I.B.M. and Apple have long been cast as polar opposites.
Big Blue is seen as a machine — a company that caters to big corporate and government customers and is known for five-year profit plans. Indeed, I.B.M.’s profit rose 12 percent for the third quarter, the 31st consecutive quarter that the company delivered higher earnings.
Apple, by contrast, is seen as a consumer-product hit factory that is on a roll.
Yet the two companies can be viewed as the yin and the yang of high-tech innovation: they have more in common than is generally understood. There is a lot of invention and deep science in I.B.M.’s varied businesses, industry experts say. And Apple’s continuing success, they add, is explained in good part by its ability to make innovation a managed system, more machinelike.
I.B.M. and Apple pursue different markets, but there is a similarity in their strategies, according to David B. Yoffie, a professor at the Harvard Business School. The big shift at I.B.M., he notes, came about 15 years ago.
The goal, Mr. Yoffie adds, was to build a profitable business with a lot of recurring revenue, based on service contracts and software licenses, and to attract industry partners and software developers to use its technology.
Over the last 10 years, Apple has embraced much of the same strategy — in broad strokes. The company’s partners and developers build on its iPhone and iTunes software and share with Apple their revenue for music and software applications sold on the iStore.
“Each company has created an ecosystem of partners and developers around its core products,” Mr. Yoffie says. “And both depend on ongoing innovation.”
When Steven P. Jobs returned to Apple in 1997, the company was suffering from inefficient manufacturing, loose cost controls and bulging inventories.
It lost more than $1 billion in fiscal 1997. In early 1998, Mr. Jobs recruited Timothy D. Cook, an operations expert, from Compaq, who had previously spent 12 years with I.B.M.
Under Mr. Cook, now Apple’s chief operating officer, the company is now a model of lean efficiency.
It holds seven days’ worth of inventory, compared with an average of more than 30 for most technology companies, analysts say.
Companies typically try to manage payments so they collect cash from customers slightly before they have to pay suppliers, thus making money by investing the cash before payments are due. Apple collects its cash in 25 days, on average, and pays its suppliers in 85 days — an extraordinary, 60-day spread that generates an extra $1 billion in cash flow a year, estimates A. M. Sacconaghi Jr., an analyst at Bernstein Research.
Fostering consistent innovation, experts say, requires a balance of management systems and inspirational leadership. At Apple, the inspiration wellspring is the megawatt personality of Mr. Jobs, and Apple’s ability to make popular consumer products that delight millions of people.
At I.B.M., the inspiration engine is more a theme: the deployment of scientific research and technology to tackle big challenges for business and society in fields like energy, pollution, transportation and health care.
And I.B.M. has spent hundreds of millions of dollars on its “Smarter Planet” advertising campaign.
“Sure, it’s marketing, but it’s also a big idea that explains the company’s mission to the world and to its employees,” says John Kao, an innovation consultant to governments and business.
A striking difference between the companies, experts say, is in their approach to research. I.B.M. has laboratories around the world, spends $6 billion a year on research and development, and generates more patents a year than any other company.
Five I.B.M. scientists have won Nobel prizes; its researchers attend scientific conferences, publish papers and have made fundamental advances in computing, materials science and mathematics.
Apple, by contrast, focuses only on product innovation, not scientific invention. Its emphasis is not on the basic science of traditional research but on the user experience, explained a former Apple manager.
Apple’s technical experts constantly scout new commercial technologies, he said; they work with suppliers, often co-inventing down to the chip level. Prototypes are shown only to Mr. Jobs and his lieutenants. For example, of three iPhone prototypes, the first two were tossed out, the former manager said.
“That is the rocket science — the product,” he said.
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