Apple is in trouble--but it's flawed thinking to say that's due to Jobs' passing

2013 wasn’t a great year for Apple. You’ve probably seen the stories about Apple failing to innovate, etc. If you haven’t seen those, you’ve probably at least noticed… that Apple failed to innovate.

One thing you’ve also probably heard is lots of people rending their clothing and keening, “It’s because Steve Jobs is DEeAadD!!!”

First, I think it’s sad that Jobs died so young. Rest in Peace.

Let me also say that I have been “a Mac” since 2004 and was formerly a big Apple fan, now less of an Apple fan. I don’t think their gadgets mean a whole lot as of almost-2014, but I do prefer the Mac platform for my personal computing.

But now let me argue against the hagiographic assertion that Jobs was the Jesus of Apple and more. I have two types of arguments:

1. People give Jobs too much credit for Apple’s success.

It’s a habit of the human mind to pick a living symbol and attribute anything and everything to that symbol. Typically, the leader of something. If things are going well, it’s to that person’s credit, and if not, it’s that person’s fault. This is understandable, since mental bandwidth is limited, but that doesn’t make it correct thinking.

I can say with certainty that while Jobs may or may not have been a necessary cause of Apple’s success in the new century, he was not a sufficient cause of the company’s success. Not unless he walked into a room and invented the iPod, iPhone, and iPad himself. At any company that big, there are a heckuvalotta people who have to be good at big jobs in order for things to turn out well.

One may credit Jobs with ideas. I haven’t read an account of what exactly he came up with or promoted within Apple after his Steve Agonistes move in 1997. But I think it’s fair to guess that he was overall a good leader for the company. It also seems pretty clear that he was an asshole and a micromanager too (he corrected people’s emails!), so it’s also probably true that, while leading Apple well overall, he also held it back in some ways. I have also heard that he was pretty disinterested in the finances of the company, which is why Apple now is sitting on a mountain of cash with no real plan for what to do with it.

I’m not trying to be a contrarian or hater. I’m just saying, hey, he was a human being with flaws and limitations, and you can’t credit him with everything Apple did right 1997-2013 (or in the earlier period for that matter).

Further, it’s simple hero worship to assume that a ton of brilliant billion-dollar ideas died with the man. For one thing, since he was alive until recently, Apple should at least have a solid pipeline based on those brilliant ideas. Currently, there is no evidence of that.

2. Apple’s success was unsustainable anyway.

Take a look at these monstrous figures:

Nearly 80% revenue growth in 2010–what?! For 2013, it’s only 9.2%, which would be enviable growth for a lot of companies.

Apple’s financial press releases:

http://investor.apple.com/results.cfm

Note that Apple’s fiscal year ends in September.

I added up the revenue for FY2013: $170.9 billion. Consider that Apple’s revenue in 2001 was just $5.36 billion!

Even 10% growth on $170.9 would require an additional $17 billion next year. That could very well happen, but that’s like adding a small industry’s worth of sales every year. Every year. And we have already lowered our expectations from the monstrous double-digit growth of just a few years ago.

The numbers alone should give one pause–I don’t care what kind of miracle products you launch, you just can’t sustain that kind of growth once you reach a certain size. But then there is no evidence that Apple has those miracle products in the pipeline. In fact, all of its current products are commodities. All. Some things, like the laptops (which don’t sell in large numbers anyway), are high-end commodities, but they have substitutes that are more than adequate. In the smartphone sector, it is arguable that Apple has already been outcompeted. In the MP3 player sector, it is arguable that the product itself is obsolete. If there is any real juice to be squeezed yet, it is in the tablet sector. Which, if you ask me, is not very exciting and already has the whiff of “that was so 2012” to it.

That means that, even if Jobs were around to introduce a new miracle product or two, sales of iPods would soon be meaningless if existing at all, sales of laptops and desktops could be growing but would still be small overall, sales of smartphones are already dodgy, and sales of tablets are very much threatened by the competition. How much of the current $170 billion is really safe at all? Not a lot. Even $50 billion in new products (no sign of which exists!) cannot stop $170 billion in old products from going bye-bye.

Capitalism is a great, fun game when you’re small and growing fast. Once you’re big, it becomes a dreary chore to fulfill the expectations that are built into the very nature of the system. I think that’s fair to say even if you think capitalism is the bee’s knees.

Apple is now in the position to which it was destined with almost mathematical certainty. It’s to Steve Jobs’ credit that he helped the company get to this level of success. But there is nothing he could have done to prevent what happens next: failure to sustain rapid growth.

Does this mean when I walk by the Apple store I no longer see the arrogance billowing out the door?

Y’know, I get the same feeling, and I am a Mac owner who spent thousands on a high-end laptop last year (great computer, by the way!).

When I pass by the Apple store, for some reason I don’t feel invited to the party. It’s very odd, and I can’t quite put my finger on it.

I am no fan of Apple - I own no Apple products, and have no desire to waste hundreds of bucks to be cool. But the importance of Jobs was not that he invented anything - it was that he drove people, and he made good choices of the many inventions that people no doubt showed him.
The story of electronics is the drive to commodity status of all products. Jobs could convince lots of people that an iPhone was enough better than Android phones. Jobs could somehow push out new stuff that wouldn’t be a commodity for a couple of years at least. Maybe it was him, or maybe he just died at the top. But he did have a big influence.

I agree with all you say here. He was a great presenter as well, hence the “reality distortion field.”

You know, I’ve been reading “Apple is doomed” articles for going on thirty years now. If they’re doomed, they really, really suck at it. They’re the largest tech and most successful tech company in the history of the world.

Sure, there will be a post-Apple world. There will also be a post-Microsoft, post GM, post Verizon, post Ford, and post Kellogs world. But for some reason people seem to fixate on Apple in the same way creationists fixate on evolution – “If we can just show something wrong with this, then our answer is obviously right!”

In thirty years, Apple has basically invented or re-invented five different markets. That’s an average of one every half decade or so (and also more than any company I can think of), but now every time Apple goes a week without releasing something new, analysts post the copy-and-paste “Apple didn’t innovate” story. Seriously: hold any other company to the “innovation frequency standard” that Apple seems to require and they’d fail. Anybody.

This is almost as annoying as the meme that buying Apple is “spending hundreds of dollars extra to be cool” or “only done by sheeple or fanbois”. It’s what CEOs tell themselves is going to make the next Apple product fail so that they don’t have to ramp up their innovation. It was wrong for the Mac, the iPod, ultrabooks, the iPhone, and the iPad, and sneering at the fanbois and sheeple is leaving money on the table: apparently there are hundreds of millions of them.

Apple is in trouble?
I should be so troubled.

I don’t own any Apple products, but I have bought them for my kids (iPhones and iPods) so I am familiar with the paradigm. To say Jobs was not absolutely key to Apple’s success is very wrong. He was an asshole bordering on minor league sociopath in some ways BUT (1) he had a concrete vision he was willing to risk the company on and (2) he had a near intuitive understanding of effective ergonomics and functional style. The latter is a very, very rare attribute. He had ergonomic and aesthetic “taste” and the ability to have these ideas made real.

High powered tech CEO’s are dime a dozen and they are usually fairly clueless about the specifics of what is going to make a desirable killer product and what is not. The result is that you have masses of clunky hardware that billions are wasted on. Jobs was able to synthesize and bring together a lot of the bleeding edge tech that was already out there and make it work in an integrated package by hiring the people that could get this done and driving them like a tyrant. In the end he got his vision made concrete. He had some misses but his hits were spectacular.

That (IMO) is why Apple is struggling re public image. The impression (and I think it’s correct) is that The Wizard has left the building and everything coming out for while is going to be derivative. They are a cash machine and are not in any financial “trouble” in the near future. If they lose the ability to create magic products and Apple products start being commodities they will be.

Homer Simpson: “There can be only one great music festival in a lifetime, and it’s the US Festival.”
Record Store Clerk: “What festival?”
Homer Simpson: “The US Festival! Geez! It was sponsored by that guy from Apple Computers.”
Record Store Clerk: “What computers?”

Straw man. I didn’t say they were “doomed.” I said they were in trouble: specifically, that they couldn’t sustain their growth rate and there is no evidence of a good pipeline. And even if there is a substantial pipeline, they will have trouble sustaining sales in their current markets.

I think the very worst thing that will happen to them is that they lose a lot of market share and go back to being producers of high-end stuff that everyone else is making, as opposed to being world-conquering innovators. Aside from it’s early leadership in home computing, that’s what Apple did: they made computers that were arguably better than IBM clones. That said, such a fall from grace would be big, and I think it will happen to some degree. It’s pretty much inevitable for mathematical reasons.

Right, people who argue about Apple’s prospects are as bad as creationists. :dubious:

People fixate on Apple because… wait for it… Apple has the largest market capitalization of any listed company right now! People will be discussing any company that is in that position.

They were a very influential leader in the infancy of home computing, albeit not particularly successful money-wise. They didn’t do much else original until 2001 with the iPod. That and the iPhone I consider big accomplishments. The iPad, not as major a shift. So you have the reinvention of MP3 players and smartphones, the former being made obsolete by the latter. You have the reinvigoration of the tablet market. I will give you three markets there, with smartphones now commodities and tablets being not that exciting a market in the first place (they really are just cheaper computers with touch screens and thus are displacing these and cannibalizing Apple’s own laptop market).

You’re right! That’s my whole point about the devil being in the mathematics of the situation. Any company in that situation would of necessity be facing the same impossible conundrum.

It may be as annoying, but it’s completely irrelevant to the point at hand.

Are you saying that other companies have not ramped up innovation?

I have a Nokia Windows phone that I like a heck of a lot better than the available iPhone options. Apple lost me. Samsung’s phones are kicking ass in the market. Heck, people get free phones with their plans now that look just as good as the iPhone.

MP3 players are obsolete. No one caught up with Apple before the market became unattractive.

Different tablet options are now flooding the market. I don’t see any particular advantages possessed by the iPad, do you?

The Ultrabook isn’t an Apple product. Did you mean Mac Air? Well yes, the Ultrabook is a worthy competitor.

I will stick with Apple laptops because–for now–the OS superior and the hardware is excellent (though definitely expensive). But Apple is not innovating well with its laptop/desktop and mobile OSes and is pissing a lot of people off.

You’re asserting that Apple will do well just because and ignoring the fundamental mathematical problem it faces. It sounds like a statement of faith more than a cogent argument.

I basically agree. I tried to be nuanced in my OP, but I wasn’t nuanced enough.

I think that might be overstating things. Hit products have come out from a variety of companies that get the market just right. At one point, Blackberry and Nokia and even Motorola were tremendously successful. We don’t talk about their visionary CEOs because their time has come and gone. Nintendo is a pretty admirable company, as they’ve been able to put out one successful system after another. Samsung is absolute electronics giant that does a lot right. Their highly organized marketing machine has the Japanese also-rans (Panasonic, at this point Sony, sadly–is anyone else even trying?) quivering with frustration. Squaresville Microsoft really did a good job with the XBox but now seem to have screwed the pooch on that one. And that’s just B2C. In the world of B2B, you have your Oracles and whatnot.

So I would hesitate to portray Apple as uniquely competent. Until the iPod came out, they were a niche producer of desktop and laptop computers with $5 billion and change in sales.

The iPod and especially the iPhone were definitely a big deal, the product of brilliant design and superb marketing. I do admire those accomplishments.

As I said in the OP, Jobs was around until recently, so he should have been able to foster a significant pipeline. I personally doubt that he did.

They have so much cash that, barring a takeover, they could exist in some form for another 20 years while failing the whole time. The big danger is a takeover, however, or a shareholder action to pay out a huge dividend or buy back stock (rumblings of which are already being heard).

I disagree. The new Mac Pro is an astonishing piece of industrial design, and apparently the Reality Distortion Field generator was used to get parts pricing for the hardware, as a recent attempt to spec out a PC hardware equivalent actually cost more.

I’m no Apple fanboy - I have some Macs that I have been given, but my main computers are all running Windows 7.

In trouble compared to what other industry-dominating word-straddling business colossi? General Motors? Wal-Mart? Time Warner? I suspect most of them would be delighted to be posting numbers like Apple’s.
That certain people are stupid enough to expect startup-like growth from a company with over $150Bn in sales is certainly a problem, but it’s not Apple’s.

You must not have read what I wrote. I said that the hardware is excellent, but they are not innovating well with their OSes.

I agree with you. But you’re not actually responding to what I wrote.

I don’t have the same intense feelings of loyalty to Apple I once did, and to be fair I always thought a computer-world dominated by Apple would be as rife with problems as one dominated by Microsoft (or IBM). I no longer fear (much) that the MacOS is going to disappear and force me to switch to Windows.

I’ve also always tended to want to set up MY computer the way I want it, and Apple’s Mac has always been a double-edged sword for that, being on the one hand the platform that had INITs (system extensions) and CDEVs (control panels), or, in the modern world, the wide spectrum of Mac and Unix and other-Intel-OS apps you can run on a Mac, and without those PC-type fears that bad things will happen if you actually install stuff; but on the other hand a significant lock-you-in mentality in which backwards compatiblity is thin and sparse and old familiar ways are taken away willy-nilly. I have 10.9 in a virtual machine but I still happily run 10.6.8 as my everyday OS so I can run PowerPC apps. I still run MacOS 9 apps (necessarily in another virtual machine environment) and within that environment I still use a tiny handful of 68K apps. Apple doesn’t make it easy. They’ve made some incredibly good stuff but they don’t always know what makes their good stuff good and they kill too many of the old things in the process of generating the new.

There’s damn little they’ve introduced in recent years that I lust for. I don’t want to start new and fresh, I want to add new capabilities to what I already know and have.

I never worked for Apple. From the outside looking in, what made Jobs great is that it was all about getting the products right…meaning as near perfect as available tech and target price could support. Build it and they will come, I guess.

Every company I have worked for is focused on share price and next quarters’s financial statement. Every nickel spent on product development is viewed as flushing money down the toilet, and task forces are convened to assure that any good idea will not survive.

I don’t see why Apple has to grow at all to avoid being “in trouble”. Another year, or ten years, with $170billion in annual revenue would be sweet for any company.

I think that apple’s product look and feel lovely. However…

I just bought an Asus Chromebook C720 that boots to usable in 7 seconds, resumes to usable in 1. Performs 99% of the tasks that I need fast enough that I don’t crave faster.
It is not much heavier or thicker than an apple mac book air and has a 9+ hour battery life. It took me 25 mins to install a full Ubuntu desktop and can switch between the two without rebooting in 2 seconds flat.

In short, while agreeing that the apple product is better spec’ed I haven’t yet found anything that this (I’m typing on it now) can’t do that I want it to and I’ve had no issues with it at all. It just works. I turned it on for the first time, entered my google details and had it fully ready for work in 30 seconds.

The real killer? It cost £190 (I believe it is $199 in the US) and It suspect this and other better products to come may well erode apples market share for light, powerful laptops.

How many of these did they do without Jobs? Before Jobs came back Sun almost bought them.

When I mentioned people spending extra money I was in no way implying that this was a poor business strategy. Clearly if you can convince people to do it it is great for your margins. The danger is that as soon as people wake up, you are screwed.
Samsung has traditionally been a fast follower, and has turned out to be very good at it. They have just realized that with their market position they are going to have to be more innovative. Can they do it? Anyone’s guess. But innovation also exists outside of Cupertino.