Published , by Captain Business
Published , by Captain Business
Today marks ten years since Apple Cofounder Steve Jobs passed away after a prolonged battle with cancer, and the company that started in his parents' garage is now valued at over $2 trillion. Apple Inc. is the largest company on the planet with massive revenues and earnings to boot. In one of his last public interviews at D8 in 2010, the Apple CEO said that the massive financial success of the company (which had just surpassed Microsoft's market capitalization at the time of the conversation) "doesn't matter very much. It's not what's important. It's not what makes you come to work in the morning. It's not why any of our customers buy our products."
Ten years after he passed away, the company has spent hundreds of billions of dollars buying back their own stock, and billions more chasing cool with the Beats acquisition and the advent of Apple TV+. While many customers may not notice any difference, Apple has lost the keen attention to detail that Steve Jobs held in such regard in his time at the company he founded. The company is not the same, and has ignored many of their core values in my opinion.
This article is not meant to disparage the hard work of Tim Cook and his team at Apple, but will instead highlight several moments over the past decade when the company deviated from the path Steve Jobs laid for them. Apple has moved from being an underdog driving innovation and risk-taking in the late 90s and 2000s to a company focused on iteration and maintaining market share today.
Apple has had many near-death experiences in its 45 years of existence, and it is safe to say that the iPod saved the company back when it launched 20 years ago this month. Like many of the products Apple has released over time, the company didn't invent MP3 players. There were plenty of competitors already on the market when Apple began shipping the device in 2001. What Apple got right with iPod highlights a lot of what they did right under the leadership of Steve Jobs as the product was easy to use and featured an elegant way to navigate through thousands of songs and organize them how you liked. And it fit in your pocket!
When iPhone launched, Jobs even described the product as one part iPod. iPhone had an iPod app built in, and it brought over a lot of the functionality of the preceding smash hit product. While the iOS developers certainly tinkered with the iPod app over time, it let users pick how they wanted to navigate their music and video collections with moveable buttons on the bottom of the screen. This all changed when their Apple Music subscription service launched, and the company decided to ignore the brilliant simplicity of the iPod.
On May 28, 2014, Apple Inc. acquired Beats by Dre for $3 billion. This is still one of the largest acquisitions ever made by the company, and it ultimately lead to the release of Apple Music. Apple Music was truly the first step the company made into streaming music with a subscription model, but the acquisition was truly a departure from Apple's do-it-yourself strategy of product, software, and service design.
When Apple created iTunes, they didn't have to acquire a company to execute on their vision. With Apple Music, it really felt like the company was attempting to buy cool for the first time. iTunes and iPod never really seemed to need that extra juice with their amazing and iconic market campaigns, and seven years after the acquisition, it is hard to understand why the company made the Beats deal.
At the time of the Beats by Dre deal, Apple CEO Tim Cook said, “Music is such an important part of all of our lives and holds a special place within our hearts at Apple. That’s why we have kept investing in music and are bringing together these extraordinary teams so we can continue to create the most innovative music products and services in the world.”
It makes sense for Apple Music to exist, but the introduction of the service on iOS truly lead to a worse user experience for customers who were used to the easy navigation of the iPod app. Four out of five of the buttons on the bottom of the new Music app push Apple Music while users have to click on Library to navigate their owned iTunes music content. This was a huge step back from what made iPod the dominant music player, in my opinion. I would have preferred a separate app for Apple Music or at least the option to change the bottom row of buttons like in previous versions of iOS.
The iPod app wasn't broken when the original iPhone shipped back in 2007, and today's Music app design is a fine example of Apple pushing their services over friendly and easy-to-use user interface design to the detriment of iOS as a platform.
When Steve Jobs revealed the iPhone at MacWorld in 2007, the phone's operating system was truly revolutionary. Sure, the company didn't invent multitouch technology, but iPhone was a stunning package of emphasis that created a whole new era for smartphones.
When the iPhone launched, Apple truly had a five year lead in software development which it has since squandered. The most recent release of iOS 15 highlights just how iterative the operating system's updates have become, but it goes beyond that. Apple no longer introduces new features that are truly different from the rest of the market. Most of the WWDC 2021 iOS 15 announcements were features that have existed on Android for years. Apple spent way too much time talking about widgets and continues to make design changes that move the iOS experience further and further away from the original user experience.
Things really began to falter with the introduction of iOS 6 and the release of Apple Maps. Apple and Google had previously worked together on some tremendous iOS apps for YouTube and Google Maps, with Apple helping on the front-end design. It seems likely that Steve Jobs would have also pushed for an Apple Maps application, as Google's Android was gaining steam, but I sincerely doubt that he would have shipped it in that sorry state.
Tim Cook had to issue an apology for the terrible Apple Maps launch, and Scott Forstall ultimately left the company as a result. Forstall's name is featured on many patents for iPhone features that we see to this day, and is widely regarded as one of the best engineers to ever work at Apple.
Following Forstall's departure, Apple put industrial design expert Jony Ive in charge of iOS software design, ushering in a new era of flat design. This was a huge departure from the skeuomorphism style of most Apple software products, and iOS 7 was another moment when I couldn't help but think that Steve Jobs probably wouldn't have done that.
"You know that if they'd ever used a computer, it would have been a Mac," said Steve Jobs about the historical icons featured in the Think Different brand advertising campaign that kicked off his second tour of duty as Apple CEO. 1997 was a tumultuous time for the finances of the company, and Jobs threw out the existing product lines and streamlined their offerings. Just a year later, customers would get to see the new iMac revealed. While that product had some very odd design decisions, it was a turning point for Apple. The Mac was back and at the center of the next twenty years of the company's growth.
Over the next decade, Apple slowly clawed back PC market share with its Mac line. A focus of a lot of their marketing efforts centered around being able to create and edit content on their computers. Famous movie directors were frequently featured in Mac announcements and commercials, and software offerings like iMovie lead to the release of the truly professional software suite Final Cut Pro.
The past decade has seen the Mac slip in terms of power under the hood, and many creative professionals have left the platform entirely due to the product lines inability to keep up with competitors. Many Mac Pro or MacBook Pro models cost more than their competitors and come with less impressive hardware.
This lead our own Shacknews Head of Video Production Greg Burke to leave the Macintosh ecosystem after being a lifelong user. "It was a very sad day for me when I woke up and had to choose if I was going to continue to use the Apple operating system or make the switch to PC. What made it easier was the complete lack of optimization I had faced on the Apple platform over the years leading to my switch. Dumping literally thousands of dollars into proprietary raid cards, NVIDIA-specific compatible graphics cards, and lots of other things. Despite the upgrades my Mac Pro still ran pretty poorly in terms of performance when compared to equally-powered Windows machines. It was when Apple dropped CUDA support that I knew I needed to make the switch. CUDA compatible software and hardware was relatively new at the time. Being able to export, render and run apps via the GPU rather than the CPU was a huge game changer in the video production department. To this day I believe Apple doesn't use CUDA, but rather its own proprietary version of it that they didn't release until many years after I made the switch."
Many creative professionals have made the jump to Windows PC workstations, and Apple still keeps using extremely underpowered AMD GPUs in most of their Mac offerings. The lack of NVIDIA GPU support across the Mac line is just another example of Apple moving further away from what made them the counterculture PC company of the late 90s, but to be fair much of this was put into motion while Steve Jobs was still alive.
One thing that Steve Jobs did not really care about was Apple's share price. He presided as the company's CEO over many bear markets and never once issued a buyback or a dividend. Due to his frugal nature, Apple was in a very strong financial place when he passed away in 2011.
Apple had stopped paying a dividend in 1995 before Jobs returned to the company, as their finances faltered. Less than one year after Steve Jobs passed away, Tim Cook and Apple's Board of Directors issued a dividend and announced a massive share buyback. Nine years later, Apple has returned nearly $200 billion to shareholders.
This is another philosophical difference that highlights just how focused Jobs' successor Apple CEO Tim Cook is on keeping Wall Street happy. At the 2012 shareholder meeting, I asked Tim Cook to please avoid buying back their stock and issuing a dividend and to instead focus on acquiring companies that could help Apple grow revenues for years to come. Apple could have attempted to acquire hot companies like Netflix and Tesla for pennies on the dollar and gone after some more distressed consumer electronics companies like Sony or Nintendo with that money. Apple doesn't have much to show for their buyback other than a decreased amount of outstanding shares which has propped up their earnings-per-share results which have been experiencing decelerating growth for the majority of the last decade.
Share buybacks and stock dividends are not what cool and innovative companies do, and it is pretty clear that Tim Cook is more focused on keeping institutional investors happy than doing what is in the best interests of the company's long-term future. Jobs left the balance sheet with zero long-term debt when he stepped down as CEO in 2011, and the company now has over $100 billion of long-term debt that was all issued to pay for the share repurchase and dividend program. Much of Apple's cash resides overseas, and the issuance of debt in America circumvented the company paying a hefty repatriation tax to execute the buyback. One has to give Cook and company credit for coming up with an innovative way to do something that every stodgy Dow Jones company is lauded for on Wall Street, but none of that leads to great products that surprise and delight customers.
At the 2010 Shareholders Meeting, when asked why Apple didn't buy a game studio or Netflix, Steve Jobs said that the company didn't want to be a content producer because they believe that other people do a better job at that. Apple in 2010 was happy just being a storefront for successful video streaming apps and mobile games, but things have changed over in Cupertino. Apple TV+ is the most "hello fellow kids" moment of the post-Jobs era at the company. Apple is dumping millions of dollars into TV shows that are fine, but have not broken out the numbers of how many subscribers they have.
The company's Services revenue segment is one of their fastest growing divisions, and has been a focus of Wall Street analysts as they have rerated the stock with a focus on recurring revenues. This is another example of Apple focusing on appeasing shareholders instead of making something truly different.
The other side of Apple continues to show a disappointing lack of attention to detail across many product lines. From HomePods leaving rings when used on wooden tables, to the massive camera bump that makes iPhone 13 Pro wobble when using it on flat table, much of Jobs' maniacal attention to detail is absent from most of the product lines. In the Walter Isaacson biography of Steve Jobs, there is story about how his father Paul taught him to paint both sides of the fence. Jobs carried that lesson into his work at Apple, spending hours and days working on a detail that no one would ever see or notice.
I would argue that Jobs' attention to detail is the most sorely missed aspect of his management style. He had a borderline tyrannical focus on making products, manufacturing processes, and software experiences better and more user friendly. Many of Apple's recent updates across all their offerings seem to be moving in the opposite direction.
Instead of innovating, Apple has truly fallen into the trap of solving problems that don't exist. No one asked for a Touch Bar to replace the F keys on the MacBook Pro. In fact, the removal of the Escape key drove even more people away from the Mac. The reintroduction of MagSafe wireless charging is fine, but the company still hampers their iPhone product line with their proprietary Lightning port. Some of these frustrating design decisions may have been made with Jobs in charge, but it seems abundantly clear from the past decade of failures that Apple lacks their "idea man." Even if the company made a stupid design decision, Jobs would figure out a way to spin it as a positive.
In the decade since Steve Jobs passed away, Apple has become the company that they used to lampoon. In their 1984 ad, they painted the Mac and their company as a counterculture icon that was to be viewed as the little guy. That is certainly hard to do with a market capitalization over $2 trillion, but we are starting to see the company behave in a way that Jobs painted Microsoft in the 90s and 2000s.
The Epic Games vs. Apple Inc. case highlights this in the context of the App Store. Apple has created a walled garden for apps that Epic claimed is anticompetitive, and even though Apple has been able to defend these claims of antitrust, the battle rages on. Epic Games CEO Tim Sweeney now finds himself in the same role of Jobs and fellow Apple Cofounder Steve Wozniak back in 1984. Sweeney is willing to sacrifice millions of dollars of Fortnite mobile revenue in the name of doing what is right for his view of the metaverse. Sweeney definitely provides an interesting foil for Apple CEO Tim Cook, who is clearly very focused on the company's financial performance.
Apple has become that which they demonized in the past in a lot of ways, and it extends beyond the company's products, services, software, and relationships with competitors. In recent months, dozens of stories have been posted under the #AppleToo hashtag, with several Medium blog posts hitting the wire over the past few months. There are countless stories of women, lgbtq+ individuals, and other minorities being ignored by Human Resources and management at Apple. This might not be attributable to the absence of Steve Jobs, but it just highlights how Apple is no longer the company fans worshipped in the iPod days or even in the early years of the iPhone's rise.
CEO Tim Cook faces a lot of challenges in managing the technology behemoth that is Apple Inc., and I commend him on his ability to follow up one of the greatest tech executives in history with very strong financial results, but it has become pretty clear that Apple is just not the same ten years after the death of Steve Jobs. Perhaps the company really does have one more thing somewhere in their R&D facility that will knock our socks off with true innovation, but as of right now it seems like they are coasting on the hard work of Steve Jobs and the team that executed the most amazing corporate turnaround in the last 30 years.
This article is meant to express the opinion of the author and does not necessarily reflect the thoughts of the entire staff. It is only meant for educational purposes, and should not be taken as investment advice. Please consider your own investment time horizon, risk tolerance, and consult with a financial advisor before acting on this information.
Full Disclosure: At the time of this article, Shacknews primary shareholder Asif A. Khan, his family members, and his company Virtue LLC had the following positions:
Long Apple Inc. via AAPL shares
Short Apple Inc. via AAPL put options