A Shift in Direction: Apple’s Strategy for the Next Decade
Just Getting Started
At the end of the keynote unveiling the iPad with Retina Display, the first after Steve Jobs passed away, Tim Cook had some very curious parting words:
Only Apple could deliver this kind of innovation in such a beautiful, integrated, and easy to use way. It’s what we stand for. And across the year, you’re going to see a lot more of this kind of innovation. We are just getting started.
That last line is significant. Yet few seem to appreciate its meaning. Consider, Apple has more devices and operating systems and first-party apps and stores and services than at any time in its near forty year history. Just getting started? One of the largest and most profitable companies in history? It’s a bit like the Williams sisters saying they are just breaking into tennis. At best, it seems like a rallying cry, at worst, corporate marketing dishonesty — either way, it’s enough to raise a few eyebrows. Yet with no inside knowledge and a little imagination, I believe any fool can confidently say it’s neither. There is a point to this narrative, and we’ve just been introduced to the main characters. To put it in Shakespearian terms, not only hasn’t Hamlet soliloquized about the deepest and most pressing issue facing humanity, he has barely met the ghost of his departed father.
Despite Apple’s monstrous size, it remains a rather simple company, one that moves with purpose. Unlike the era before Jobs returned, they don’t make a surfeit of marginally differentiated computers, they make devices at a broad range of prices, sizes, and capabilities that point toward something bigger. That something bigger is not some grand and unchanging idea cast in stone. Off the cuff, I’d say it’s a process in three steps:
- Envision the future
- Create the future
- Get rid of what isn’t the future
Sounds simple, right? Notice, however, that these steps are in an unordered list. They are not a serial process — they are executed in parallel, backward and forward and upward and always twirling, twirling, twirling towards freedom — or in this instance, the future. It’s a system that relies on feedback loops, with the vision molding the process and the process altering the vision. Recursion. Iteration. Evolution. And when enough of those changes accumulate, their combined weight collapsing the edifice of older ideas, we call that a revolution.
The revolution that became the iPhone started behind closed doors as the beginnings of the iPad. Only later did it morph into the trio of an iPod, a phone, and an internet communicator we have come to know. And it was derided as derivative, a.k.a. iterative, a.k.a. evolutionary. What such unimaginative people fail to realize is that all revolutions are the product of evolutionary change. Revolution is a subset of evolution, an emergent process of seeming inevitability, at least in retrospect.
While the iPhone took us by surprise, the iPad took us aback — so thin with such great battery life, but it was basically just a blown-up phone, it even had the option of a cellular connection. We should have seen it coming. But we didn’t. We wanted OS X; what we got in January was iPhone OS 3.2 and thousands of pixel-doubled phone apps plus a hope that developers would be quick to adopt and adapt to the larger screen (turns out they were). The panning typically took the dismissive form of “it’s just a big iPod touch” — and the criticism was more widespread (according to my rigorously casual observations). Everybody underestimated the iPad, including those who thought that it would be great. Three years and over a hundred million iPads later, some still question whether this is the future, and when they do, they tend to make the fallacious leap to this is the only future. But the fact is, futures change. This is why iteration is so important.
Back when NeXT took over the company in 1997, Apple’s continued existence was very much in question. But there were little cues to follow, should they have enough capital to keep going. These pointing arrows giving Apple a path away from bankruptcy also shaped and directed their vision of what the future could be. That future evolved into the digital hub, the Mac at the center of all of your devices, the holder of the canonical truth, and an opening for the iPod to draw in the blue ocean of non-Apple users — a combination that has served Apple better than anyone could have expected last decade, even if the hub was a machine inelegant enough to be prone to the Blue Screen of Death.
Successful or not, the hub strategy always had an expiration date. The new strategy — likely hatched and iterated upon in tandem with the iPad some eight to ten years ago — got its unveiling with Steve Jobs’ final keynote at WWDC. “The truth is in the cloud” began Apple’s public transition from a series of siloed devices tethered to a PC to a hardware and software ecosystem connected by a series of services. Steve Jobs’ death marks not just the passing of an era in leadership, but also the passing of arguably the most profitable strategy in history. This, along with the fact that trees do not grow to the sky, should explain why myopic pundits are calling for Tim Cook’s head. A change in CEOs has little to do with their recent stumblings and everything to do with how difficult it is to expand the services that integrate these disparate devices — no matter the quality of the hardware.
Weighing Words by Action
Endowed with the wisdom of hindsight, and given what is outlined above re Apple’s vision, we can take a look at those parting remarks again and see whether they were vapid business speak for the benefit of shareholders or honest and measured thoughts that Tim actually believes:
Only Apple could deliver this kind of innovation in such a beautiful, integrated, and easy to use way. It’s what we stand for. And across the year, you’re going to see a lot more of this kind of innovation…
While the much rumored and anticipated iLookingGlass didn’t make an appearance after that event, what did was nothing less than impressive to anyone who bothers to understand the scope and the lead times involved: Updating (nearly) the entire Mac line including the introduction of the 15-inch then 13-inch MacBook Pros with Retina Display and the chipsets that allowed for (nearly) every Mac to get both ThunderBolt and USB3; releasing OS X Mountain Lion on time despite the accelerated schedule and the curse of Mythical Man Month; overhauling (nearly) all iPods and accessories including the whimsically if not oddly dubbed EarPods, their completely rethought earbuds; new, super-thin aluminum unibody construction of (nearly) every iOS device and the inclusion of the cleverly if not confusingly named Lightning connector, a dock connector for the next decade; a further integrated chip design with their custom Swift cores in the A6 and A6X processors; and releasing the next version of iOS, which didn’t exactly go as planned.
(Take a breath.)
Indeed, many things didn’t go according to plan. On the hardware side, given the scale Apple needs to operate at, a burden borne of their unprecedented popularity, the year brought pretty major leaks and shortages. Those iPad mini rumors that surfaced were undoubtedly planned leaks, but those iPhone 5 cases that ended up being dead on, were surely not. Trying to ramp up the supply necessary with literally millions of new parts without leaks and without pre-announcement is an impossible task when humans are involved. Gross margins fell because new products — especially supply constrained products based on supply constrained parts that have to meet a high minimum standard of quality — cost more to produce than devices that have been around for half a year or more. Many scoffed at the new dock connector and the exclusion of optical disk drives where space, weight and battery life are not a constraint.
On the software front, the accelerated release cycle thrust Apple’s platforms firmly into the region of pain. Some of that software was released before being fully baked on the front end (iTunes) or fully fleshed out on the back end (Google-free Maps). The headline features of iOS 5, iCloud and Siri — those services on which the future hangs — gained marginal functionality but still lack the feedback and reliability for people to trust them to just work. To top it off, the additions to iOS didn’t match the pace of Android, which has come into it’s own as a solid and mature operating system — with a head start on many of the services that Apple needs to fulfill its own vision.
But that vision is the point — all of these problems stem from Apple’s internal vision of what’s to come — a good sign, if not for the health of the organization, then at least for fact that they are still pushing themselves. Overreaching? Possibly. They have made a few course corrections in recent months, like the ouster of Scott Forstall, that should alleviate fears of a Microsoftian malaise due to internal politicking among the various fiefdoms (exacerbated by Jack Welch’s stack-ranking meritocracy that invites all forms of spiteful subterfuge). The notion that they have lost it, are doomed, and the sky is falling is definitely an overreach.
They are just getting started. And getting everything right will take a while. My guess, they are half way there, which is to say that in about five years, the current problems will have given way to a new set of problems to solve and the current goal will have have transformed into something a little more sci-fi and a lot more mundane. To get there, Apple will likely do a bit of spring cleaning, and that is what we’ll look at next.
Originally posted on my Tumbl and The Tech Block
