According to Hoyle...
Apple in the Post-Steve Jobs Era
by Jonathan Hoyle
The economy is down. We have the highest unemployment since 1992, sales are steeply declined,
and companies, even very successful ones, are laying off in record
numbers. Some say that this is the
worst economic crisis since the Great Depression. Whether you buy into such statements or not, most believe
that things are going to get worse before they get better. Perhaps much worse.
And yet, Apple posts record revenues and profits for Q1
It seems very difficult to get a handle on what Apple will
do next. Throughout the 1990's,
all the major prognosticators were predicting Apple going out out business
"in five years". It was
always five years away, whether the claim was in 1990, 1995 or 2000. Even as late as 2002, one columnist
predicted that Apple will voluntarily exit the computer business by 2008.
Yeah, so much for the genius of
Not that the Pro-Mac fan-base fared with any better. With each new product release, some
blogger somewhere speaks of Microsoft now being "doomed" and that
Apple will take over the market, again "within five years". Although Macintosh marketshare has
recently spiked (one in every five portables sold today is a MacBook), overall
share still remains shy of 10% (lower than it was ten years ago during the Mac
clone era of the late 1990's). Hardly
a take-over. Sure Microsoft no
longer holds 90+% of the market as it used to, but it is still the dominant
OS. And it appears very unlikely
that that will change in as short a period as five years.
And as if Apple weren't unpredictable enough as it is, we
now have Steve Jobs taking a leave of absence for health reasons. And what if he doesn't come back for a
while? Or ever, if the unthinkable
were to happen? As we are all
mortal, this is something that must be considered. Can anyone forecast what would become of Apple under such an
eventuality? This (hopefully)
hypothetical is the subject of this month's discussion.
So what makes me think I can do a better job at foreseeing
what is going to happen than others who have miserably failed at it? Actually, I doubt I can do any
better. I estimate that my
predictions about Apple has an accracy rate of about 40%. Not a great batting average, I
admit. However, I know what I will
NOT do: apply conventional wisdom and standard business expectations to Apple's
current situation to forecast their future. People who do this have always been wrong about Apple. (Which is why Apple never went out of
business in any of those five year periods.) I instead will apply my knowledge of the company history,
customer base, and just plain gut feel. (Hey, how much less accurate can that be than from what these other
talking head geniuses come up with?)
The Steve Jobs Effect
Before predicting the effect the absence of Jobs will have
on Apple, we should first consider how his presence affected it. Some people are quick to overestimate
it, even coming out and saying Jobs is Apple itself. Essentially: The Fall of Steve Jobs = The Fall of Apple. Although I would agree that Steve's
influence has been quite profound, it should be remembered that in the 25-year
history of the Macintosh, Steve Jobs was involved in only half of it. Macintosh fanatics abounded throughout
the John Sculley, Michael Spindler and Gil Amelio eras, and most certainly will
continue to do so after Steve leaves. Moreover, Mac OS marketshare reached its highest level during the period
when Steve was still at NeXT, and reached its lowest (~3%) while Steve was in
Having said all this, there is little doubt that Steve Jobs
was instrumental in turning Apple around from near-death to the booming
business it is today. The
master marketeer, Steve was able to create interest and spin a business plan
like nobody's...uh, well, business. Could Apple have created the iPod and the iPhone in the same way under
anyone else? Could anyone else
make them such household names? Pretty darn unlikely.
So, Wall Street sees Steve Jobs as essentially equal to
Apple. When it was announced that
he was taking a leave of absence, Apple stock plummeted. Never mind the fact that its business
remained solid, as evidenced by the record numbers in an otherwise terrible
economy. Never mind that Apple
remains the toast of the town in the tech world. No, what matters is: "What's happening to Steve"?
After all, Jobs brought genius and unpredictability to the
show. Steve took gambles, and won
more often than he lost. His
gambles changed the face of entire markets (including portable music players
and cell phones). And OS X finally
made the Mac the clear winner in OS market.
So Prediction #1: Even with the same numbers and the same profitably, Apple stock price will be
significantly lower without Steve Jobs than under the same scenario with him,
as Wall Street's expectations will be lower.
For the longest time, Apple never got any respect. I remember about 10-15 years ago, my
Windows friends would constantly call my Macintosh a "toy", whilst
their Windows boxes were "serious machines" (despite the fact their
OS was simply a wholesale rip-off from the Mac). I think this lack of respect also played into the belief
that Apple was going out of business in five years attitude. Whenever I'd hear that suggested, I
would remind my friends, "You said the same thing five years ago, and five
years before that, yet Apple is still in business". My friends just laughed and said,
"Well, I'll probably say it again five years from now."
Notice that no one is saying it now.
Competitors take Apple very seriously today. Even a behemoth like Microsoft targeted
Apple when it launched its ill-advised $300 Million Gates/Seinfeld ad campaign,
as a response to Apple's Mac/PC ads. These Microsoft ads were so poorly received that they were replaced by
the current "I'm a PC" ad, again to combat Apple. These ads were much better and could
have actually improved things for Microsoft, if it weren't for someone leaking
the fact that Macs were used in creating these Microsoft ads. But I digress...
With Steve gone, will Apple go back to being the Rodney
Dangerfield of tech companies? I
don't think so. If nothing else,
the iPod and iPhone have made Apple a very powerful mover in the business
world, and those products are here to stay, at least for the foreseeable
future. No matter who is Captain
of the ship, Apple will get its respect.
Prediction #2: Even
with Steve gone, pundits will still admit that Apple will still be around five
The Customer Base
Apple's customer base is very loyal. Always has been. Mac users in particular are known for
their zealous, near religious, fervor. And it should be remembered that the customer is not just due to Steve
Jobs, as Mac-o-philes have been this way for decades. But there remains no question that Steve Jobs has won over
the Mac user base. Despite this
though, there have been times in which Macintosh community has seen Steve
misstep, causing Steve to change direction.
Heretical sounding? Well, true none-the-less. Consider some of Steve's less brilliant decisions:
- The Round (Hockey-Puck) Mouse. Yeah, remember that one? That pretty boneheaded move took place not long after Steve Jobs
returned to Apple. Any simple
user study would have disabused him of any delusions regarding this
product prior to releasing it. It took Steve three (friggin!) years to reverse this decision, and
only thanks to the users (voting with their dollars to buy other vendors'
mouse products) to force his hand.
- Rhapsody. At the 1997 Apple Worldwide
Developer Conference, Steve Jobs attempted to kill the Mac OS and replace
it with the NeXTStep operating system (called Rhapsody). All Mac developers would have to rewrite everything
from scratch. A huge
developer revolt took place, forcing Apple to switch gears and instead
create a new operating system: Mac OS X, which combined the best of the
Mac OS, NeXTStep and other new innovations.
- The G4 Cube. This little painful
item was overpriced, incorrectly marketed and had no real user base. It was display-less and
non-upgradeable, a combination that didn't appeal to the high end user it
was targeting. Cancelled and
quickly forgotten, it was replaced by the far more successful Mac mini.
What is my point with regard to these three examples? It's not that Steve Jobs isn't
brilliant (because he most certainly is). It's that the Mac customer base is extremely strong and loyal, and a
mistake by any CEO (even the great Steve Jobs) will result in a very loud
response. Hey man, we Mac fanatics
are not afraid to express our opinions. The above three failed products are proof of that. We are not simply sheep following
blindly (as many PC pundits like to suggest); stupid decisions will cause user
reactions, regardless of who is CEO.
Prediction #3: The
next CEO will be carefully scrutinized with each product announcement. Stupidity will have its
consequences. The high
expectations people have had with Steve Jobs is likely to make any mediocre
rollout appear disappointing in the eyes of Apple devotees. Advice to new CEO: It's going to be tough out there. Better wear a cup.
I don't care what anyone says, Apple's most important
product will always be the Macintosh. Yes, I know iPods outsell Macs by an order of magnitude (they should,
they're an order of magnitude cheaper). And iPhone contracts are a huge revenue source. But in the end, it is development in
Mac OS X which drives the technologies of everything else Apple has.
So what impact would the departure of Steve Jobs mean for
the Mac? In my opinion, not as
much as you might think since Steve has been "gone" from the Mac for
the past 2-3 years now. Since the
beginning of the iPhone's early development, Jobs had pretty much delegated Mac
development efforts to others. One
merely has to compare the last few WWDC and MacWorld keynotes with previous
ones to see what I mean.
highly controlling Steve Jobs had always been on top of everything to do with
Mac technology. Every keynote demo
was timed for effect and just the right words were used for marketing. Even as late as 2005, his last minute
decision to leave IBM's G5 processor behind and switch the Mac architecture to
Intel was masterfully marketed. Compare that to WWDC 07's keynote, in which he followed notes written
out for him in his Mac demos, and WWDC 08's keynote, in which skipped the Mac
Sure the very high-end movements have to be cleared by him,
but he appears to be happy letting Bertrand Serlet and Scott Forstall make the
day-to-day decisions. Unless the
next guy is also a micro-manager, I believe that things will continue in the
And what will that course be? One important aspect I believe has to do with its MacBook
line. Although overall Mac sales
climbed this past quarter, Mac desktops fell a whopping 20%! It was fortunately made up for by a
staggering 30% increase in portable sales. As time goes on, I believe this trend will continue, and
MacBooks will soon become Apple's most important product. Gone will be the days that Apple can
simply just poor more power into their tower machines. They will need to keep their portables
very fast and very light.
Prediction #4: Mac
OS X, without Steve Jobs, will emphasize performance improvements over glitz
and keep one step ahead of Windows. I am sure there are still a number of really cool new features started
under Steve which have yet to make it out of the pipeline and into our hands
yet, but an emphasis in cleaning up the features that already exist will be as
Apple without Steve Jobs is almost impossible to
imagine. He has single-handedly
brought Apple back from life-support and placed it ahead of the pack in
technological wizardry. Added to
that Microsoft's blundering of Vista, Apple is actually sitting pretty well
right now. Desperate times had
called for Jobs to perform desperate measures, but the times are no longer so
desperate (at least not for Apple). Steve has done a magnificent job, and his successor should hopefully be
ready for the transition.
Final Prediction: Apple without Steve Jobs will be more
about evolution than revolution. That's not to say there won't be new insanely great products. But the volatility of such dramatic
changes for Apple will probably cool for a while. And although the fun of revolutions may be missed, maybe a
little while of evolution will be a good thing after all.
Coming Up Next Month: Software Development Jobs in a Down Economy! See you in 30!
To see a list of all the According to Hoyle columns, visit: http://www.jonhoyle.com/maccompanion