Apple brouhaha

There are a few things you can count on when working at Apple.  One is that your first day back from vacation will be so overwhelming that you won't even be sure that you ever went on vacation by the end of the day.

The second is that Apple's stock price bears no relation to the products being delivered.

The third is that at any given time, Apple has a fair number of experienced people at least in the sales force whose thoughts mirror the sentiments of the tee shirt to the right.

First off Apple is one of those companies where getting the information to do your job can often be a real challenge especially if you are in the outer provinces otherwise know as the field.  Even getting out of the informal information flow at Apple for a few days can really make your job a lot more difficult.  Internal communication is not one of the company's strong points.  There's a key Apple cultural factor behind this.  Knowledge or access to knowledge is power at Apple.  Information is jealously guarded.  Power flows from secret information.

There lots of talk on the Mac sites about some problems with Apple products. There's talk of delays to new iPods. Then there's the potential scandal of Apple executives playing with their option dates.  This is all emotional stuff which has an impact on one of the most emotionally charged stocks around, Apple.

People should not be surprised.  I was not alone in writing about "The Apple bubble" in stock prices.

Analysts have been saying that Apple is going to face challenges in the iPod space since the iPod came out. 

As to Apple's executives, anyone who has been close to the company has to have been suspicious about some of the trades that the executives made. 

Compensation at Apple has been managed for a long time based on who you are, not how well you do.  I wrote about it at more length than anyone but an Apple sales employee could care about in "Whacky Numbers."  It was often discussed among Apple employees that it was an amazing coincidence that the executives and Steve's buddies always managed to sell their boat loads of options at the best time.

Perhaps this is just the American way or at least the American way in technology companies.  I know we joking referred to Apple's finance department as the gang that couldn't count, but somehow even the most incompetent of Apple executives always ended up millionaires.

One of things that is sometimes mistakenly assumed is that Apple success is because of great management throughout the company.  That is about as far off base as you can get with an assumption.

Apple's recent success is based on some great ideas, which means great products, and the fact that it has been able to deliver them in quantity without completely screwing up.  There's a very thin bench at Apple, and then there's Steve.  The thin bench is inevitable in a company where the number of people who can actually make a real decision can be counted on the fingers of one hand.

The real problem with Apple is not that it's stock is down 41% from its 52 week high.  The real problem is that the company hasn't been structured for sustained success.  While Tim Cooke, may well be an operational genius, I have serious doubts that he could fill Steve's shoes on stage or in product design. So where does Apple go after Steve.  "Trust us, we have a plan," might work in US conservative politics but it rarely works in the stock market.

Sustained success requires a different culture than Apple's.  Apple is a home run culture.  If Apple can
hit a home run often enough, the company assumes things will be fine .

That's because they have the most loyal customers in the world, and to be frank, in spite of everything I've said, the product side of Apple continues to churn out some of the best designed stuff in the world.  That's more of an indictment of the competition than anything.

I do credit Steve's uncompromising attitude as having a very positive effect on product development and the exact opposite effect on most of the rest of the company except the overcompensated executives.

None of this means that Apple's products aren't likely the best and most secure that you can buy in the computer world right now.

More and more people seem to agree with that assessment every day.  I fully expect Apple's market share to grow.  Here I am, an employee who was let go for questionable reasons after nearly twenty years of tremendous success at Apple. I've bought three Apple computers in the two years since I left Apple.  You can't buy that kind of loyalty.

I'm typing this post on my new MacBook which, aside from some ghosting of the cursor, is a computer that I absolutely love.  It's one of the best values in a computer I've ever seen.  Lots of people agree, and some of them are new to the platform.

An Apple employee laughed at me today when I said that I thought Apple stock might be a buy perhaps in the thirties. He doesn't think it could fall that low.  We'll see who is right. Apple stock often defies logic.  I believe the price could go into the thirties or lower not because the products aren't great, but because the company isn't a great company.

You need a company firing on all cylinders to be a sustainable success.  Apple's product and software engines continue to create wonders which are pleasure to use.  Yet the rest of the company has some rough spots.

The support the company provides to end users, system administrators, and to its own field people leaves much to be desired.  Also in the end Apple is just too greedy. They want to milk the maximum amount of money out of the relatively small group willing to put up with Apple and pay Apple prices.

Just look to the lack of upgrade prices on every piece of Apple software.  I'm not saying that most of the software (iWeb being a notable poor exception) isn't some of the best every done, it just needs to have upgrade pricing.

Apple could treat its loyal customers better and be more successful because of that, but it has chosen another road, one which often leads to some frustration in spite of the wonderful products.

Instead of secrecy to build buzz, how about wide spread testing to build quality and a better user experience for those willing to gamble on the dot zero release of the operating system.

I think the best example of the real Apple is the recently released Educational iMac being pulled from individual education sales. And that in the end is the really sad part about Apple.  The product was so successful that it might have cost Apple some margin. It was selling too well.

Imagine how iMacs you could sell to the general public at that educational price.  Yet to do that would violate the Apple maxim of maximum profits from a minimum of people with the least amount of effort.

It's not that Apple's stock price has fallen, it's that the company could have been so much greater with a different style of management in the non-product design part of the business.  Success has more dimensions than just profit.

Maybe Steve should check out the new Fortune article, "Tearing up the Jack Welch playbook."

Then again it's all brouhaha in the end.

Comments

[Jim]

In my opinion Apple is playing the wrong game. They like to think of themselves as a hardware company, but since they have moved to the Intel chipset the line of seperation between Dell and Apple is really blurry. I don't think Apple's hardware is worth the price. Sure OS X is great and if it ran on my Dell Latitdue 820, that would be great. But for Apple to step and play in the software business they would really have to support the enterprise space, and that's not going to happen. Mac market share isn't really going to grow in my opinion. People just don't care that much about thier operating system and that only helps Windows keep it's footing. As we move more and more towards the internet based apps and services who cares what the PC runs?

[ocracokewaves]

Many of us have struggled with the same issues. I've written at length about Apple's lack of commitment to the enterprise space. I also don't see that changing.

I do think Apple's biggest opportunity is setting OS X free, but they seem to love the proprietary link between hardware and software, so I also have my doubts that we'll ever see legal copies of OS X running on anything besides Apple hardware.

I've written on the Internet hosted app revolution, and I agree with you there also.

That article "How much longer will operating systems really matter, even to Apple?" is available at the following link.

http://viewfromthemountain.typepad.com/applepeels/2006/02/how_much_longer.html