Applepeels

Apple's Sincere Interest in Security

Apple has come out with a strong statement about privacy.

Our commitment to protecting your privacy comes from a deep respect for our customers. We know that your trust doesn’t come easy. That’s why we have and always will work as hard as we can to earn and keep it.

Tim Cook
CEO, Apple Inc.

If you read the whole statement, it sounds great as long as you are a customer of Apple and not just an Apple employee like many of my friends.  Now I will admit that for much of the nearly twenty years that I was at Apple I worked as if I had very little personal life.  Apple, the company, took up an oversized portion of my life.  My history at Apple included far too many weekends and nights when my family and children saw little more than the back of my head.  Apple as one the leading early technology companies worked hard to build that culture of long hours for the company.

I was well paid for my time at Apple, but I think it is worth asking one question.  What would Apple do if the company believed that information about a leak about Apple products was on a locked iPhone?   If Apple is as concerned about a person's right to privacy as they would have us believe, would they leave it alone?

No one should forget that Apple is one of the most secretive companies on the face of the earth.  I well remember when the iMac was released.  I was the ranking Apple manager in the Apple Reston, Virginia office.  The boxes of literature about the iMac showed up at the office with the dire warning that if they were opened before Steve spoke, that people would be fired.

One of my favorite examples of Apple's zeal to find any and all leaks happened at FOSE in 2001.  A reporter for FCW published a story, Apple Not Making a Federal Case.  In it he said "To the obvious frustration of the federal team members, they were prohibited from speaking for this story."  The witch hunt that went on for the obviously frustrated federal team members was impressive.  I was questioned multiple times. I knew who made the comment and laughably he was someone on the NEXT team. I did not give him away because he did not say anything and he was as dedicated an Apple employee as you could find.  He is still at Apple.  I hired him a year or so after the FOSE event as the NEXT team started to vaporize.

It can easily be argued that Apple was just protecting its business interests, but you can only say that with a straight face if you never worked at Apple.  We had many executive briefings at Cupertino where you reached a point in the briefing that all of Apple's field sales people would be asked to leave the room as the Apple executives told customers things which the field sales people were not permitted to hear.  Imagine how easy it is to be an account manager and your account knows more about the product you are selling than you do.  I guess trust is hard to earn since I had employees who had worked at Apple for over twenty years that were asked to leave the room.  Again some of them are still at Apple.

It was pretty clear that Apple executives did not trust their own employees to keep a secret.  Perhaps you might think my employees weren't trustworthy?  Many were ex-military and had clearances before coming to work with Apple.  The reason often given as to why Apple would not work towards getting clearances for our team?  Steve had some questions that he did not want asked.  That's fine also but we were tasked with selling to the federal government and often it felt like we had one or both arms tied behind our backs.

I also knew some of the folks in Apple's security organization who were tasked with tracking leaks at Apple.  All emails were fair game.  We always assumed that Apple read every email that we sent.  We did not know any secrets to leak and often joked that we got our product news from MacSurfer.  I will never forget the Friday executive briefing we had at Cupertino with a NASA CIO.  He complained bitterly that you could not connect an Apple display to the Powerbooks that he was deploying.  We trotted out the Powerbook product manager who did a great presentation but would not touch the question about hooking the Powerbooks up to our displays.  The next Monday Apple rolled out a Powerbook with an Apple display connector.  Late that afternoon I got a priceless tongue in cheek email from the NASA CIO.  He said if he had known how fast an executive briefing could get product changes, he would have scheduled one much quicker.

Perhaps the most interesting example came as I left Apple. Now Apple had no employee handbook, and every employee that I knew had personal email accounts on their Apple laptop.  As the federal team, we needed to have digital certificates for our email to communicate with our cusotmers.  With that came the ability to encrypt emails.  If you are a technology driven person, you play with technology.  I had a friend at a Pennsylvania college who also had a digital certificate so we often encrypted messages between us just because we could do it.

When Apple asked me to hand over my laptop, they generously let me remove my tax files and personal correspondence.  I provided them with the password to my computer and the key to my Apple email account so they could see all the email there if one happened to be encrypted.  However, then Apple demanded that I provide them the key for the personal email account that I used mostly for communication with my friend in Pennsylvania.   I am sure there were employee emails there because it was not unusual to email my personal email account on the weekend if I didn't answer my Apple one.  I at first resisted just on a matter of principle, but Apple threatened to withhold my vacation pay and severance.  I finally gave them the key, I had nothing to hide, but it has always bothered me that I was forced to hand over my personal email key.  I had paid for the key myself. My biggest worry was that once Apple had my key that they could send emails as me. Of course I revoked the key as soon as I got to another computer and then I got a new key.

That was nearly twelve years ago. The person in charge of sales at that time, Tim Cook.  I am sure that given what I have seen since then, I would never keep any personal files on a company computer.

So please pardon me if I am a little skeptical of Apple's interest in preserving the privacy of anyone.  The sincerest held belief at Apple is making money from selling products.  That's is fine, I have nothing against Apple making money because they make some very good products and I use one daily.  However, let us not put Apple on a security pedestal without asking Tim if he would try to break into an iPhone if they thought someone at Apple was saying something the company didn't want said.  My guess is that they already have a way to do it.

My personal take on the whole security issue is that if a judge can be convinced to issue a search warrant, my whole house gets searched including my computers.  What makes a smartphone so special that potential evil can hide on it undetected? Granted we live in a country with remarkable rights of free speech and others are not that lucky, but a locked iPhone is not going to slow most repressive regimes.  They just make up the evidence anyway.

If you want more details on my life, click this link.  If some some first hand Apple history appeals to you, read my book, The Pomme Company.

Apple's Big Misstep In Education

I am not surprised by the recent articles about Google unseating Apple in the classroom.  Back in the spring of 2013, I wrote an article, It is not the Pixel that should worry Apple.

It could be argued that Apple's business has been built on education and education is still a key market for the company.  The iPad, iPod Touch, and iPhone are the current hot products for Apple and in general are well received in the education market. However no product stays at the top in education forever and Google attacking Apple's education pond is a much bigger problem than Google coming out with an arguably over-priced Chromebook (The Pixel).

I come at this as someone who spent about half of my nearly two decades at Apple selling to the education market.  Back in the last days of the Apple II, I made one of the largest single purchase order sales of Apple IIes.  It put an Apple IIe in every fifth grade classroom in Nova Scotia.  I went on to be higher education account executive of the year in 1992 and then led Apple's most successful higher education team over the five years that Apple treated higher education as a separate market.

I got ripped out of higher education during one of Apple's many reorganizations in the mid-nineties but education stayed close to my heart.

For years Apple believed in the power of computers in education to create consumers of Apple technology.  We used to take great pride in higher education that we sent college students home every Thanksgiving with full instructions as to what their families needed in the way of computer technology.

In the dark days of Apple, when it was hard to find a decent reseller of Apple products anywhere, you could discover many wonderful places to buy Macs on campuses well before Apple Stores ever showed up at the mall.  Apple at the time was a real partner with campus resellers.

When I was director of federal sales at Apple, I can remember being flown to California twice to take part in education briefings.  Schools in the period just after 2000, were worried that using Macs to teach their students would make them ill-prepared for a career in the business world.  My job was to tell them about all the successes that the federal team was having at NASA, NIH, and the many federal labs. The not so subtle message was "Do you want your child just to learn how to use Microsoft Word or how to think like a scientist?"  It was a powerful message and well received by many schools.

Apple is changed company since those days but Apple is still about convincing you that you need the next glitzy device.  At Apple I heard Steve Jobs say many times that we were not an enterprise company but rather one that sold products that are sometimes very useful in the enterprise.  He often followed that message with a comment about the heart of Apple being education.

So what happened?  It would be easy to say that Apple became enthralled with its own gadets and maybe that is part of it. However, I think it was a much more subtle change and I have to put the blame on Steve Jobs and not Tim Cook. Tim Cook might be guiding the good ship Apple, but Steve Jobs put it on this course.

One of the biggest things that changed after Steve came back was how Apple interacted with its higher education and large business customers.  There were changes with the K-12 customers but perhaps not so dramatic.  If you were at Apple in the early nineties, you would probably agree that Apple and many of the thought leaders in higher education agreed that computing had the power to transform education.  At one time Apple invested in many higher education projects.  Apple also listened to higher education customers and worked with them to deliver exactly what their students needed for a college computing environment.  There was a tremendous synergy between Apple and its higher education customers.  We gave them special pricing, told them what we were going to do before we did it, and often protected them from their own mistakes.

Much of this changed when Steve came back.  The first to go were customer meetings with publishing professionals.  Steve did not enjoy customer meetings when he was not on a stage.  While the higher education meetings continued, it was clear that Apple was not listening seriously.

The Cupertino briefings kept going for business, higher education, and K-12 customers but the amount of useful planning information that came out of the meetings declined.  It was not unusual for Apple to pay the way of some K-12 executives to come to a Cupertino briefing but the true education partnerships were gone.  However, the briefings also brought out another change that was close to Steve's heart.  Apple sales people were excluded from customer briefings when non-disclosure information was discussed.  Apple would often tell customers something that they were unwilling to tell their own sales people.

That might seem fine on the surface since no one likes sales people, but when you are company such as Apple which in essence walls itself off from its own customers except for the tiny scripted interactions that take place in an executive briefing, you need consistent, reliable feedback from your sales people as to the directions that customers are headed or the issues they need solved.

By not trusting its own sales people and giving up on customer advisory boards that often fueled Apple's own imagination, I believe Apple has become disconnected from some core elements of its customer base. Having some arrogant, perhaps even toxic sales vps has not helped Apple with its education customers. One of the worst ones is gone, but I suspect people are still trying to repair the damage that he did.

The second thing that I believe hurt Apple is the inability of the company to get web services right.  While today's iCloud is better than it was, it is way too confusing compared to Google's Drive and Docs which just keep getting better and better.

The web has been an afterthought for Apple for as long as I can remember.  Your web data has often been tied to a particular device just like your iPod.  I remember a strong push from some of us in Apple's enterprise groups for a home directory that would work from USB thumb drives. I actually saw prototypes working but Steve shot it down because he thought people would screw it up.

Google has always abstracted the data from the hardware, Apple has always tied the data to a device in the hopes that you will buy a new one.

You can use Google Docs from just about any device including Macs of all stripes.  Just try using Apple's cloud services from an Android device. Of course I have found Apple's cloud apps are often hobbled like the inability to do notes in Pages or presenter notes in Keynote.  Actually you cannot even upload files from an old Mac to Apple's own Cloud drive.  You have to use DropBox.  How many schools have you visited where old Macs and in fact any old computers that they can find are part of their educational computing program?

While Apple was diddling around with the complexities of NetBoot, difficult to manage one to one laptop deployments and trying to convince educational customers that first the iPod, then the iPad was the greatest thing for education since chalk, Google went out and solved some real customer problems and gave educational users a way to use computers without a lot of hassle.  They also gave them a keyboard, a way to collaborate, and they made it very inexpensive.

Apple makes very nice devices.  On Black Friday, my wife and I were in Best Buy.   I wanted her to have a look at a MacBook.  Since I work for a company that uses Macs, I thought it would be nice for her to get a Mac so I would have one in case I needed to edit some Pages documents when we are traveling (and yes I have used Pages on the web).   She spent some time with a MacBook Air and then went over and tried a Chromebook.  Her question to me, "Why would anyone with basic browsing and email needs spend more than three times the money on a MacBook?" I had no answer.

For education customers the question turns out to be, "Why would I spent double the money on an iPad that doesn't meet the needs of my students as well as a Chromebook which is much easier to manage?"

It is a good question and most educational institutions have figured out the answer as we can see from the education sales figures.

That is it from the Crystal Coast where being on the beach is more attractive than being in Best Buy on Black Friday or being an Apple education rep at any time.

Is The Enterprise In Apple's DNA?

Reading a sampling of this week's articles about Apple heading into the enterprise brings to mind Yogi Berra's famous comment "It's like déjà vu all over again."  As one Apple employee told me, we never stopped going after the enterprise.

There is a grain of truth in that as I will explain later, but if you read a few of this week's Apple enterprise articles, you will find that the newest Apple push is based on partnerships with other vendors and developers.  When I see articles touting partnerships like the one with IBM, I have a hard time thinking beyond what a longtime Apple employee told me a few weeks ago.  "You cannot say Apple and partnership in the same sentence."

Considering my long history at Apple in enterprise sales and that I still have some whiplash from Apple's enterprise efforts, I think a few comments are in order.

The gospel according to Steve Jobs says that Apple is a consumer company which makes great products, some of which work very well in the enterprise.

My last few years at Apple I led what might have been Apple's most successful enterprise team.  It was something of a skunk works project, but we did exceptionally well in one of the toughest enterprise markets in the world, the United States federal government.  We had some high level support including Tim Cook, Bud Tribble, and Fred Anderson. 

We were able to get operating system level implementations that made Apple products attractive to a number of agencies and especially to scientists who were tired of dealing with what at the time was a never-ending assault of viruses and malware.  We got as far as getting OS X approved as part of the federal government's enterprise architecture. Apple did an OS level implementation of smart cards.  Smart cards are requirement if you are going to do business with the federal government.  A couple years after I left, they even published a manual about how to implement smart card services on your Mac.

Apple in 2000-2004 period championed CDSA, or Common Data Security Architecture, as the middle-ware building block for smart cards.  The theory being it would be easier for everyone if security devices and providers across difference architectures wrote to the same middle-ware.  I have not followed this closely but I know that you can still use smart cards with a Mac.  However, Apple has switched how they do it all as of Yosemite and there are some questions as to Apple's direction with their security implementation.

With that as a background, here are my thoughts on Apple and the "new" enterprise push.

First Apple has done many enterprise pushes and perhaps all have shown some degree of success but the ill-fated attempt just after 2000 to get into the enterprise with iMac kiosks.  The only thing thing that push accomplished was to get a lot of enterprise sales people fired.

Since the early nineties, all of Apple's enterprise sales pushes have had a few common characteristics.

1. Lots of strategy.
2. Few actual Apple feet on the street.
3. Apple has continued to go its own way.

I still remember the Apple-DEC alliance announced in 1988.  Most of us selling to the enterprise hopped on a train and went to DEC Word in New York City.  DEC was to provide the integration support and people to get Macs into the enterprise.  I cannot remember any sales bump from the DEC alliance.  Perhaps the third time alliance with IBM will be the charm.

In talking to Apple folks, the theory is that Apple is just building the hooks into OS software mostly iOS and that the enterprise folks are going to run with this on their own with help from IBM and a sales bump to Apple.

It is obvious that iPhones are doing well in American corporations.  A new iPhone, much like a fancy Mac was in my days of selling at Apple, is a pretty nice corporate perk.  iPhones are tied down more than the Android world so there is some appeal to the corporate IT folks.

However, there are some substantial cultural barriers at Apple.

1. As my example with smart cards illustrates, Apple often changes course for what seems to Apple like very good reasons.  However, those changes are sometimes not communicated well and often the benefit is more in Apple's mind than to the customer who sometimes just wants things to work without having to jump through some new hoops.
2. Apple really does not know how to listen to customer needs. It used to be a big part of the company's culture before Steve came back. It disappeared then.  If you saw the procedure Apple uses to determine what features make it into an OS release, you would have a hard time not laughing.  I hope but doubt it has changed much.
3. Though the Yosemite Beta program  is certainly a step in the right direction, I doubt we will see pre-release versions of iPhones being sent out to enterprises to make sure that new software and/or hardware does not break their software.  Apple is built on surprise and secrets which are not favorites in the enterprise world.
4. Enterprises really like companies that keep working on something until they get it fixed.  Apple would rather invent something new than fix something old.  That is truly part of the company's DNA.
5. Enterprise sales are often built on long time relationships between executives and Apple does not do this well.  One of our biggest challenges in selling to the federal government was that no Apple executive would say in public that the enterprise was important to Apple and that Apple would stick with its enterprise products.  Beyond that Apple executives do not like to travel far beyond the safety of their offices in Cupertino. You have to make the pilgrimage to Cupertino. Enterprises want you to come to them.  Unfortunately not enough comes out of Apple executive briefings to compensate for this Cupertino-centric approach.

The history of Apple is littered with failed enterprise products from Apple's AIX based Network Server to the more recent Xserve and Xserve RAID products that were abandoned in 2010.

The whole Xserve with the RAID product was supposed to a major push into the enterprise.  They were great products but Apple had done little preparation for the selling and support of the products.  They shipped the products, the field sort of figured out how to sell them and the diehard Apple customers helped us through the many product challenges.  Apple actually did a training for the sales people after the Xserves had been selling and the people doing much of the training were the people in the field who had figured out the product's limitations.  Apple was never willing to commit enough system engineer resourses to adequately support the products.  Apple also made a major server architecture change to Intel.  Changing processors pulled the rug out from under one of the largest Xserve customers who was using the Xserve product mostly because of the small heat footprint of its PowerPC processors.  One might want to ask the VAR who got stuck with lots of outdated PowerPC Xserves about the reliability of Apple as a partner.

As to Apple listening to customers, I can still remember giving Tim Cook's Quicktime movies of enterprise customers talking about the difficulties they were having getting Macs to be good citizens on their Active Directory networks. After those made their way through the organization, I can remember Avie Tevanian flat out telling us that the customers did not know what they were talking about when they said Macs were not good Active Directory clients.  In his mind there was no problem.

The solution to that problem was that I took one of my field system engineers and had him spend months writing an Active Directory plugin that got rolled into OS X.  The employee is still writing OS software for Apple.

I was recently complaining to an Apple employee about all the incompatibilities between different versions of Pages.  He assured me there were no problems. Yet I told him we live with problems almost on a daily basis because so much of our work over the years is in Pages 09 and there are always litle problems if we open the sixty page documents in newer versions.  He said that Apple certainly did not expect enterprise employees to move to Pages but it was fine for small businesses.  As someone in a small business, I might question that assessment.

Unfortunately the problem is not really Pages.  It is Apple's attitude that it is okay to release a product that is not backwards compatible and then not even work at fixing it.  If iPhoto can die for a "better" product, what changes might Apple spring on the enterprise just because it is going to make something better for Apple.

I am not holding up Microsoft as the perfect enterprise company, but the kind of we-are-going-to-fix-it attitude that took VISTA and made it into Windows 7 helps enterprise customers stay the course.

It is entirely possible that Apple's DNA has completely changed and this enterprise push will be the charm, but pardon me if I remain a skeptic for a couple of years.

For more on the world of Apple enterprise sales, check out my book, The Pomme Company.  Of course this is not my first post on Apple and the enterprise.  Feel free to visit, Once more into the trenches on Apple and the Enterprise or Lingering regrets from Apple days.  I also stumbled across this post, Why the Apple-IBM tie-up is doomed to fail, and how it could succeed, by Jean-Louis Gassée.

As with most things Apple, time will tell better than any of us making guesses, but at least I have history on my side. That is my take on Apple and the enterprise from our spot which is almost as far as way from Cupertino as one  can get and still be in the United States.  

Our November Transformation at the coast is a much better prospect than hopping on an airplane and heading to one of the Apple Sales Conferences that are happening this time of year.

However, I will look forward to hearing how this new enterprise push is positioned internally.  It should be entertaining.

 

Reading the Apple Tea Leaves

I certainly do not claim to be an expert on today's Apple.  However, I have lots of history with the company and I have written the only book which describes what it was like to work at Apple in sales. 

With that background I can look into the Cupertino tea cup and swirl the tea leaves as well as anyone.

Recent numbers on CNNMoney based on Gartner and IDC suggest that Apple might have had a period of "negative growth" in Mac sales during the critical back to school season.  Both Mark Rogowsky, a contributor at Forbes, and John Gruber of Daring Fireball have recently chimed in with perspectives on Apple.

Others have chosen to spin this drop in sales as dramatic.  I doubt Apple is any danger.  They could keep Tim Cook in sushi almost indefinitely with their offshore billions.

The one take away that I have from Gruber's article is that today people who have the money are willing to pay for Macs.

The Mac today has roughly 10 percent of the PC market, but it’s not just any randomly distributed 10 percent of the market. Quite the opposite — Apple’s 10 percent of the market is entirely comprised of the high end of the market. Mac users are discriminating, willing to pay more for a product they deem superior.

I am not sure many price conscious buyers like me would be surprised that Mac buyers seem to have more money.

Long ago I hinted that Macs would have a hard time getting above 10 percent of the market, and price was a limiting factor then.  I think things are perhaps even more challenging today. 

My experience which is perhaps different than yours is that Macs have not delivered the value that I want in a computing platform. My computing closet still contains a very expensive 26" i5 iMac that died well before it was two years old.  Hopefully it will be this year's holiday project for my son and I to install a new SSD in it.

The only Mac in our household today is a new Mac Mini that had some challenges early in 2013. Our last Apple laptop purchase was a 2006 MacBook which was a faithful friend for years.

With Apple's continued focus on thin and light, I have not seen the type of changes that once defined Apple's computer products and kept users on their seats and might have brought me back to its laptop platform.  My Windows 8 laptop has a touch screen and it is almost a year old. Apple still does not have touch screens in their laptops and you cannot get an Apple laptop with a SD card reader for under $1,000.

Rogowsky's article, In A Declining PC Market, Opportunities For An Indifferent Apple is out of left field and must have been suggested by an old Apple enterprise sales person because he seems to think the real opportunity is for Apple to go after the enterprise market.

"What it hasn’t done so far is seized on the weaknesses of HP, Dell and others, though, to build a world-class corporate sales organization to push its tablets and PCs aggressively into thousands of organizations worldwide."

As much as I have a problem with Gruber's "discriminating" buyer argument, I came close to choking upon reading the suggestion that Apple build "a world class sales organization."

Actually I think Apple had close to a world class sales organization in the early nineties.  It was perhaps one of the things that kept Apple in business long enough for Steve to rescue the company from itself.

Certainly Steve did not love the sales organization and that is one of things that the field sales force clearly understood.  Apple's sales leaders after Steve came back were undistinguished and often off base unless you somehow believe that going after the enterprise with iMac based kiosks was a good idea.

As for thoughts that should temper any suggestions that Apple go after the world's corporations with an enterprise sales force, this post, Lingering Regrets From Days At Apple, that I wrote seven years ago is still pertinent.

Apple will never be a successful enterprise sales company, it is not in the company's genes.The company had plenty of opportunities that Microsoft threw in their laps but they punted on them all. 

Certainly after Apple's last flirtation with the enterprise which included the Xserve, I would think most large customers would have a hard time seriously considering Apple on the desktop.

If I were an enterprise CIO who had tried Xserves only to see Apple abandon them, I might be worried that Apple would completely give up desktops and laptops for iPhones, iPads, and iPods.  The CIO of the federal government was worried about that when I took Avie Tevanian in to meet her back in 2004.

The only real opportunity for Apple in the enterprise is to keep doing what they are doing and penetrate the enterprise with iPads and iPhones which users will demand be supported.

More important in reading Apple's tea leaves than either Gruber's or Rogowsky's article is the hint that the back to school season was not good for Apple.  I do not have any inside verification that back to school was not great for Apple.  However, it would not surprise me.

Higher education has been a strategic but sometimes under appreciated market for Apple since I joined the company in 1984.  One of the things that higher education has always done for Apple is put a device in the hands of the one person most likely to understand leading edge technology in a family, the college student.  College students often go home and sell their families on Apple technology.  When they graduate from college, they take their Apple devices to work and lobby for corporate support for Apple.  It was a well appreciated sales cycle at Apple during my time as a higher education manager.  Apple lost a lot of its higher education focus when it rolled the higher education division in with the K-12 folks back in the nineties.

The only time in my memory that we had a bad back to school at Apple during my career there was during Gil Amelio's brief tenure as Apple CEO.  He decided that Apple was giving higher education students too good a deal on computers so he raised prices for students.  Higher education sales tanked.

Now Apple's prices have not gone up, but their laptop prices have not gone down either.  As I suggested in the article that I wrote over four years ago, all you have to do is walk the aisles of either a Best Buy or Staples to get a feeling for just how far PC laptop prices have gone down.

In spite of what Apple folks think, there are some very nice PC laptops out there.  I use a first generation Lenovo Yoga which cost me under $1,000. It is my second Lenovo laptop and will not be my last.  When I decide to pass this one on to someone else in the family, I will be buying the next generation Yoga.  My Yoga has been one of the finest laptops that I have ever used.

Beyond the product, I also happen to like the philosophy of Lenovo.  Back in January I wrote an article for RWW, Apple and Lenovo: The Tale of Two Companies.  I had this to say.

Apple has come to believe it cannot make anything worthy of the Apple brand at a low price point. Lenovo believes it can deliver quality and still serve customers looking for a good deal.

If they are both right, that's a big win for Lenovo.

If you look at the CNNMoney charts, Lenovo has grown the most of any vendor.  While one quarter is too early to make much more than an educated guess, it is possible that the Apple price differential on laptops has finally gotten too much for even college bound parents to bear. Tuition keeps going up and family incomes have not gone up.

We are in a tough economy and the reality is that Apple is a luxury brand.  There is protection in being a luxury brand as Gruber hints, but there are limits to your growth if some of your strategic customers have decided your products are too expensive.

Perhaps Apple's actual numbers will spin all of this a little differently.  Certainly there is no cause for doom and gloom in the Apple world.  After all, someday they might actually ship that new Mac Pro that they announced in June and of course we are due for an iPad refresh.  Let me guess, they will be thinner and lighter but will still be lots more expensive than a Nexus or Kindle.  Did I tell you I suspected the "new" iPhone might sport some color?

That is it from the Southern Outer Banks where we might get summer in October but the hope of actually seeing a Mac in one of our electronics stores is as elusive as ever.  I will just keep living my dream to ease the pain.

Update- Mark Rogowsky posted some interesting charts on Apple after my article was published yesterday.

Just to make my point on price, I checked the flyer in the Sunday newspaper and compared the computer prices I found to Apple Store prices.  You can argue all you want about Windows 8 and it certainly is not perfect,  but it is very usable and in fact I use Windows 8 every day along with Mac OS X Mt. Lion and Xubuntu Linux.

As of October 13, 2013, the least expensive Apple laptop with an I7 processor is $1499.  The MacBook does have a slot loading optical drive, a thunderbolt port, and Firewire 800 port, but I live quite well without any of those on my current laptop.

Best Buy's Sunday, October 13, 2013, flyer lists a Lenovo laptop with an I7 processor, a 15" touch screen which is bigger than the 13" MacBook Pro for $829.99.  The hard drive is smaller on the Lenovo but the bigger screen would make that a wash for me. As someone told me when I bought my MacMini, you can find USB optical drives for under $70 if you really need one.

I have used a lot of Mac laptops and I judge the quality to be similar to Lenovo.  You can make your own judgment, but as of October 13, 2013, you pay a 81% premium for buying a MacBook over a Lenovo. Unless you put a lot of value on Thunderbolt, aluminum, and Firewire 800 as opposed to USB 3.0, I think the Lenovo is a better buy especially for college students.

Laptops are almost a necessity for college students and those of us who travel for work.  The word that comes to mind for someone willing to pay 81% more for a product that will likely need to be updated in three or four years no matter which one you buy certainly is not "discriminating."

 

 

If Google Did Win the Mobile Battle with Apple, How Did That Happen?

Recently Derek Brown posted an interesting article, “The Epic Battle Between Apple & Google Is All But over- Who Won?”  He goes on to declare Google and Android the winner.

 

While I tend to agree, I do not want to get into argument over whether or not he is right and if the battle is actually over or not.  I do want to discuss this as someone who has felt for a while that Apple was letting things slip away from them.

Brown seems to think Apple’s success was a “Fluke.”  I am not sure that I would agree with that and you can check out my Pomme Company book for more details but I would like to explore some of the things which I saw as an insider at Apple and later as a vocal critic of the company’s direction.

If you are not familiar with me, I worked at Apple nearly twenty years and was a sales director. If you want more about me, please check out this link or read one of my books.

I actually do not think it is fair to lay what has happened to Apple at Tim Cook’s feet. So this is not about Tim Cook and I stand by what I said about him in an article last year, Tim Cook Is One Of The Three People Who Saved Apple.

Apple’s problems are deeper than one person.  The company has a very complex and unusual corporate culture. Factors which might be part of Apple's "declining" success are also impossible to adequately handle in a simple blog post so I suspect this will be the first of a series.

When I was at Apple during the worst of the times and during some of the best of the times, we would read these reports detailing Apple’s grand strategy.  There were plenty of grand strategies for Apple but unfortunately most of them were in the minds of people who were not working at Apple.

There was no shortage of buzz words to indicate a grand strategy but the truth is that there was little behind most of the hype.  I think the closest Apple ever came to a strategy was the iPod, iTunes, and the hope to bring Windows users to the platform by releasing iTunes for Windows.

Here are just a few of the key things that I will be exploring in future posts and articles.

1. After Steve came back besides the distinct emphasis on products, there was a huge push to not just be profitable but to become a money machine.

2. Again after Steve’s return, Apple decided that “it was the company’s job to tell people what they wanted to purchase” and ignore the requests of customers.

3. After a strong effort to get away from the “not invented here” syndrome, Apple over time has clearly decided that their technology is the only way to true enlightenment.  Other companies can mostly take a hike.

4. Apple has clearly become the Mercedes or BMW of technology companies. Depending on your perspective that could be a good or a bad thing.

5. Apple's inability to figure out the "Cloud" might be the biggest stumbling block for the company's future efforts.

 

I fully expect Apple to turn in many more highly profitable quarters.  However, like many others, I wonder if Apple’s best days might behind them.

Whether some of the things I have identified are the root cause or not is certainly open to debate, but it does seem to me that money has become as much a defining element of Apple as technology.

 

I will have more on that in later posts and articles. 

 

If you are interested in the cloud, check out my new ReadWrite Article, Dropbox vs. Google Drive vs. Amazon vs. Skydrive: Which One Is Fastest? I did not test Apple's iCloud but there are plenty of reasons why and I should not have to explain that to anyone.

 

Finally if you like cameras, check out my recent post on the Canon Powershot SX50 HS.

What would it be like to work at Apple?

If you have ever wondered what it would be like to work at Apple in sales, my book, the Pomme Company, is a good place to start. Actually some current and former Apple employees think my book should be required reading for people hoping to work at Apple. My long history with Apple gives me a rather unique perspective.

There is no question that Apple is now a computer electronics powerhouse. Questions have been asked about the labor practices of Chinese companies used by Apple and other electronics companies. However, few people have thought to look stateside at the business culture within Apple.  It is actually not a very pretty picture.

That Apple has risen to the top is unquestionable.  Whether Apple will stay in its current position is more of an open question especially to those of us who have lived inside the world of Cupertino.

Creating great products is one thing.  Building a sustainable business culture that can continue to turn out great products is another thing.  Just ask Sony how difficult that is.

I would argue there are plenty of signs that the Apple of today is not the Apple of a few years ago.  I continue to be frustrated by Apple's user interface changes.  I thoroughly dislike the "Save as" changes implemented in Mountain Lion.  The dumbing down of iPhoto is a depressing subject for me.  While I am not an iPhone user, I can understand the frustration of paying a premium price for something, and then finding out that you don't have a wonderful experience with an app like maps on the iPhone.

In October of 2012, I purchased an I5 iMac.  I watched as it suffered through "Slow Snow Leopard" problem and then as I finally had to move all the data from the drive and format it.  It was the first time in 28 years of using Macs that I have had to move my data and reformat a drive.  I've had to reinstall system software plenty of times, but I have never had an Apple operating system destroy my drive.

There is no question in my mind that Windows 7 is more consistent and reliable than Apple's current operating system.  I use Mountain Lion on my iMac and Windows 7 on my Lenovo laptop on a daily basis.  Windows 7 just runs better.  If I could get Fetch, Coda, and RapidWeaver on Windows, I would likely abandon the Mac platform in spite of my long history with Apple products dating backing thirty years to 1982.

As I state in my book, Apple likely no longer has sophisticated users on their radar.  They are now more interested in casual consumer users.  Demanding users who expect a consistent user interface which enhances their productivity are on the back burner at Apple.  I challenge anyone to use an old version of iPhoto and tell me that the current version works as well.

Just the fact that you can no longer hit the escape key to move back to the full library is a huge disadvantage. As ugly as the Picasa user interface is, it works far better than iPhoto.

Then there is Apple's multiple attempts to figure out the cloud.  Certainly if you want to selectively share photos from your computer, Apple's cloud solution is not even on the radar when it comes to the best ways to do it.  Picasa web albums, Dropbox, and even Microsoft's Skydrive with Portfolio work far better than iCloud.

That Apple's popularity is at its peak when the quality of some of its products is suspect is a function of our society.  People want to be cool and Apple's products have the image of cool.  Certainly the Apple iPhone redefined the world of the smart-phone.

Clearly though if maps are important to you as they are to me, an Apple iPhone is no longer the best choice.

However, the question that remains unanswered is whether or not the unsustainable Apple business culture is at the root of these Apple products which have lost their luster.

At the end of my book I mention that my next computer product might be Microsoft's new Surface product.  An interesting side note to this is that one of the Surface engineers used to work as a student rep for us at Va. Tech.  I think my team paid for his airfare to California while he was an intern at Apple.

He got offered a job at Apple and another one at Microsoft.  He took the job at Microsoft because he was unimpressed with the culture inside of Apple.  I know from talking to him that he still believes that he made the right decision.

While I did not end up buying a Microsoft Surface, I did end up with a Lenovo Yoga, a Lenovo Desktop and a token Mac, a Mac mini.  I think Lenovo works harder at meeting its customers needs than Apple does.

Lessons that Apple might learn from its past

If you are a long-time reader of Applepeels, you might know that I have said many times over the years the experience of being an Apple employee depends a lot on what you are doing and the management team in charge of your division.

Today I came across a presentation from RSA (Royal Society for the encouragement of Arts, Manufactures and Commerce) that talks about what really motivates people. 

Paying attention to some of the thoughts in the presentation would really help Apple fix a hidden weak spot in their culture and management philosophy. 

You might argue that Apple doesn't need any help with anything, but I actually know some very good people who have left Apple.   In the long run even for a great product company, losing very good people could lead to problems down the road.

Apple actually had some great results in the past from the techniques discussed by RSA, but I suspect that years of wet-behind-the-ear MBAs have erased the memories.

It is likely not a surprise to some readers that Steve Jobs was not a fan of the Apple sales force.  At best he believed them to be a necessary evil.  I did get to hear him in essence say that.  Unfortunately, I never got to have a personal talk to Steve about his views on sales. 

However, I did work for some of his Apple managers who really did not understand sales.

Understanding the potential for success by having good sales leadership as opposed to having nit-picking sales management might not matter today in this world where Apple has become the darling of just about everyone.  However, it did once and might again some day.

In the mid-nineties until early in the next decade when customers, especially enterprise ones, were fleeing Apple, it was important to have a sales force which kept customers in the fold so Apple could survive.  I suspect it will be important in the future even if Apple doesn't slip.

There was a time when it was hard to get good people to work at Apple.  There were a lot of reasons for that, but one of the most interesting ones was that Apple sales people didn't make as much money as other technology sales people.  On top of that selling Apple was much more difficult than selling a generic computer box based on price.

That was especially true when you were selling to the enterprise. You had to convince your enterprise customer who was sometimes betting his job on making a large Apple purchase that Apple actually cared about his business.  That was tough to do when Steve spent most of his stage time telling people that Apple was a consumer company that didn't care about large businesses.

Fortunately Apple had people like Fred Anderson and Tim Cook around who were good at talking to enterprise customers.  However, Apple was like many technology companies in one respect.  It believed in a highly leveraged compensation plan that in theory rewarded the top performers the most.

Most of you have likely never been in sales, but those of you who have had some experience in sales would not be surprised if I told you that there is a lot of room for error in setting quotas and measuring performance against them.  All of this boils down to how much money sales people make.

Much of my first experience with Apple was in higher education sales where in the early days it was pretty easy to measure what customers were buying.  Higher education customers bought everything directly from Apple.  You had years of data to help structure quota.  If you had a decent manager and a reasonable divisional goal, you could feel pretty good about having a chance at making money.

In the mid-nineties during one of Apple's countless reorganizations, I got moved over to the business division.  The team I headed was responsible for resellers and large accounts.  It didn't take me long to be appalled at how bad the historical data was and how flawed the quota setting process was in the business division. 

The first year I was there, my team was given quota for a couple of "reseller locations" that turned out to be bank accounts in Delaware.  They ended up being not used the year after we picked up the quota for them.  It was literally millions of revenue which was in our goal and which turned to vapor the year when we were supposed to grow their business.

Still I had a great manager at Apple, and once we got control of the numbers, the next year my team went on to be very successful.  In the fall of 2001, my very good manager fell victim to being blamed for the failure of a hair-brained scheme from upper management to win the enterprise by selling interactive iMac kiosks.

New management was brought in, and my manager who had been in charge of business sales for the US ended up with only one person directly reporting to him.  That person was me, and I had been given the unenviable challenge of turning Apple's tanking federal business around. 

While competitors often had hundreds of reps covering the federal government.  I was given two reps, one on the east coast and one on the west coast.  My area associate came with me and one system engineer along with a person to work with resellers.

It was a daunting challenge, but one thing I did negotiate was a team goal.  In other words I convinced management and the finance people that it was more work to figure out individual numbers for customers than it was just paying everyone on one number. Our small team worked towards one quota number.  If we hit it, we would all be successful.

Doing that made all of our lives much simpler, we focused on the customer and didn't really worry about who was getting paid for what business or even through which channel.  We were wildly successful.  We grew our business a phenomenal amount, and I ended up being manager of the year.

Now the compensation plan obviously was not the only reason for our being successful.  I had run a stealth federal sales organization for over three years.  With help from a number of operating system folks in Cupertino and support from upper management, we removed a lot of barriers facing our customers.  We made Macs attractive as an alternative in the federal market to virus plagued Windows machines.

Still I firmly believe that it you look at the historical records, the team goal was a big part of the reason that a relatively small team of committed individuals were able to turn around Apple's federal business.

We managed to keep our team goal for three years even as the number of people working for me grew to over twenty.  Though we didn't make a lot of money after the first year, we more than tripled Apple's federal revenue in less than four years at time when no other enterprise team was nearly as successful.  The reason we didn't make much money was that each year after the first our goal was set so high that it was almost impossible to make.  That a whole different story.

Still I had a very motivated team that was growing Apple's federal business by leaps and bounds while making less and less money each year.  In the final year that I was at Apple, the team goal was abandoned until six months into the year when Apple had to admit they couldn't figure out individual revenue performance.

It is interesting that most executives get paid on the total performance of the company, yet they almost all believe that paying sales people on just the business they "personally touch" is the only way to effectively compensate them.  I would argue that what is good for motivating executives might work even better for sales people.  It certainly did for the ones who worked for me.

My experience at Apple and the research presented by RSA seems to indicate that a leveraged monetary reward for the top performers isn't necessarily to way to get the best performance out of anyone.  Fixing that might make a huge difference in the Apple sales force over time.

At least that is the view from NC's Crystal Coast where the winds are still blowing this spring, but the ocean water has warmed enough for wading and the air temperature is to the point that a quick dip in the pool is possible.  We still haven't found a new owner for our home in Roanoke, but I have started a new career selling cloud-based network asset management tools.

I will be focusing on that new opportunity in spite of living in a spot where there is a special place around every corner and the beach is always calling me.