Biting, Frantically, at the Apple

If you’re reading this on an iPad, then you’re part of the problem for Dell, Motorola, Microsoft and other jumpy Apple challengers.

As The Los Angeles Times reported recently, sales of tablet computers—a market dominated by Apple’s iPad—are set to exceed those of laptops next year. (In fact, according to one new study, Apple is now the world’s most valuable brand.) PC sales this past quarter were 11% lower than a year earlier.  Meanwhile, imitators of Apple are rushing into the market with releases of tablets like the Motorola Xoom and the RIM Playbook.

[EXPAND More]But the hard truth is that speed alone won’t be the deciding factor as to which companies thrive—and which struggle or even disappear as the market shakes out. Being fast isn’t nearly as important as having a valid “theory of the business,” as Peter Drucker called it. As we’ve noted before, this is the collection of fundamental assumptions that a company makes about customers and competitors, about technology and about its own strengths and weaknesses.

Drucker tells the story of IBM, a company that seemed to do almost everything right at the dawn of the PC era; indeed, Motorola today is reminiscent of Big Blue in its vigor and inventiveness. Up through the 1970s, Drucker noted, IBM assumed that computers served no purpose and stuck to the business of mainframes. Suddenly, the PC market began to boom.

“IBM immediately accepted the PC as the new reality,” Drucker wrote.  “Almost overnight, it brushed aside all its proven and time-tested policies, rules, and regulations and set up not one but two competing teams to design an even simpler PC. A couple of years later, IBM had become the world’s largest PC manufacturer and the industry standard setter.”

Nevertheless, explained Drucker, it wasn’t long before IBM was back on its heels again. “Mainframe computers and PCs probably cannot coexist in the same corporate entity,” he said. This was something that IBM, reliant on the cash cow of mainframe computers, couldn’t accept. And it left the company unable to optimize either the mainframe or the PC, which were, incorrectly, viewed as complementary lines.

“The assumption that a computer is a computer,” wrote Drucker, “paralyzed IBM.” In other words, IBM had moved boldly—but under the wrong theory of the business.

What do you think: Which companies will thrive in the tablet era, and which will stumble? Why?[/EXPAND]