apple Does It

Conventional wisdom says its strategy is wrong, yet it keeps turning out great products. TIME looks inside the world's most innovative company

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In other words, Jobs is into control. In itself, that is of no real importance, except that in a lot of ways, Apple is an expression of Jobs' personal ethos. One reason Apple makes its own hardware and software is that when Jobs goes to the trouble of creating a piece of software, he doesn't want it running on hardware built by a bunch of dudes he doesn't know and can't fire. He wants it on hardware he makes himself. How else can he be sure that every little thing integrates together the way he says--nay, insists--it should?

He needs that control because he is fastidious about technology the way a gourmet is fastidious about foie gras, and he recognizes that in an increasingly networked world, in which gadgets can't just do their own thing but have to talk to one another, that conversation will go better if Jobs has scripted both sides of it. "One company makes the software. The other makes the hardware ... It's not working," Jobs says. "The innovation can't happen fast enough. The integration isn't seamless enough. No one takes responsibility for the user interface. It's a mess."

That isn't the only way to run a business. Look at Microsoft. Bill Gates focused on operating systems. He didn't worry about hardware. He gave Windows to anybody who could pony up a licensing fee, and he let them worry about hardware. Result? He devoured the market and made the biggest killing in the history of killings. Apple kept its Mac operating system on Apple hardware almost exclusively. It may have won a moral victory--or a technological one or an aesthetic one. But business-wise, it got the bits kicked out of it.

But Jobs doesn't care just about winning. He's willing to lose. He has done it often enough. He's just not willing to be lame, and that may, increasingly, be the winning approach. The iPod proved that design and ease of use are at least as important as increased functionality, and the iTunes Music Store proved that goes for smoothly integrating physical devices with online services too. "I think the definition of product has changed over the decades," observes Tony Fadell, vice president of engineering in the iPod division, who played a key role in conceiving and building the first iPod. "The product now is the iTunes Music Store and iTunes and the iPod and the software that goes on the iPod. A lot of companies don't really have control, or they can't really work in a collaborative way to truly make a system. We're really about a system."

That's one aspect of control. Here's another. What Jobs has accepted--the truth that he's willing to face and others cower from--is that new things don't want to be born. Innovation causes problems, and it's much easier simply to avoid it. In fact, it's downright tempting. Other guys may give in to that temptation but not Jobs. He's smart, but more than that, he's willing to be the guy who looks over your shoulder and tells you you're not going to make your dinner reservation tonight because you're going to be here at the office, thinking different.

Here's the end of his parable, the story of what happened after Jobs got the iMac launched. "The people around here--some of them left," he remembers. "Actually, some of them I got rid of. But most of them said, 'Oh, my God, now I get it.' We've been doing this now for seven years, and everybody here gets it. And if they don't, they're gone."

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