Apple and the Thing That All Companies Should Get Into An Arms Race About
Apple announced its first down quarter since 2003 this week, an occurance Tim Cook had warned investors about some days ago. As an Apple nerd and an Apple afficianado going back as far as the Newton (and further), it seems to have been a wholely preventable downturn. Apple is currently in a period of stagnation, as evidenced by some of the half measures it’s taken in product development over the last five years. I also think it may be building some secret thing—a car, a spaceship, a magic toothbrush—that could invigorate things, but not if there’s no one around to care.
I’d like to pull apart some of the thoughts I have about this, and pretend for a moment, if I may, that I’m the CEO of Apple, Inc.
The vision thing
Apple has always been a company that lived and died by what it deemed “innovation.” By Apple’s definition, innovation has meant a couple of things; in the early eighties it meant developing something no one else was at the time with any degree of mass market success. During the second coming of Steve Jobs, it was saying ‘no’ constantly and developing a product lineup that was exciting, forward-looking, and simple. During that same period, Apple’s innovation recipe started to take on aspects of “real” product design.
Jony Ive has been widely attributed as having been a fan of Dieter Rams and other minimalist product designers; Ive worked skillfully to create a design language for Apple’s products that was minimalist and friendly, not unlike the Braun record players and Sony Walkmen that dominated his early design education. Jobs, too, was a devotee of “great” design—owning a long line of BMW motorcycles, McIntosh tube amps, and the like.
Having these classic products and masterful designers as heroes and inspirations seems to be a fine thing for some parts of a product’s design. I think in other ways, it’s hurt Apple immensely. Braun never had to contend with the two year product cycle that is now de rigeur for smart phones. More to the point, Braun never helped to create such a cutthroat product cycle in the first place. It could afford to slowly iterate a product’s design over a long timeline—given a variety of stark differences between the market the Braun of the 70’s existed in, and the one in which Apple operates today.
Apple set a breakneck pace for itself in the early part of this decade. Another ingredient in its innovation recipe was the desire to leapfrog itself every six months; shaving entire pounds off of laptops, developing new materials and manufacturing processes to support its outlandish and wonderous engineering goals, shipping software that was remarkably bug-free and safe—the list goes on and on.
Now Apple finds itself in a position where, in order to perform from both the position of shareholders and in the court of consumer opinion, it must keep the pace of leapfrogging itself every six months. That’s impossible. For any single company to have the number of successes Apple did from 1998 to 2007—going from the brink of bankruptcy to the most valued, trusted, and cash-rich company in the world—is a statistical improbability. It’s not an overstatemt to say that while some of the operation excellence the company exhibited in that time was not his, almost every other success can be attributed directly to Steve Jobs.
His life, human foibles, legendary temper, and directness have all been covered now ad nauseum. Steve Jobs the literary and mythical figure will forever overshadow the real guy who went to a job every day. While there, he somehow directed the creation of a series of products that, in a small but detectible way, changed everything about consumer culture for decades to come. I’m not a “real” Apple pundit, so it’s difficult for me to gauge the success or failure of Apple purely by its current management. I believe it’s impossible not to talk about the passing of Steve Jobs as a major factor in Apple’s current position.
I think what we can safely say is that around the same time that Jobs was no longer directly involved with the company is when momentum started to drain from the company. I don’t think there’s anyone who would really dispute that. With one or two possible exceptions, Apple hasn’t released a single product that wasn’t a minor iteration of an existing one in almost five years. This is a problem given the situation, where Apple is expected to keep the pace of a NASA in 1963, and not a Dell in 1996—a situation it helped to create. So how to break out?
The electric car
Something on the order of 14 companies are developing self-driving electric car tech for the mass market. Among them are Google, Elon Musk’s Tesla, and many of the current automotive giants like Toyota and Ford. The autonomous car has, for whatever reason, been anointed as the Thing That All Companies Should Get Into An Arms Race About. Through that lens, SDCs seem a lot like smartphones in 2006; people seemed to want something that had the silhouette of a smartphone, but no one company had yet figured out how to fill the silhouette with stuff that anyone really wanted.
And in 2006 Apple, in classic form, was mixing its own brand of magic with an ability to capitalize and improve on the failures of others. It produced the iPhone, and a host of devices decended from it. The iPhone now accounts for 65% of its business. Could Apple do the same with an SDC? Of course. That’s how Apple pulled off every success in the last 10 years.
Organizationally, Apple has proven ability to enter a space and rapidly “train up” on what it takes to be there. They hire, develop, or shrewdly purchase the talent and materials they need to work in a space, spin up products that tweak or revise the failures in that space, and often find themselves hitting homeruns. Ed Collegan, former CEO of now-defunct Palm, is famously quoted as saying, when asked about rumors of an Apple phone in 2006:
“We’ve learned and struggled for a few years here figuring out how to make a decent phone,” he said. “PC guys are not going to just figure this out. They’re not going to just walk in.”
Apple didn’t walk in. They compressed years of operational gearing-up into eighteen months, and then they walked in. So, with regard to SDCs I see no reason it can’t do the same. Apple could also find success applying its ability to ease pain in a space to SDCs. Auto manufacturers have for years been behind the curve with regard to adopting new technology. Even the car sales model has never been disrupted, something that only now is playng out thanks to Tesla and its direct sales. An Apple in those spaces, providing its classic innovation recipe to the in-car experience (and an Apple-store like sophistication and simplicity to purchasing) could very well be another homerun. But with costs in the billions for the development of a new automobile, the cash machine has to keep running. And with Jony Ive presumably logging long hours on the iCar, who is minding the store?
Back of the envelope plan
To keep the ATM spitting out twenties, Apple needs to do several things in the near term. The first and most important is to develop an all-new iPhone lineup and a new, reimagined iOS experience. While Apple has been gently refining these two things towards the stable, graceful and predictable state they’re in currently, Google’s Android has gone from garbage to a stout contender. Google has learned from Apple’s vertical tendencies, and it has developed bloatware free phones with excellent cameras and batteries that work much more closely with its OS than ever before. Google has learned that companies need to “own the whole widget”, as Jobs once said, and it’s working.
Apple’s iOS is also long in the tooth where features are concerned. By most accounts, the software shipping with iOS—its mail, calendar, and other preloaded apps—are among the first things to be jettisoned by new iPhone users. This isn’t necessarily a bad thing, as the holes in Apple’s software can create niches for all-important developers. But these gaps do tend to portray Apple as a company that is tone deaf to what’s going on around it. I remember Apple adding “pull to refresh” to its iOS Mail app some years ago and being astounded. That doesn’t bode well.
The experience outside of using apps has also changed very little since 2007, when the first iPhone shipped. Google trades stability and battery life by allowing users to deeply customize their Android handsets. I don’t think any iPhone user would really want to “sideload” untrusted apps that give them silly watch faces on their iPhones. I do think that some level of customization would be gladly welcomed, though, and that a balance could be struck between the “reassuring sameness” Apple has always employed and allowing a user to feel at home.
I also see the latest revision of the Apple TV as a big mistep. One of the keys to the success of iOS is its massive library of software, much of which consists of games. Had Apple included a Playstation-style controller with the Apple TV I think it would have been a massive hit. Instead, developers have been stymied by the difficult control schemes required by the Siri remote. The games that have been successful are fun and engaging, and the Apple TV has the processing power to do quite a lot. Another option would have been a VR headset—to capitalize and improve on another Thing That All Companies Should Get Into An Arms Race About.
Apple also, as point of pride if nothing else, needs to develop an all-new Macbook lineup. I’m writing this on a Retina Macbook Pro from 2013. It is indistinguishable from the ones produced in the three following years. Pressure sensitive trackpads notwithstanding, the Macbook lineup is in dire need of a refresh. There are rumors that this will happen, but processor bumps aren’t enough. This product may only account for 12% of Apple’s revenue, but it could be more—and could take up the slack left by iPhone—if new models were compelling and deeply innovative.
So, to recap: all-new iPhone, reimagined iOS experience, vastly improved Apple TV (with a fighting chance at taking on Sony and Microsoft in the gaming space) and all-new Macbooks.
One more thing
Will Apple survive without doing these things? Could they ship minor iterations on all of their flagship products while they work on the Thing That All Companies Should Get Into An Arms Race About? Probably. Fifty-two billion dollars is a lot of cash. Maybe staying the course is Tim Cook’s plan, and we’ll all look like morons when Apple all but leaves the consumer technology space in ten years to make cars—which will then account for 65% of its revenue.
In this universe, though, I think I would much rather see these products developed on dual road maps. Putting my emotions well ahead of any knowledge I might have of running a billion dollar enterprise, I just like living in a world where Apple is succeeding. Somewhere deep in its guts I believe it to be a thing that was founded to make life a little better and more interesting. Did its founders become gazillionaires? Sure they did. No one said any of this would be free.
The Jobs era was characterized by his ability to say ‘no’ until he was ready to say ‘yes.’ The pattern was to essentially refuse to move on any initiative, then suddenly break out the very moment the iron was hot—or when the company had 85% of the knowledge it needed to create a new product. The magic was in the remaining 15%—done on the fly at the expense of sleep, food, or appearances on TV.
Tim Cook’s Apple says mostly ‘no’, and never seems to move unless totally prepared to do so. It seems to punch desperately below its weight class, and only move on something when it’s sure it will work. Not only is it no fun watching billionaires be cautious, it’s also culturally bad for a business built on brash innovation and tilting at windmills.
As my first act as CEO of Apple, I would make tilting at windmills a daily requirement. The rest can take care of itself, as it does for every other plain vanilla company making gadgets.
