It won’t happen overnight but once the co-founder and chief executive of Apple packs his black turtlenecks into a suitcase and calls it a career, the circus he leads will start folding its tent.
Jobs is the company’s public face and driving force – no one can replace the unique culture and emphasis on product detail and design he has instilled at Apple.
In fact, a successor could very well send the company back to the also-ran status it enjoyed last decade.
How would such a demise of a company with a market cap of US$108-billion unfold? Quite easily.
A new and possibly inept successor to Jobs will take over and eventually, if not immediately, fall on his face soon after Jobs leaves the company. It’s happened before – anyone remember the disastrous 12-month reign of Gil Amelio as CEO from before Jobs came back to lead his people? The stock hit a 12-year low under the watch of Amelio. Many of those problems were passed down by previous CEO John Sculley, who replaced Jobs after his first tour of duty (apparently in a power struggle). Sculley erroneously decided to embrace the PowerPC computer microprocessor when the whole world was going the way of Intel.
He zigged when everyone else zagged. Worse yet, the company had no cachet with consumers.
It took the return of Jobs in 1997 and the release of the iPod some years later to restore the company’s lustre. Some 11 years later, the topic of succession planning was brought up by a cult member, er, shareholder at the company’s annual meeting yesterday. It’s unusual when a topic or sentiment other than mass adoration for Jobs and the company’s products is bought up at Apple’s AGM.
In a low-margin business like computer hardware, which is Apple’s bread-and-butter, it’s a question worth further exploration.
Apple’s phenomenonal growth so far this century is already a tough act to replicate even for Jobs given market conditions and increased competition. The departure of Jobs would surely test the company’s wherewithal; probably shrink it sizably over time in fact.
Apple has gained ground on Microsoft in the more lucrative operating system market but it’s still a distant number two. Furthermore, market conditions have eroded to the point and products are good enough so that convincing consumers to upgrade their home computers, to the Mac or Windows platform, is difficult at best. The company is clearly the leader in the digital music player market but rivals have set their sights on it. In the smartphone game, the iPhone’s 10-million shipments expected by the end of year pale in comparison to the business generated by the likes of cellphone giants Nokia, Motorola and Samsung.
Point is Apple’s growth and sex appeal is inextricably linked to Jobs, its public face and leader.
The departure of Jobs, when it happens, will signal the beginning of the end for Apple, which has had a great run. The fact that the company is so dependent on Jobs, however, is yet another reason not to invest in the company.
UPDATE: Based upon the advice of a few level-headed readers, I’ve decided to eliminate all five (inclusive) references to “cult” and “Mac fanatic.” Apparently, the references devalue my otherwise valid points (my quasi interpretation). Could just be sour grapes too but I like to be responsive to reader requests.
12 Comments on “The demise of Apple starts once Steve Jobs departs”
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I don’t know if I’m just missing something. Maybe me and my friends are in a different society. I have an iPod, and so do most of my friends. A couple of them have Macbooks. Most of them enjoy their products.
However, none of them are in any sort of cult following of Steve Jobs – in fact, a few of them don’t even know who he is. Somehow, I don’t think that his demise will reduce these userss enjoyment of Apple products.
Lastly, this reminds me of blaming Bush for his policites. Does anyone actually believe that he’s responsible for anything? He’s just a spokesperson. Likewise, the software and hardware engineers at Apple are responsible for continuing innovations for Apple products. Steve Jobs just talks about them.
Posted on March 5, 2008 at 5:10 pm.
Hey Denis,
Thanks for your comments – great counterpoints!
Kevin
Posted on March 5, 2008 at 5:16 pm.
While Bush has advisors he most definitely contributes to policy. He and others are out to protect their own. That is one big reason why the U.S. is still in Iraq. It’s far too glib of a statement to say that Bush is a glorified PR person.
As for Jobs, he is far more than a spokesperson for the company (though he’s a damn good one) – he’s responsible as I said in the post for the company’s product direction. In essence, he’s Apple’s driving force and will be sorely missed once he’s gone. So much so, the company will head in reverse I believe.
Posted on March 5, 2008 at 5:25 pm.
Well, I stopped reading the article when you said that the Lisa was Sculley’s brainwave. Sorry, that was Jobs. Get your simple facts straight before you try things that are more complex
Posted on March 5, 2008 at 8:05 pm.
Let face ivery company or country has it day in the sun, to day Apple is riding high and with the blue print of Steve Jobs in place we will it it as it is today with or without Steve Jobs.
Innovation is the name of the game which Apple is good at and couple it with the huge cash reserves it can ride over a lot of economic storm.
BTW your bringing up the sales of iPhone vs the rest is lame. As it stand to today Apple has 1 model and has begun selling the iPhone since June whereas the rest have been doing it for years and selling many models.
Your writing reminds me of the tech ANALysts as they based their finding on a company which is dead and the managed are idiots.
Are you implying that those who are working at Apple are useless once Steve is gone and they will manage the company to the ground?
I am no analyst like you but I believe one thing Apple is a well run company with or without Steve Jobs and with the blueprint in place it is a matter of following it.
BTW Is Steve a success at NEXT Inc.?
Posted on March 5, 2008 at 8:19 pm.
Hi AdamC,
Thanks for reading the post. Your point about the blueprint Steve has left behind is well taken – I’m just not sure it’ll hold up without him driving people and the culture.
As for NEXT, it most certainly hasn’t been a hit but boy Apple is an unqualified success thanks to Steve wouldn’t you say?
Posted on March 5, 2008 at 8:24 pm.
Kevin,
I think what you’ve highlighted is Apple needs to pick the right person to succeed Jobs. Clearly, it has failed miserably in the past with Sculley and Amelio. Why did that happen? Perhaps it was the landscape at the time; maybe Amelio and Sculley made terrible strategic decisions; maybe they simply the wrong people (both outsiders). My bet would be someone internal will be promoted when the time comes for Jobs to step aside. He/She may not have the aura of Jobs but they may be able to keep the corporate mojo alive and well.
Posted on March 5, 2008 at 10:40 pm.
Mark,
I highly doubt it.
Jonathan Ive is a talented and remarkable man for example but he isn’t a leader nor is that Oppenheimer fellow either.
Jobs is the driving force behind Apple – the company won’t be the same without him.
Kr
Posted on March 5, 2008 at 10:43 pm.
A couple of points:
“Many of those problems were passed down by previous CEO John Sculley, who replaced Jobs after his first tour of duty. Sculley erroneously decided to embrace the PowerPC computer microprocessor when the whole world was going the way of Intel.”
At the time the PPC processor was more advanced and actually stayed more advanced for several years, but then MOTO and IBM lost interest in the the Desktop PC market, and didn’t even eat their own dogfood—i.e. didn’t use PCs with their own chips!
Sculley, et al, however, made at least five enormous mistakes running Apple:
1. Sitting on fat profit margins and then not innovating enough new products/software/features to justify those continued fat margins.
2. When Sculley did innovate, (think Newton) it didn’t help the Mac! (Just like the Mac didn’t help the Apple II) they were incompatible. Now, all of Apple’s products feed off of OSX! Every improvement to Mac OSX, improves all of Apple’s product line, and every new product, gives OSX a bigger footprint in the market.
3. Huge inventory management issues—millions of one model of a computer sitting in warehouses which sucked and millions of other models which were on backorder. (Apple’s Powerbooks!)
4. Dependence on other companies for success. When MicroSoft tried to knife the Quicktime baby, Apple finally realized it could not rely on other companies to exploit the unique features of their OS which was absolutely necessary if they were going to carve out a market for the Mac. Out of that crisis, Final Cut was born, as well as the deep desire NOT to be dependent on MS or Adobe or IBM or Intel.
4. Total lack of product focus. When Jobs first started back at Apple, he sat dumbfounded as the other execs attempted to explain the 30 to 40 different computer models they had in their product lineup. More than anything else, Jobs has brought a laser-like focus back to Apple on where to prioritize the company’s resources and people.
This focus is what has brought Apple back from the dead, not the iPod. It actually started with the iMac, then the iPod, OSX, the iTunes Store, the PPC to Intel transition, Apple Retail Stores, AppleTV, and now the iPhone/iPod Touch. There is really no other company on earth right now that has the software, hardware, design, creative, logistics and retail resources that Apple has.
Certainly, some doofus could run Apple in the ground pretty quickly, but Jobs has created a culture of excellence and focus at Apple, as well as fixing the fundamental problems of logistics, product exposure and diversification. When Jobs started, Apple had the Mac, now they still have the Mac and the iPod/iTMS and the iPhone and Apple Retail as major revenue generators. And if AppleTV ever gets a decent movie catalogue, watch out cable companies.
After being back at Apple 10 years, Jobs now has a group of very trusted, bright, creative yet focused people around him, who share his vision and could carry the torch.
Posted on March 5, 2008 at 11:34 pm.
Hi,
Thanks for your detailed response. That’s a very helpful and level-headed analysis as well as great context.
With respect to the Intel comment, I wasn’t grading one technology over another.
The business decision to go with PowerPC was incorrect though granted circumstances made it difficult to choose correctly.
As for the iPod, wasn’t it a result of greater product focus?
One last question – do you Jobs’s successor whoever it may be can knit it all together like he has in past and currently?
KR
Posted on March 5, 2008 at 11:55 pm.
Mark,
I couldn’t agree more that Apple needs to pick the right leader and that person, rightly or wrongly, will come from the confines of 1 Infinite Loop in Cupertino, Calif.
I’m just not sure anyone there can fill the shoes of Steve Jobs.
KR
Posted on March 6, 2008 at 12:04 am.
Hey,
Yes, I agree, that focus allowed the iPod—as well as a series of other highly successful products—to be created, all of which helped to resurrect Apple. Previously, Apple was trying to do so many things that weren’t directly related to the OS, (Pippin anyone?) it wouldn’t have had the time to create the iPod universe, much less the iPhone. Apple’s focus on a world-class OS which is not dependent on anyone else’s software or hardware, has allowed them to thrive.
I believe that Jobs’ successor has a good chance of knitting it all together, as you say, IF he comes out of the elite group that has been close to Jobs for the last five to ten years. When Jobs left Apple the first time, no such group existed—and if they had existed, Sculley probably would have kicked them out as well.
Now if the board gets frisky and brings in some outsider, well then, all bets are off.
Posted on March 6, 2008 at 12:19 am.