IBM z Systems vs. Apple iPod: Lessons in Product Management

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Back when I worked at IBM in the early 90s, the mainframe faced serious challenges. Almost everyone seemed to believe the platform was on its last legs. I must admit, when people brought me a mainframe project, my tendency was to hide under my desk until they left.

However, the mainframe always had a big advantage over other server types in terms of its ability to handle massive numbers of transactions securely in real time. It was really an appliance at scale. And it drove IBM to the top of the tech market, much like the iPod later did for Apple.

With this week’s IBM announcement about the availability of IBM Z, which can run handle more than 1 billion encrypted transactions per day, it’s an ideal time to compare and contrast the product management of the mainframe and the iPod.

Z Systems: IBM’s iPod

In a whole lot of ways, z Systems, and the mainframe in general, is IBM’s iPod.

If you recall, in the 1990s Apple had declined significantly until it launched and refined the iPod. The iPod then took over most of the MP3 market, restored Apple, and helped set it up to be the most powerful technology company in the world.

A few years later, Steve Jobs concluded that MP3 players were about to be replaced by smartphones, and Apple more or less discontinued the iPod. In my opinion, had it not done so, the iPod might have evolved into something that bypassed carriers for communication and rose to even exceed the iPhone because Apple could control more of the experience.

Case in point: the mainframe. The mainframe propelled IBM to become one of the most powerful companies in technology long before Apple was a viable company. IBM became convinced that client/server computing would replace the mainframe, but it didn’t execute the transition to these new servers as well as Apple did with smartphones.

Later, IBM came back to reinvesting in the mainframe only to find that it remained one of its most popular and profitable products. Now the mainframe, called z Systems, is a major server player, and its unique capabilities have it playing critical roles in government, healthcare and particularly banking. In a world of state-level attackers, it may be the most secure platform targeting enterprise-level transaction traffic currently in the market.

It makes me wonder what might have happened if Apple had turned the iPod into the best music accessory for those using Android phones or Blackberries rather than cutting the legs out from under the platform. Given that IBM and Apple partner now and in the past, and that Steve Jobs frequently disparaged IBM, it is kind of ironic that IBM recovered its “iPod” while Apple never seemed to grasp, as IBM did, that its near-identical move to kill its hit product may have been a mistake — or that it could reverse that bad decision.

Apple vs. IBM

In my opinion, Apple has hit an innovation wall. Its last attempt at a hit was to create a watch that didn’t really look like a watch (more of an iPod for your wrist) and then try to position it as a watch (rather than a wrist mounted iPod).

Its latest product, the HomePod, comes across as an overly expensive knock off of the Amazon Echo.

I believe that what it should have done is make the Apple Watch more of an iPod for your wrist, and the HomePod more of an iPod for your home (which likely would have been more like the Amazon Echo Show). In other words, Apple should have enhanced what worked for it rather than trying to create a very different product (Apple Watch) or copy someone else (HomePod).

IBM, in contrast, just went back to building ever-better mainframes. While it clearly does also have more mainstream servers, its efforts have resulted in the IBM Z being a far better strategic offering than the Apple Watch or HomePod are for Apple.

Customer Focus

If you contrast Steve Jobs’ Apple with Tim Cook’s, you see, I think, a difference between being focused on customers and being focused on margins. Jobs homed in on things that would excite customers. Cook seems more interested in raising prices and lowering costs, which is why excitement seems to have fallen off with Apple.

With its latest announcement, IBM, on the other hand, has focused on its customers, particularly the banking segment. These customers have suddenly become excited about blockchain but are even more concerned about security. So IBM’s mainframe blockchain encryption announcement speaks to where they live and showcases that customer focus while over at Apple the price of the new iPhone and HomePod are pulling ink.

Big Lessons

Thousands of years ago, Sun Tzu wrote about the importance of understanding who you are and building on that (an idea which apparently was more widely known back then than it is today). Today, we talk about the importance of customer focus. While the two companies are in different markets and partnered with each other, I think IBM is demonstrating a better understanding of both ideas than Apple is right now. I think this is a teachable moment. Actually, I think it is a teachable few decades.

When you have a leading product — your own iPod or mainframe — defend it, build on it, and maintain a laser focus on your customers. Over the years, IBM and Apple have been examples of both what to do and what not to do. It is often in the contrast where we can gain insight.

This may also be a reason to read the book “Black Box Thinking,” which explains likely reasons why companies like Apple and IBM often don’t learn from their mistakes. (It is good summer reading and compares the air transport to healthcare, which will likely scare you away from hospitals permanently. It also seems to explain why both Obama and Trump healthcare solutions have been wrongheaded initially.)

Developing a major asset and staying focused on customers shouldn’t be this hard to understand. That’s something to chat about and consider during what I hope is a relaxing summer for both of us.

Photo courtesy of Shutterstock.