From Thinking Outside the Boxe’s Sydney Correspondent
For the best part of 35 years, the singular vision of Steve Jobs took Apple from a company that made some of the world’s first PC’s into a hugely popular global brand that has changed the way we interact with technology through the introduction of revolutionary products such as the ipod and iphone. Indeed it is hard to imagine any other company that has ever produced such devotion among consumers with people lining up overnight to be among the first to get their hands on the latest phone. When looking at Apple and asking where it is headed it is important to think of it more of a brand than a company. This has been the key to it’s success in the past and holds the key to its future. With Jobs’ death, Tim Cook has inherited the position of CEO and is in the unenviable position of trying to fill Jobs’ sizeable shoes. Of course there will never be another Jobs, so can Cook maintain Apple’s success in the long term. With profits slowing that question is being asked by more and more people.
On April 23, 2013 Apple announced second quarter revenue of $43.6 billion and net profits of $9.5 billion. These are profits that many CEO’s would never dare dream of, let alone complain about, but they represented a fall in profits for Apple, and for many it appeared to be the first tangible sign that the company was entering a period of decline. The facts remain however, as more than one commentator pointed out that growth cannot continue forever as this is prohibited by market size, and Apple is a company that definitely occupies a position in the market that is unique.
So is this slide in profit really a problem? In itself, I would argue that it is not in itself much more than a blip. Barring total incompetence, Apple is not a company that will face real financial difficulties anytime soon. As Matt Warman wrote in The Telegraph, “…denying its strength… as a cash cow, is simply childish”. Many commentators are wondering what Apple is going to do with all that money. Unlike some of its competitors it is yet to splash out on large acquisitions, in the way that Yahoo, Google, and Facebook have all done in the past year or so. Critics of Apple’s strategy point out that while it has focused on incremental improvements of its own products, other companies have been playing catch up.
The real key to understanding the future of Apple is to realise that it is a brand first. Steve Jobs, for all his well documented weaknesses as a leader was able to create products that were so amazing and easy to use that it is not an exaggeration to say that he single – handedly revolutionized the way we use technology. Following Jobs’ death Apple hasn’t released any new products as such, however, even the incremental improvements make newer versions of old products absolute must haves for Apple devotees.
As a brand, image is everything. I don’t think that incremental improvements will satisfy consumers forever. People expect to see new products, and soon. As Bobbie Johnson observed in the Guardian, “a smaller iPad might be popular, but it is not world-changing”. There are many people who believe that Steve Jobs left Apple with some new designs before he died and that so far the company has held these back. When the second quarter results were announced Tim Cook confidently stated that something big was not far away but when pushed to provide more detail could only say, “We don’t want to be more specific, but we have some really great stuff coming in the fall and across all of 2014”. This vague promise is something might keep the financial market and consumers happy for now but expectations are high and if Cook fails to deliver, the Apple brand will take a real hit. Personally I’m not confident that Jobs did leave much, and even if he did it can’t have been enough to sustain Apple’s popularity in the long term.
To survive and flourish in the future, Apple must innovate. It is not enough for a company to hope that past successes can sustain it. Not when the competition is working hard to catch up. One of Apple’s problems is its sheer size. It’s hard to be at the forefront of innovation when every decision has to be approved by multiple levels of management. This is where Jobs was such an asset. His inability to work with people meant that the products that Apple produced only had to meet the expectations of one person, that is, Jobs himself. There is also the possibility that Apple has so much money that it doesn’t know what to do with it; and so much shareholder expectation that executives feel they can’t afford to make a mistake. So while Google is busy making automated cars, and Yahoo is buying Tumblr, Apple appears to be treading water.
Like Ford and other iconic companies, Apple’s fortunes will wane. Without Jobs’ vision it will never again deliver products that are truly revolutionary. Apple does have one thing in its favor that can ensure longevity as a business, that is, it’s huge amount of cash. By innovating and making smart acquisitions Apple should survive long into the future. The popularity of Apple’s brand will fade as its current devotees get older and develop priorities that are more important than the latest phone. The young children of today and the tweens are unlikely to ever be as excited about Apple because they will use technology in ways that few of us can probably even conceive.
References and Further Reading
http://www.intechnology.co.uk/blog/internet/what-does-the-future-hold-for-apple/ http://www.apple.com/pr/library/2013/04/23Apple-Reports-Second-Quarter-Results.html http://www.guardian.co.uk/commentisfree/2013/mar/09/debate-apple-out-of-juice http://www.guardian.co.uk/commentisfree/2013/jan/24/apple-new-microsoft-steve-jobs-cool http://www.forbes.com/sites/gregsatell/2013/04/24/why-apples-future-is-uncertain/ http://www.macrumors.com/2013/04/23/apple-optimistic-about-future-lots-of-surprises-in-the-works-for-fall/