These last two weeks have been, well, incredible. As amazing as last week’s HP TouchPad news was, the fact that Steve Jobs is stepping out of the CEO Job at Apple means the end of an epic age. What also just seems incredible is the number of people who say that Apple will largely be unchanged by the move, when it seems clear to me that Apple can’t avoid change.
Now, to be clear, I do understand that forecasting anything but a massively glowing future for Apple, particularly when lots of folks are doing exactly that, is dangerous. But I actually think that is our job as analysts to actually analyze and not just tell folks what we know they want to hear.
To start, I do think Apple’s strong growth is assured through year’s end. The new carriers alone (Verizon’s iPhone 5 ramp, Sprint, T-Mobile) will carry the company for that long. After that, say about a year from now, I expect we’ll start to see erosion. Let’s look at three changes — internal process, external product, and competition — and how they will change Apple over the next 12 to 18 months.
By the way, if you get that I’ve been covering changes like this for a few decades in depth, you’d be partially right. The other part is working at companies that went through them before that.
Changes within Apple
This is likely what makes me the craziest about folks who say Apple won’t change. They seem to understand that Jobs is a micromanager, and many will actually cite the 313 patents surrounding critical features and products Jobs personally drove, yet still conclude that his departure will have no impact. The same people seem to know about the large number of key employees who have already been leaving in anticipation of Jobs’ departure (a lot of folks had turned down lucrative offers to be near a legend).
Steve Jobs is a micromanager. Now, if you have ever worked for an executive micromanager, you are already likely on the same page I am, but if you aren’t, here is what we are talking about. Any issue, small to large, that the micromanager feels is important (and at Apple this ranged from carrier and supplier deals, to yelling and firing first-line employees) Jobs personally got involved in and made critical decisions. If a supplier shorted a part, or couldn’t make a change fast enough, Jobs himself called and scared the crap out of the poor guy. Buildings were known to take early lunches, go home early, or just run for the hills to be gone when Jobs dropped by when he was pissed off. There is actually a term at Apple called “Getting Steved” (it amazes me how many people haven’t read his background) that refers to his practice of firing folks on a whim, and an inside joke that equates the number of times you’ve been fired by Steve with your status at the company. Three or more times is high status. Like him or not, he sure as hell had a huge footprint at Apple.
So the guy has the final vote on almost every product decision, touches almost every vendor, and regularly wanders around and personally scares the crap out of virtually every employee. Actually it goes beyond that: At Apple, Steve Jobs is consumer testing (that’s a quote from the above background), or at least was. In short, we can argue about what the change will be, but there is no argument that there will be a change.
In process, the change will likely take three forms. One is that decisions across the firm may go more quickly because Jobs is no longer in the loop. That speaks to agility. However the evaporation of fear means that drifting from the “what would Steve” do decision criteria comes with far less risk, and will be increasingly attractive. Finally, suppliers who didn’t dare disappoint Jobs will be far less afraid of anyone else, and Apple shortages are more likely.
Changes in Apple’s products
As a lot of us have pointed out , Apple has about a two-to -five year product pipeline that Jobs has blessed. However, the farther you get from the initial decision to build something and the closer you get to actually building it, the higher the number of interim decisions, ranging from product design to user interface. While most would have had Jobs’ unique touch, now none will. These decisions would have been made anyway, but now they’ll be made by someone who isn’t Jobs. Unless that person can somehow act exactly how Jobs would have acted, the result will be increasingly different depending on how many un-Jobs decisions shape a product before it reaches the market.
Jobs has always served as the balance point between engineering, design and marketing. Generally, firms favor engineering, and underfund and understaff design and especially marketing. This suggests Apple will drift in the same direction. Imbalance between these departments is pretty much exactly what doomed the vast majority of non-iPad tablets, and as staffing changes occur at Apple, that behavior is likely to spread in Apple.
Finally, Jobs was great at seeing the underappreciated ideas of other companies and out-executing them. From Xerox, where ideas for the Mac came, to Portal Player, where the iPod was born, to LG, where the idea for the iPhone came from, to Bill Gates, who created the idea of a tablet PC, Jobs saw the potential that others missed. That is a unique skill, because in most firms, the “not invented here” attitude rules. Apple will lose it when it loses Jobs.
Expect feature creep, and like Microsoft, either an increasing number of failed products, or endless repeats of existing successes. Maybe a bit of both.
CEOs are scared half to death of Steve Jobs because they just can’t compete with the guy. As a result, they either avoid bringing a true competitive offering to market, underfund the competitive offering to limit the loss, or avoid Apple’s market altogether. Jobs’ departure makes it appear like Apple is beatable, and firms are already looking at technologies to do just that.
Recall that you couldn’t even get funding to run against Microsoft until they lost to the DOJ, then suddenly the money opened up. Well, Apple has been pretty much in that same place; no one wanted to take Steve Jobs on because losing is embarrassing. But Tim Cook just doesn’t seem that scary, evidently. Kind of like rolling against Batman isn’t something you’d like to do, but Robin seems more of an acceptable risk (I say that knowing Robin could easily kick my butt).
In the next 12 months, we have Google’s Android Ice Cream Sandwich, Intel’s Ultrabooks, and Microsoft Windows 8 on the horizon. All have Apple in their headlights, and two of the three come with $300-million marketing budgets. Everyone recognizes that there has been no one — in Apple or outside — that could launch a product like Jobs does, and now he’s gone.
Forecasting change, not failure
Does this mean Apple is going to fail? No, I’m not that foolish. It remains a strong company with strong products. But it was an invulnerable company that couldn’t fail, and that changes without Steve Jobs. Look at Disney without Walt, or more recently, Microsoft without Bill. Both firms were staffed well; Disney with a handpicked team, and neither of those CEOs, even if they wanted to, could micromanage those empires. Yet within 12 months of them stepping out of day-to-day operations, their firms changed, and not for the better.
A company is like a team, and top companies like Apple are more like precision machines: You can’t cut out a critical part and expect there to be no change. Inside, people will start seeing the changes immediately; outside you’ll see them if you look closely at the next launch (iPhone 5, assuming Jobs doesn’t pull a Gates and show up). The material changes likely will come in 12 to 18 months, which is how long it typically takes for the changes to be large enough to be impossible to hide.
Anticipating a new CEO or a new leadership team
When those changes bubble to the surface, we’ll see if Tim Cook survives. Steve Jobs isn’t anywhere near as tolerant as Bill Gates is of Ballmer, because Cook and Jobs aren’t that close. Cook can’t buy vision any more than Ballmer could fill Gates’ shoes with a subordinate Ray Ozzie. He’ll have to build a new team. The longer it takes to figure this out, the deeper Apple’s fall is likely to be. We’ll revisit this when Apple either bites or misses this bullet. Right now, Apple and Cook are in denial. That’ll change. I’m convinced this problem can be avoided; I’ve just never seen a company like Apple avoid it.
In the end, I’ll leave you with a quote from Larry Ellison, one of Steve’s closest friends and an ex-Apple board member.
“The Mac is the expression of his creativity, and Apple as a whole is an expression of Steve.”
Apple’s success is largely because Apple and Steve are part of a whole. Apart, both are likely broken.
Guest contributor Rob Enderle is the founder and principal analyst for the Enderle Group, and one of the most frequently quoted tech pundits in the world. Opinion pieces denote the opinions of the author, and do not necessarily represent the views of Digital Trends.
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