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A Big Surprise From Apple

Steve Jobs has decided to do an unusual strategic deal: Make a version of the iPod for Hewlett-Packard.

Apple announced yesterday that starting in the spring an HP branded iPod, in that company’s signature blue color, will be sold. HP will also pre-install Apple’s iTunes music stores on its computers.

We’ve taken a bit of a drubbing from readers on our recent Steve Jobs cover that focuses on the broader theme of the limits of innovation. It’s surprising, then, that this strategic departure by Jobs follows on the heels of that provocative essay. The HP-Apple deal clearly addresses the issues we raised.

Over the years, there has been no shortage of critics who have pointed out that Apple’s failure to license its operating system ultimately made it impossible for the computer maker to ever gain significant marketshare. In the same Fast Company issue that featured Steve on our cover, we also had an opinion piece by MIT economist Lester Thurow. He believes Job’s decision not to license the Macintosh operating system was the “biggest business blunder in the past half-century,” costing the company some $559 billion in peak market value. “Instead of leading a $23 billion also-ran,” wrote Thurow in Fast Company’s January issue, “Jobs could have been Bill Gates, with a company worth $582 billion.”

That seems an exaggeration, but the point remains fairly clear. One of the reaons why the innovative leader in its space hasn’t fared as well as other less innovative companies is because of implementation and strategy. This deal is a big one for Apple and for Jobs. Would everyone agree?

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