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Apple Proves That Innovation Pays Off, Even When Copied

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Apple's enduring contribution may be less about the products it makes than the ones it inspires.

As I look back at the company's history and that of its competitors, it's clear to me that Apple is living life at the bleeding edge of technology by creating innovative and much-loved products that are quickly copied by other companies that, collectively, wind up selling more of their copies than Apple does of the original.

The one exception, so far, is the iPod, which continues to dominate the standalone digital music player market. But largely thanks to Apple, the standalone market may dwindle now that most smartphones are also media players.

Think back to the late 1970s, when Apple was one of the first companies to introduce a personal computer. The big tech companies at the time -- IBM, Hewlett-Packard and Digital Equipment Corp. -- thumbed their noses at the idea of an entire computer sitting on someone's desk. IBM and DEC were busy making "big iron" mainframes. The story goes that Apple co-founder Steve Wozniak, who worked at HP in the '70s, unsuccessfully pitched HP on the idea of building its own PC.

It wasn't until 1981 that IBM entered the PC business and quickly overtook Apple as the No. 1 PC vendor. HP entered a bit later and now it's the leading PC maker. Ever since Steve Jobs returned to Apple in 1997, the Mac's market share has been on an upswing, though it's never likely to overtake the bevy of PC makers that bundle Windows.

With the Apple II looking a bit old, Apple's next big contribution was the Macintosh, which it introduced in 1984. Apple didn't invent the graphical user interface, but the immediate appeal of the Mac put it on the map.

Microsoft actually announced its Windows operating system a few months before the Mac was announced. But it didn't start shipping Windows until 1985, and it wasn't until 1990 that Microsoft released the first popular version of Windows (3.0). Since 1990, Windows has been on a long but not always steady ascent and, despite the Mac's recent gains, continues to dominate the PC market.

Microsoft and the BlackBerry from Research In Motion were way ahead of Apple in the smartphone market, and BlackBerrys continue to outsell iPhones, as do phones with Google's Android operating system. Yet, if you look at the Android interface and the interface on the BlackBerry Torch that was announced last week, it's pretty obvious that they are taking a cue from Apple.

In the meantime, Apple is starting to lose a bit of market share to Android. A report from Canalys found that Android shipments in the second quarter of 2010 were up 886 percent from the previous year. NPD puts Android's second-quarter 2010 U.S. market share at 33 percent, compared with RIM's 28 percent and Apple's 22 percent. Of course, Apple is just one company with one carrier partner and Android sales are divided among several, manufactures and cell phone carriers.

Apple dominates the tablet market, but the iPad is new and it's only a matter of months before we start to see lots of tablet computers with a similar interface and more or less the same features as Apple's popular tablet. Of course, Apple didn't invent the tablet PC -- it reinvented it.

It took Apple to figure out that tablets need an operating system designed for hand-held touch-screen devices. And since it already had an operating system for its touch-screen iPhone, it was pretty easy to extend that to a larger screen with a similar form-factor.

In late June, just three months after it released the iPad, Apple announced that it had sold 3 million of the devices. But Apple's continued dominance in the tablet business depends, in part, on what other choices people have, and soon there will be lots of choices. There are several Android tablets in the works, and HP has announced plans to build a tablet or "slate" PC running the Palm Web OS that it inherited when it acquired Palm.

I have no doubt that HP will build a classy tablet PC that at least approximates the fit and finish of the iPad, and I am equally convinced at least some of the Android tablets will be shoddy imports that are a bit rough around the edges. But there will also be some excellent Android tablets, perhaps from Motorola, HTC and other well-respected phone vendors. And collectively, they are likely to gain a pretty big share of the tablet market.

Despite its likely loss of dominance, I'm not shedding any tears for Apple. Despite some small setbacks, Apple stock is near its all-time high, and last month the company reported record profits.

So let that be a lesson. Just because you can be copied doesn't mean you shouldn't innovate. As Apple has proved, you don't have to dominate to do well.

This article originally appeared in the San Jose Mercury News

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