Apple is now run by a guy who is more like John Sculley than Steve Jobs
recode.net
recode.net
Tim Cook has a few things over John Sculley.
A big difference is that Tim was at Apple for decades before taking over as CEO. He joined Apple in 1998 as an SVP, which means he was part of Steve Jobs' leadership team for the entirety of Apple's resurgence. The article says:
> Jobs obviously saved the company years later with the iMac, iPod, Macbook, iTunes, iPhone and iPad.
Tim Cook was part of the Apple leadership team for every single one of those products. There hasn't been a "Steve Jobs era" followed by a "Tim Cook era." There was a "Steve Jobs + Tim Cook era" and now it continues as a "Tim Cook era."
And other people too, of course. Ctrl-F in the article for "Ive"--no results. An article about the past and future of Apple that doesn't mention Jonathan Ive? Looks like another in a long line of "cult of personality" articles that ascribe all success--or failure--to a single person, the CEO.
There are many other differences from Sculley. Tim Cook has been Apple CEO before--this is his 2nd turn at it. He's a believer and defender of Apple's culture. He personally understands computer engineering. He has personal principles that he advocates for. Etc.
Apple has always had an ecosystem of second-guessers telling it what it should do differently. The greatest strength of Tim Cook as CEO is that he, like Jobs, doesn't listen to those folks.
Jobs rejoined Apple in 1997 when turnover was $7.078bn, after which turnover declined to $5.36bn in 2001 before recovering to $8.28bn in 2004.
So Apple did better when Sculley was in charge ($0.98bn in 1983 to $8.00bn in 1993) than in the next decade, when he wasn't ($8.00bn in 1993 to $6.02bn in 2003).
What Sculley didn't do was successfully introduce non-Mac products (iPod, iPhone, iPad), which Jobs did. The jury is out on whether Cook can do that too.....
Apple without the return of Jobs wouldn't exist - it wouldn't have innovated in anything. But without Sculley to give it some solid ground for a few years, it would probably have gone bankrupt.
Next few years will be interesting.
So I would not say that Apple failed to think about the future under Sculley. It's not easy to understand or describe why Jobs succeeded as wildly as he did in his 2nd tour at Apple. If it was, everyone would be doing it. :-)
One thing I rarely see discussed is the importance of the time in which Steve Jobs succeeded. The success we ascribe now, in hindsight, to Jobs' incredible leadership, might be in part the result of just a good match between what Jobs could do, and what could succeed in the market at that time.
His principles did not really change that much, actually--he always believed in owning as much of the tech stack as he could, and in producing integrated products with custom hardware and software. That approach was too expensive and inflexible to compete against Microsoft PCs the first time he was at Apple. It failed at NeXT. But it succeeded wildly the second time around, at Apple.
Would Apple be doing much better now under Steve Jobs' leadership? I don't think it's entirely clear. Some aspects of Apple's success continue to match up with Jobs' vision, but the areas in which Apple seems to have the most challenges--services and interoperable ecosystems--were never really Jobs' strong suits.
because iOS and Aluminum.
1) Inertia. The flick page scrolling single handily changed touch. I would bet against the iPhone ever taking off without it.
2) Locked down app store. The OS itself is never taken down or modified by apps.
3) Power management. Apps weren't allowed to stay running, and even now silently kill in the background with little visual indication.
Milling computers out of Aluminum was a very innovative decision.
Sculley was more of a manager, Jobs was a dictator. Once Jobs was back, he was somehow able to lead the company in a near-authoritarian way, and despite many flukes, it allowed the company to try many things that would not be readily accepted by an all-powerful committee.
One authoritarian that is wrong half the time is better than a committee that is not-wrong 100% of the time. The former tries a bunch of stuff, the latter doesn't really try anything. (And to me that's what got RIM and Nokia killed).
I agree that Jobs was a special talent who could command the organization. I think Cook is emphasizing collaboration because he knows he can't lead Apple the same way Jobs could. Probably no one can.
http://a16z.com/2010/04/28/why-we-prefer-founding-ceos/
The story plays out over and over again in the tech industry. Larry & Sergey were great innovators but terrible managers; if you ask Googlers who were there in 2000-2001, Larry made some very basic management gaffes that almost destroyed the company. Eric Schmidt's genius was in being able to maximize the value of the Search product cycle while still giving the founders enough latitude to champion innovative new products like GMail, Maps, Android, Chrome, and YouTube. And then he turned the reigns back over to Larry when the Search product cycle was just about maximized, because the industry was facing a period of unusual uncertainty that required the ability to spot new product cycles.
With Cisco, the visionary founders were forced out by VCs, and as a result, the company has had to buy innovation by spinning off startups, letting them innovate, and then folding them in through an acquisition process.
Microsoft remained undisputed king of the PC industry for decades under Bill Gates, but as soon as he left, innovation basically stopped. Ballmer managed to dramatically increase revenues and has built something like 6-8 billion-dollar businesses, but there were no new product cycles under him.
If you look more in the way what was possible, Apple was mostly a marginal player, and its peak was in 93. Eventually the market share started declining rapidly even though the industry was still increasing.
https://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=image...
Of course, that massive expansion was kicked off by Windows 3.1 and then Windows 95.
Microsoft's annual turnover went from $3.75bn in 1993 -- less than half Apple's -- to $32.19bn in 2003, which was 5x more than Apple.
Dell is perhaps an even better illustration. Its turnover grew from $2.9bn in 1993 to $35.26bn in 2003.
Apple's "market share started declining rapidly" after 1995 (when it reached $11.06bn) because it couldn't compete with Windows 95.
OK, but remember that Microsoft's only significant "variable costs" (cost per unit sold) were the costs of stamping CDROMs and providing basic tech support, whereas Apple (and Dell) incurred all the variable costs involved in making whole computers, so Microsoft's "gross margins" (turnover minus cost of goods sold) was much higher than Apple's.
Supermarket chains have tremendous turnover, but their gross margins are around 1% in contrast to Microsoft's margins in excess of 30% in the 1990s -- and Apple's sky-high margins of recent years -- and IBM's sky-high margins before they lost their dominance during the rise of the personal computer in the 1980s.
My point (since we are talking about CEO performance) is that Microsoft was probably much more profitable than Apple already in 1993 although the ratio definitely increase in the late 1990s as you point out.
In the 1990s, Microsoft also had CD manufacturing and packaging costs, but those have mostly gone away now.
In a competitive market, hardware generally results in manufacturing_cost+plus_profit pricing, which drives margins close to zero. That's what happened to the PC OEMs. Apple makes better margins because it doesn't use cost-plus pricing: it picks whatever price it thinks the market will bear. The higher margins are justified by product design, branding, saturation advertising and/or whatever. That's how IBM worked as well, until it had to face competition from PC clones.
They're different business models, but Sculley took a bet, essentially thinking that there was more turnover (and profit) in selling PCs for $2,500 than there was in licensing software for $50. He was wrong in the 1990s, but maybe times have changed ;-)
IBM has got rid of as much hardware as possible and shifted its focus to high-margin licensing, and it's not doing too well....
That's just the marketing / planning side of things. He wasn't that great at setting directions for technology, either.
What made Apple the thing it is today is their pinpoint and high quality products for each sector they're in, and their willingnes to take initiative and introduce radically different stuff.
I'm sure the dotcom bubble played a role in this (i.e. Job's leadership however effective or ineffective it was, wasn't solely to blame).
*For those (like me) who didn't know, turnover is the net sales generated by a business,
Tim Cook has been adding blur from the first moment.
I also see an odd parallel in another corporate transition... even though it's the same leadership, is the new re/code more than a shadow of the old All Things D?
I'm in the camp of believing Apple's product line-up is too big. It's having a huge negative impact on their software quality too.
Sport: cheaper model, a little better for athletic activity (screen is more impact-resistant but less scratch resistant)
regular: main model, styled more like a classic watch, screen is more scratch resistant but less impact resistant
Edition: made of gold, super-expensive
The Edition watch specifically isn't going to be confused with the other two models, and the Sport/regular split seems pretty straightforward to me.
Why would I get a 9.7-inch iPad Pro over a 9.7-inch iPad Air 2? What's the difference between an iPad mini 2 and an iPad mini 4, and what happened to the iPad mini 3?
They ought to just have three iPad models, distinguished by size: iPad Pro (the 12.9-inch model), iPad Air (the 9.7-inch model) and iPad mini (the 7.9-inch model). That would make it much easier to tell the difference and decide which one you want.
phones, laptops, tablets, desktops, cloud.
iPhone mini, air, pro
macbook mini, air, pro
it's also probably time to end the tick/tock s vs non-s naming and just count up.
leave a full speed i processor in the Air, and let the Mini use the m processors.
Jobs famously reduced the product range to a 2x2 grid--desktop and laptop, pro and consumer.
But in each of those boxes, there were a number of options. In addition to different "speeds and feeds", there were even color differences. At one point, taking into account configurable options, there were over a dozen versions of the iMac alone.
The iMac came out in 1998, iBook in 1999--and that filled out the matrix. But then the iPod came out in 2001, and the Xserve in 2002. And then of course each of those expanded into different versions and options. Think of the variety in the iPod line.
Jobs also took Apple into entirely new businesses fairly quickly, like Internet hosted services. Itunes is the most famous, but Apple did not even have an online store until they built one under Jobs' leadership.
Edit: whoever wants to give some meaningful arguments can maybe use some comparable company as an example.
AAPL Mkt cap: 531,84B
MSFT Mkt cap: 382,79B
Apple is ridiculously "undervalued" compared to any peer in the industry. It is a money printing colossus.
Having said that, the market seems to get shivers around $600B, and that psychological barrier imposes a friction that makes the rules of the game change. No one can stay above that for long, and in the case of Apple its profoundly out of scale numbers makes everyone simply put it in a different universe of valuation.
For instance, no one thinks that Apple has a big vault with hundreds of billions in it. Like all rational players, they hold most of their negotiables in short term securities. For tax reasons they also have been taking on debt in some areas rather than liberate cash from elsewhere.
But they have an enormous, enormous amount of wealth sitting virtually at a standstill. They have announced that they're going to spend a lot of it to buy back shares (boosting the value of the remaining shares), but they've been doing this so slowly they're adding to their pile quicker than they're spending it.
Swift may be one of the biggest releases in recent years. However, since it doesn't affect the public, is considered a non-release.
Compare: Since Steve returned to Apple (1997) to the point of iPhone being presented (2007) there were almost 10 years of "minor changes." iPod? "No wireless. Less space than a Nomad. Lame." (2001)
Steve Jobs died in 2011. This time now is then an approximate year of the "Lame" sentiment.
Apple can't take itself private unto itself, there must be a human owner or owners that own all of Apple stock as a private corporation.
Apple could team up with JP Morgan, Silver Lake Partners, and a dozen other firms to take itself private however, and they along with a likely small class of shareholders would own the private corporation (eg perhaps Tim Cook and Laurene Jobs would would choose to retain their large positions).
There is no possible scenario under which a corporation can exist and continue to exist indefinitely in any of the 50 US states without a human owner somewhere in the chain, even if said owner is buried under a dozen shell companies.
If you assume that Apple is going to borrow the 600 billion to buy all its stock, then you are effectively saying that whoever's left holding the "private" company is holding a 600 billion dollar loan. I do not share your optimism that anyone can get a loan large enough to buy Apple.
If you still believe this is impossible, think what would happen if a company on the day of the IPO decided to immediately and unilaterally reverse every transaction. Everybody would get their money back, and the company would simply get its equity back. It's as if the IPO never happened. Clearly not an impossibility. The only difference here is that because some time passed the investors want some extra return on their investment. That's not an insurmountable problem because Apple is rich.
Yeah, this isn't a thing the company can do. The board cannot "unilaterally" take shareholders' shares and give them money in return. They can initiate a buyback, but that means buying shares on the open market, and they'd still be a public company even if everyone sold back their shares. Or they can propose a buyout, but that requires a shareholder vote and typically external money.
The first scenario still results in a public company, just with fewer shares. Neither scenario results in the company owning itself.
That ignores the Apple Watch, which has basically created a new product category and proceeded to immediately account for more than half the total sales in that category. The Watch has outsold the iPhone during its early days, as well. For any other company, this would be reported on as a great triumph. Unless you have wild fantasies that Apple is supposed to magically produce an iPhone-sized business every two years, even though no other company in the history of money has ever produced an iPhone-sized business even one time. Double-digit millions of units of sales, first year, for a brand-new product that nobody's ever spent $400+ per unit on is pretty good.
What?
Did they invent the smart watch? No. Did they innovate and start a new chapter of the category? I think so.
Also, I disagree on the bajillion number, for reasons other than the obvious. There were quite a few viable smartwatches on the market and many in the pipeline before Apple's. Plus, the watches not counting after the rumor of an Apple watch is a silly claim as well. There are numerous rumors of Apple working on a new product; for instance, that logic dictates Apple created the smart TV category.
Why isn't it good enough that Apple entered the market with a nice product? Why do people have to give more credit than what is due?
Nonsense.
The iPhone is an extra-extraordinary product, but even in retrospect it wasn't considered as amazing when it came out. The watch reminds me of the iPod in terms of when it entered the market (somewhat early, after others had probed and validated it a bit) and under-the-radar adoption rate.
If you ignore personalities, the question really is: can the machine continue to pump out extraordinary products. Not "can the machine pump out another iPhone".
apple is diversifying, if the car rumors are true it means that they are trying something totally new. its just that building a revolutionary car takes a lot more planning and effort than creating a new iteration of iphone.
Not that Steve isn't missed, of course. It's just that Tim is also great.