Divide and Conquer Why Apple Has an iPod Division

It's time again for another article from I, Cringely

Back in January, I moved from the California Wine Country to Charleston, South Carolina, trading my 47 acres of ticks and foxtails for a 152 year-old Victorian House with vintage termites. The wonder of the move is that after five months, hardly anyone has noticed. Charleston is precisely nowhere in the geography of high tech, but it really doesn't matter because I'm more or less virtual. When I moved the 100 miles from Silicon Valley to Santa Rosa in 1999, only my area code changed. This time, thanks to VoIP, not even that happened: It was easier to make my old numbers ring in Charleston than to tell my 3,309 friends a new number. Back in 1999, I worried that not being IN Silicon Valley would hurt my work, but it didn't. I averaged one day-trip down per month. Now I make a similar monthly trip, only it is a 5,600 mile round trip, and I stay for two to three days. So moving to Charleston has actually meant I spend more time, not less, in Silicon Valley. And I was in California this week when Apple Computer announced a reorganization I find to be especially significant, and which suggests dramatic changes at Apple that have yet to come.

The news, broken Wednesday by the New York Times, was that Apple was creating a separate iPod division because the little music players are such a huge success. Conventional business school wisdom also says that starting a separate division is a way of isolating startup costs, making them more obvious to Wall Street and thus minimizing negative impacts because of course, even Apple has to spend money to make money. Or, like 3Com did with Palm Computing (and even Apple once did with Claris before changing its mind), you can structure a division to spin-off or have a separate IPO. This all makes sense on the surface, but then I recalled something I was told more than 20 years ago by a much younger Steve Jobs. Back then Apple had three divisions – Apple II, Lisa, and Macintosh. Why have separate divisions? "Because it's easier to shut one down," said Steve.

News source: I, Cringely