Can Apple's Haunted Empire Still Make Hits?

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Can Apple's Haunted Empire Still Make Hits?

Isn’t it funny how much of the world has changed thanks to Steve Jobs? As I sit here at my computer using a mouse and GUI, which Jobs popularized while listening to MP3s, another industry he revitalized, I am fascinated by how much this man changed computing. Over a decade ago, my company TMC launched a show in the biometrics space called BiometriTech and another in the tablet space, Tablet PC Summit. Both shows failed because the companies in the industries failed to make products in volumes that translated into marketing budgets which allowed for a successful conference. Biometrics is now a mass-market product thanks to the iPhone 5s and the iPad has made tablets a PC killer.

We also had a show that was very successful for a while called Planet PDA targeted at enterprise buyers – it died off when BYOD and the smartphone came out – another market Jobs revolutionized. A few months back I took the family to see Disney’s Frozen – an amazing franchise which will be worth billions to Disney. Again, this movie was created with the cooperation of the Pixar team, another company Steve Jobs revitalized and later sold to the entertainment giant.

Apple stock trades at a large discount to the market in-part becausehaunted empire.jpg people think the company cannot innovate without Jobs. The issue was addressed recently in a relatively unknown book titled Haunted Empire: Apple After Steve Jobs where the author spells out exactly why Apple is doomed without Jobs – and more importantly has grown so large that it would be doomed with him there.

To be clear I haven’t read the book but one of the most trusted names in tech, Rob Enderle has and he recently summarized the title and discussed his thoughts on TMCnet sister site TechZone360 where he seems to agree with much of what the book has to say. What initially drew him to it was a comment on Amazon which seemed so negative that it was likely planted by someone who didn’t want anyone to read it.

Interestingly, sometime later Apple CEO Tim Cook came out with a statement about the book as follows:

"This nonsense belongs with some of the other books I've read about Apple," Cook said in a statement. "It fails to capture Apple, Steve, or anyone else in the company.

"Apple has over 85,000 employees that come to work each day to do their best work, to create the world's best products, to put their mark in the universe and leave it better than they found it. This has been the heart of Apple from day one and will remain at the heart for decades to come. I am very confident about our future."

 

It is very unusual and I would say not intelligent for Tim Cook to directly take aim at an obscure book that most people would have ignored. Now that he has mentioned it, he has moved the needle tremendously on the interest level in not only the book but on whether the assertion that he lacks imagination and can’t innovate is accurate. Here is Enderle in his own words:

In effect, Apple is haunted by the spirit of Jobs who is no longer there to micro-manage it and it was designed to be micro-managed. But since this design isn’t even viable anymore, it provides a double hit and thus the problems the book is full of.  

One of the key things that clearly came through in the book is that Jobs’ reality distortion field, which is the term both used to describe times when Jobs disconnected from reality and when he disconnected Apple fans from reality, continues to exist in the company.   This existence is detailed in an executive inability to even see the problems that need correcting and thus forms the foundation for why things aren’t getting better. If you can’t see a problem, you can’t fix it.

Ballmer – Cook

While the book doesn’t make this comparison, I’ve followed Ballmer much more closely than I have Cook and I was struck by how similar the two men are. In fact, I think they’d actually get along rather well. Both don’t chase personal wealth, both are sharply numbers focused, and neither is particularly good on stage - even though both have worked hard to be. Both are also decent operational managers but neither has any real imagination or ability to innovate. That similarity doesn’t bode well for Apple either.

Currently in Apple, for the employees, all career paths seem to lead to Google - where the firm is working to solve death (really) as opposed to just coming up with a way to build another phone color. There is actually an acronym for it “G2G” or “Go to Google.” That’s never good.

Now to some of the comments on Amazon – these are a few interesting ones I found:

This review is from: Haunted Empire: Apple After Steve Jobs (Hardcover)
I was curious about the post Steve Jobs era and grabbed this book on release. I don't consider the Steve Jobs biography to be a great book, but I enjoyed the insights into some of the key decisions he made or the people who influenced him.

This book does not do any of that. It has several deadly flaws:
1. It meanders from one random topic to another
2. The author injects their opinion into every detail and tells you how you should feel
3. Several topics fail to connect to the current state of the company

I was compelled to read it from cover to end very quickly. I'm not sure if it was due to a desire to give this book a chance or because I'm a masochist.
 
Amazon Verified Purchase(What's this?)
As a journalist and former colleague of the author who was amazed at the stories she broke about Jobs' illnesses and other developments at Apple, I looked forward to this book. When it arrived yesterday, I plowed through more than half of it. I very much like what I've read so far, especially things about the company's Chinese manufacturing partners and Tim Cook and Jony Ive that I didn't know before. It's clear that an enormous amount of work and thought went into the book. And the main point, that Apple isn't the same without Jobs is unquestionable. Some readers here and elsewhere have complained the book's tone is too negative. Some of them may not have read the full book. I haven't either, but so far it doesn't feel that way.

The criticism I have is that I want to know more about many of the people and developments I've read so far. That's a problem I don't think is the author's fault. I wish more people at Apple and Foxconn would have cooperated with the writing of this book. These people do interesting, important work but they take themselves and their secrecy too far and too seriously. They are in a competitive business but they also have experiences that are worth sharing and that can be shared without harming their work. They fool themselves thinking their silence is power when it often produces skepticism and distrust, even among each other.

There's been quite a bit of noise the past few days about the book. In recent years, it's become more and more difficult for journalists to write books about the subjects they cover without enduring instant criticism in many different venues, including Amazon reviews. Until now, I thought the most intense such criticism was dealt on political reporters and their books. But wow, it is truly dizzying to see the vitriol leveled at Yukari just on the first day the book was distributed. She is not an author who decided to latch on to the Apple "brand" and cash in, as some people have flippantly written here. No other company in technology has grown so fast from such a large base of revenue as Apple has in the past few years. That's something worth deeper scrutiny by a writer like Yukari with the experience of watching it and knowing the people in it.

Finally, for anyone who is part of the story, no book or article or any other type of portrayal of their work comes out the way they would have written it. No doubt everyone at Apple, Foxconn and other companies in this book see themselves and their work differently than it's shown in "Haunted Empire." Even so, Tim Cook's insulting email to CNBC about the book, which followed his refusal to be interviewed for it, is incredibly rude. It's another of the kind of episodes at Apple that the book raises questions about. A smarter, humbler leader would answer some of those questions.
 
Amazon Verified Purchase(What's this?)
This review is from: Haunted Empire: Apple After Steve Jobs (Kindle Edition)
Great book. I couldn't put it down until I finished it. It reminded me a bit of Burrough and Helyar's Barbarians at the Gate. Highly recommended.

The book's biggest shortcoming is, frankly, also its greatest strength. Apple's complete story hasn't been written yet. It is a company in the midst of an extremely challenging transition and we won't know how it plays out for years or decades. But I appreciate Kane's bravery in writing a book that both challenges the conventional wisdom and is full of new and fascinating reporting from Apple's recent history. Some of the vitriolic reviews on this page show the dangers of critiquing a company as loved by its employees and fans as Apple is.

After finishing the book, Kane's thesis -- that Apple must acknowledge the huge changes brought about by the loss of Steve Jobs and quickly adapt -- rings true for me. Others may disagree.

But is it a book worth reading? Absolutely. Brava.

 

Perhaps the best way to get a sense of whether the book is accurate is the author, Yukari Kane who defends her position on CNBC. Also check out this New York Times interview which is excerpted below the video.

Cook is more systematic and analytical. That means that he’ll run a tight ship, and Apple will be financially well managed under him. I’m not sure we’ll ever see his thumbprint on a product, though, because he’s not the type of person to get involved in the minutiae. I could see him running the numbers to make sure that new products are marketable, but he depends on his lieutenants to figure out the nitty-gritty.

One anecdote came up in my reporting that I think really shows the difference in their thinking. I don’t know if there was an official policy, but in the first weeks after launching a product, Apple would often replace damaged devices even if the customer is at fault.

When the idea was first proposed, Steve liked it because he saw how satisfied customers could bring in more business through positive word of mouth. His attitude was, “Hey, we’ve got to make people happy. If we’re spending an extra nickel, it’s O.K.”

What this discussion misses is the Apple ecosystem – (it is worth pointing out I am an Apple investor but if anything, I am typically more critical of companies I have invested in) which is already in-place. In other words, when I want to share photos, it is easier to do so using iOS than with any other device I have found. Users can AirDrop them or use iCloud and place them in specific albums. When a group of people get together and take photos, typically someone will set up an iCloud folder for sharing and the Android and other users will be excluded from partaking.

Likewise for podcasts, iTunes apps, music, movies, FaceTime, iMessage, etc.

In other words, as Apple comes out with new devices and products, the sheer weight of the ecosystem is in-place already and even if products are substandard, they will have the additional advantage of working with existing equipment and services.

Let's also keep in mind that Apple has consciously ceded the low-end of the market where there is little profit to Android. This actually hurts the ecosystem opportunity and may be looked at as a strategic blunder at some point in the future.

I would, have and will continue to argue that the iPhone 5s is substandard. Not only does it not get through the day with its current battery if you are a power user but it is too small. Steve Wozniak volunteered this same thought to me when he keynoted a recent ITEXPO in Las Vegas and I got to spend some time with him off-stage. Specifically he said they made the phone taller but not wider, suggesting this was an error.

The opportunity for Apple is to grow share in the computing market in tablet, phone and desktop/laptop form factors and from there make inroads into other markets such as music services with their radio initiative and eventually a wearable play. Home entertainment is not off the table either; we can expect more effort devoted to this space beyond their TV device.

One point worth making is Apple has innovated without Jobs – it has released a phone with a fingerprint reader which works fairly well, it has a desktop computer that is the envy of power users and the world’s first 64-bit smartphone processor.

mac-pro.png

Sure, I made fun of them for coming out with a plastic phone – which I still think was a bad idea – but there were mistakes under Jobs as well. After all, Steve never wanted the iPad Mini but was forced into the form factor wars by Amazon and others.

If Apple can come out with a few new form factors between the size of the iPhone 5 and the iPad Mini – or for heaven sakes, at least one form factor, I believe we will see a massive surge in the company’s sales (not that they are lacking now). After all, people with poor eyesight – anyone over 40, is a massive market and these people appreciate a larger phone.

Whether Apple will be able to innovate in other areas is unclear to me but we have seen the Pixar team continue to come out with blockbusters without Jobs at the helm. Understanding that Pixar can do it makes it a lot easier to believe Apple will be able to come out with new breakthrough products in the future as well.



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