A Different Kind of Apple

on August 10, 2016

This week, Fast Company published a series of interviews with Apple’s executives from Tim Cook to Eddy Cue and Craig Federighi and Bozama Saint John and if there was one point that was clear across the board is it’s that Apple is built on the core principle of “making great products” but the way to deliver that greatness might look different from what it used to. This leads many to believe we are dealing with a different company altogether rather than a company that is evolving.

Tim Cook said he does not read all the Apple coverage, which means he is possibly spared the many times the “Steve would not have done this” or “This would have never happened under Steve” sentences appear in a commentary. Aside from the obvious (we actually don’t know what Steve would have done), there is another point many seem to forget — today’s market is very different than it was when Steve Jobs was CEO.

The tremendous success of the iPhone and the consequent inability to duplicate that success has been seen as a leadership failure rather than the fact there will likely be no single product that will impact as many people as smartphones, the iPhone in particular, have done. Steve’s Apple gave us the iPhone so an Apple that deviates from Steve’s must be bad. This is basically what it boils down to for many.

But different is not necessarily bad. Tim Cook has a different personality than Steve Jobs and, as we learned from this week’s interviews, a different management style. We certainly see a more open, humble, inclusive, socially engaged leader that, in my view, has softened, not weakened Apple’s image as a company. As I mentioned, we cannot just look at management and think the Apple we see today has not been impacted by the markets it plays in. Let’s think about some of the things that are different today:
– Smartphones market has capped
– Apple is serving over 1 billion users across its devices
– Apple is present in over 150 markets
– Services grew 19% year over year
– Apple is in enterprise with more than just hardware – IBM, Cisco SAP, the boardroom area in
the revamped stores
– Apple is more vertical than it has ever been: semiconductor, hardware, software, services
– More product categories than ever
– Larger acquisitions/investments: Beats, DIDI
– Focus on new verticals other than education such as health
– Biggest R&D expenditure

Apple is evolving and, in my view, doing it faster than it would have done under Steve Jobs. This is crucial for the long-term play.

Just think how different it is to serve the Mac installed base of less than 100m units vs. 1 billion devices in the overall ecosystem. While you can try and think of everything when it comes to hardware, trying to be as inclusive as possible when you deliver a service or an app becomes more challenging when you are serving so many people in so many countries. To me, this was at the core of the Maps comment made by Cue in the interview:

“To all of us living in Cupertino, the maps for here were pretty darn good. Right? So [the problem] wasn’t obvious to us. We were never able to take it out to a large number of users to get that feedback. Now we do.”

As many indicated, we now have a Beta program for Mac OS X and iOS because of Maps but we also have a Bug Bounty Program. These are instances when being more open makes sense.

Following the interview, people lingered on the “embarrassment” Maps has caused but there were other points made that say a lot about how Apple is thinking and give insights to some of the recent investments or speculations about new directions. Cue said:

“What it causes you to do first is ask, How important is this? We had long discussions at the ET [executive team] level about the importance of Maps, where we thought it was going in the future, and could we treat it as a third-party app? We don’t do every app. We’re not trying to create a Facebook app. They do a great job. We decided that Maps is integral to our whole platform.”

You can see how, in light of this comment, you could explain the Office 365 integration on iPad or how the rumored approach to TV might be with a guide not a TV set or even how the investment in Didi will provide key learning and market opportunity for what is to come.

Another reason why today’s Apple is a distinct variety of the same company rests clearly in the fact Apple remains different in the way it approaches the market and marches to its own beat. While Steve Jobs might have said the reason for that was he knew best, the reality is it all boils down to what the core business is. For Apple, it is to deliver great products, hardware or experiences, and monetizing the high level of engagement the experience generates.

While Wall Street is worried about whether or not iPhone sales will return to growth with the iPhone 7, Apple is also worrying about how to remain a highly valued company for the long run. As Cook said:

“It’s hard to imagine a market defined in units—not revenues—that’s that big.”

Many of these areas offering new revenue opportunitiy will clearly benefit from the installed base of valuable users Apple has built. Users who are highly engaged in the ecosystem and see Apple as a trusted provider.