What Apple and IBM Have in Common

The New York Times has an interesting story today comparing Apple with IBM. In that article, my former colleague at Harvard Business School, David Yoffie, argues that the two companies actually have a great deal in common... despite the many superficial differences that seem quite stark. Here's an excerpt from that article:

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, when the company tilted increasingly toward technology services and software and relied less on hardware. (The change began under the former chief executive Louis V. Gerstner Jr. and accelerated under the current chief, Samuel J. Palmisano.)

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. These complementary offerings encourage more sales of Apple’s hardware, and have become money makers on their own.

“Each company has created an ecosystem of partners and developers around its core products,” Mr. Yoffie says. “And both depend on ongoing innovation.”