Raising Expectations About Apple
October 12th, 2011In the aftermath of the death of Steve Jobs, there have been loads of speculative pieces about the future of Apple Inc. The pressure is on for Apple to demonstrate that the company was not the one man band some believed it to be because of the genius of the co-founder, and how he restored a dying company to prominence.
The theory goes that Steve Jobs micromanaged every facet of the company’s operations, and, without him at the helm, everything will eventually begin to fall apart. This law of entropy has certainly impacted other companies after their charismatic and visionary founders have departed. You can cite chapter and verse as to how such corporations as the Walt Disney Company and HP fared, particularly the latter which, in recent years, has struggled to find its way.
Certainly there’s reason to be concerned. When Jobs was ousted from Apple in a brush up with the board of directors and CEO John Scully in 1985, Apple spent over a decade suffering a gradual, seemingly inevitable decline. When Jobs returned first as an advisor in 1996, after Apple bought NeXT, it was very possible there would be no more Macs in the near future. Apple was hemorrhaging cash, suffering from too many products that didn’t earn their keep. There were many credible reports indicating that Apple was probably dead, and there was that infamous remark from Michael Dell, founder of Dell, who suggested Apple ought to be shut down and its assets returned to the shareholders.
Over the next 15 years, Apple managed to amaze both critics and customers by doing the unexpected. Time after time, new products seemed irrelevant or underwhelming, only to be embraced by customers who had different ideas. Today, the iPod is a great success story, but few believed that the very first version, released in 2001 and costing $399 for a gadget with 5GB of storage, would catch on and take over the market. Indeed, Tony Fadell, credited as the iPod’s inventor, got a pass wherever he went when he tried to interest tech companies in his concept. Jobs understood the potential, took a chance, and the rest is history.
In the wake of denigrating the quality of existing mobile phones, Apple announced the iPhone. We only learned later that it was evidently a fork in the project to develop the iPad. But again, the critics were skeptical that the thing would catch on. After all, people who wanted smartphones bought a BlackBerry in those days. The mobile handset market was saturated, so how could Apple possibly succeed?
The story of the iPad was similar. Critics weren’t impressed. It’s just a bloated iPod touch. Microsoft had spent years trying to convince you to buy tablet-based PCs without success. Why should you take Apple seriously where others had failed with similar products?
Of course, the public disagreed. The iPod, iPhone and the iPad all caught on quite quickly, exceeding analyst expectations about sales in nearly every case. Well, these days, analysts seem to have a better grasp of Apple’s potential.
Now if Steve Jobs were here and healthy, and if he introduced the iPhone 4s last week, I expect the critics would call it another home run, even though it looked the same as the previous model. After all, that approach to product refreshes is standard operating procedure at Apple, where they leap generations before revising the looks.
But the pressure was on Tim Cook to demonstrate that he was the proper replacement for Jobs, and could exceed your expectations. Although his delivery at last week’s media event seemed efficient and well-rehearsed, Cook is regarded as too low-key to ever create something akin to the famous “reality distortion field” that Jobs can convey during his presentations. Cook is an operations person, not a public personality, not a sales guru. The bar was raised too high, and he had to fail, even though he actually did a pretty decent job. In retrospect, maybe it would be better for Cook to try to convey a less-formal demeanor, and maybe his personality would come through more effectively.
Don’t forget, though, that Cook hasn’t had years to master a public persona. Maybe he’ll never get the knack, maybe we’ll just get used to him. It doesn’t matter as much because, in recent years, the ailing Steve Jobs gave his lieutenants more and more screen time in those presentations. They had their chances to shine, and the media events remained slick affairs with great visuals, and compelling arguments.
Certainly, the public has reacted quite favorably to the iPhone 4s, with record numbers of pre-orders. But it will take a while for the critics to take Apple quite as seriously without Jobs at the helm. That is to be expected, and even though it’s reported that Jobs had already approved a number of product intros for the next few years, Apple is going to have to continue to prove it’s in good hands.
In the short term, little will change. But over time, even if the efforts of Steve Jobs to embed his vision and DNA into the corporation prove successful, things will change. That’s inevitable, but in the end, it may well be that they will be changes you can believe in.
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Yes, there will be changes, and not all of them may be for the worse. For all of Steve’s greatness, some of his more debatable personality quirks became imprinted in the company’s DNA. Most notably, with the passage of time Apple may discover that his personal obsession with secrecy can be relaxed a bit without the world necessarily coming to an end. Certainly, many developers and Apple-dependent industries, as well as consumers, would benefit from a greater degree of transparency. Here’s a minor but telling illustration of what I mean: Apple maintains such secrecy about the physical particulars of their forthcoming portable devices that it takes several weeks after the release of such a product before you can buy a protective case for the thing, because the case-makers are completely in the dark about its dimensions until it actually hits the market. Who exactly benefits from that degree of secrecy? Intel, after all, has managed to thrive with an exactly opposite policy of complete openness about its future plans, and I am sure a lot of their customers (Apple included) have greatly benefited from this.
In reply to dfs’s comment above…
INTC thrives via openness because they own 90+% of their market and they sell their products to commodity manufacturers who integrate those products into their products before selling them to end-users. This model required long lead times to ensure that INTC’s products would continue to be used. MSFT (and its Windows franchise) used to be in a similar situation.
AAPL produces, at the end of the day, commodity products that are differentiated by a high degree of internal consistency, fit, finish, and polish. AAPL then sells those products directly to end-users. The only external dependencies are for external optional accessories which really aren’t necessary to the product.
AAPL’s competitors make products that attempt to reproduce AAPL’s products’ feature sets so that they can add additional checks to their feature lists. AAPL’s competitors are primarily “fast followers”. Were AAPL to be more open about their long-term plans, all it would do is provide extra time to AAPL’s competitors to duplicate the new product’s feature set.
Additionally, the very rumor-mongering that shareholders hate (because of the resultant “buy the rumor, sell the news” cycle) results in hundreds of millions of dollars (or more) of free worldwide media coverage. No company could have afforded to buy the amount of media saturation that the “disappointing” iPhone 4s received.
Secrecy has served AAPL (and its users and its shareholders) well over the last decade. I personally hope that, going forward, AAPL doesn’t drop that arrow from their quiver.
reinharden
Lets not forget that Tim Cook and all the Apple lieutenants knew that Steve Jobs was dying the day the iPhone was unveiled. The company still went on. Also, look at the Apple tribute page to Jobs. Very Zen. Apple culture is thoroughly embedded. Long live Apple.
I always get a little grouchy when I hear comments like this…
First off, Apple in 1985 was a mess. While the Apple II was wildly successful, the Apple III, Lisa, and Macintosh were in dire straits. Apple had to spend a ton of money cleaning up Steve Jobs’ mess of the Apple III (right idea, wrong time). Lisa and Macintosh were selling way way way below expectations. Apple was, for the first time in it’s history, laying people off. It was a pretty dark time.
Without Steve, Apple was able to create computers that business customers actually wanted to buy. While, sure, the cute beige toaster was nice, people wanted to be able to upgrade the memory without a soldering iron. With Steve gone, you saw the Macintosh Plus, Macintosh II, and advances such as 32-bit color, multiple display support, QuickTime, Hypercard, etc. etc. Apple’s market share was highest in mid-to-late 1980s (around 13%, a number that Apple has only recently surpassed.) If you looked at a Macintosh and a IBM-Compatible system, the difference was night-and-day (even if the computer was running Windows 2.0).
I don’t disagree that Apple was a mess by the mid-90s. After Sculley and Gassee left, Apple degenerated into a series of “Battlin’ Business Units,” to use a term from Dilbert. Every group at Apple was going to be the one that “saved the company” and it was becoming a completely unfocused mess. What’s the difference between a high-end consumer machine and low-end business machine? Apple had “broken up” the operating system into a modular system where every technology could be removed, creating a maze for customers to run through. Installing Netscape required Open Transport and QuickTime which required a different version of Open Transport. And that’s not even mentioning the whole Pink, Taligent, Copland, NuKernel, and mklinux mess.
But to say that Apple spent “a decade in decline” is not really accurate. Apple actually grew considerably during Steve’s absence. That said, I agree with the general consensus that what brought Apple down was a significant number of managers with no real vision for the company–or with multiple conflicting visions and no way to resolve them.
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