Apple provides a cautionary tale to anyone who is thinking about the catalyst strategies that have driven much of the IT growth in the last twenty years and are powering Web 2.0 ahead.

Apple’s profit soared to its highest quarterly level according to the [1] company’s second-quarter release yesterday. Interestingly, although almost half its profits are coming from its iPod-iTunes runaway hit, its Mac line of computer actually reported higher growth (36 percent) than its iPod sales (24 percent).

Microsoft, RealPlayer, and others tried to ignite a catalytic reaction in the music business by building a great media player and DRM software and hoping that music publishers, content distributors and hardware makers would get on board their software platforms. Some did, but growth came slowly.

Apple bested everyone by choosing a closed-architecture/single-sided approach. They control everything from negotiating with the music publishers, to making the hardware device, to running the web portal. They let some add-on makers ride on their platform but their business model is to own the whole ecosystem. The lesson: sometimes the advantages of integration and control exceed the advantages of positive feedback effects that power catalytic reactions.

Now, some look back at Steve Jobs decision to manacle the Mac OS to the hardware as a mistake. After all Microsoft, whose own profits recently boomed on the release of Vista, blew Apple away by getting thousands of hardware makers to build PCs around the Windows platform.

But then again Apple managed survive–remember the Osborne?–the massive growth of the Windows ecosystem and see the day when the sales of its second killer product, the iPod, are driving the sales of its first.

[2]