No-one is doubting the article that ran in the Wall Street Journal that has it that Apple’s Steve Jobs has just returned to work two months after a liver transplant, but the question being asked right now is whether or not anyone can believe anything that the Apple management says going forwards.
Is this really a problem? The financial markets will probably be okay about this, at least at first, after all Apple is back to full strength in terms of management. The fan base will be alright about it because many never realized that Apple’s lucky charm leader has been missing. So what’s the problem?
Well here at Faultline we understand what Apple did, it simply said that Jobs was suffering from a hormonal imbalance, which was a little more serious than he had at first thought. No-one hinted that more serious meant that he might have to have a life saving operation, with possibly all this brought on by the pancreatic cancer that was supposed to be in remission.
Perhaps at the time the company was telling the truth, and that later complications led to the transplant, and now Apple has confirmed this treatment, but not let on how it came about.
History is littered with companies which have been led by secretive men, but we have to understand that Jobs IS one such person. No-one can read the mind of many men in the Faultline area of expertise ‘ John Malone of Liberty Media, News Corp’s Rupert Murdoch and Dish Network’s Charlie Ergen ‘ to name but a few.
But we cannot remember any of them heard saying something which is a deliberate untruth, in order preserve the Status Quo. They often hold back information, or refuse to comment, but do not mislead.
Apple is known to be highly secretive ‘ Jobs has fired people himself for letting minor corporate secrets out of the bag, and he has orchestrated deliberately misleading statements to and through his staff, about product launch data. One article this week makes it clear that in the past, Apple has made internal announcements with slightly misleading statements made to each team, so that when a leak came out, it could be traced back to the culprit, and leaks plugged.
We believe that Jobs himself is as passionate and ruthless as he has ever been, and still has fire in his belly. We also believe him to be as honest as any company leader. His staff are fiercely loyal, for the most part to the company and brand, as much to him personally.
But although Apple has leaked in the past over product details, no-one strayed once off message about Jobs’ health, probably because it was kept at the highest possible level, and possibly because the day to day decisions about what the story was on Jobs’ health were taken by very few men, operating at Board level.
However had something gone wrong and if Jobs had failed to return, and the reason had then leaked, at a time when there was an absence of power which invited competition for the post to carry on Apple leadership, then it would have been a PR disaster. Had the story about a transplant leaked at a time when he was about to go under the knife, then the Apple share price may have hit freefall, not because this type of liver surgery has a high incidence of failure, but because the truth had not been told. It would have been disastrous.
Not telling the whole truth is insidious. There will be doubt in the hearts of many when Jobs next speaks ‘ he will need a showman class performance to win back his many supporters, to convince them he is not frail, infirm or in any way impaired by his experience. Knowing him, he will take it in his stride.
The question remains ‘ the Board did a great job of keeping Jobs’ seat warm, and they stuck to plan, but will the board be allowed to remain as it is? Will investors want someone on board who might give them more warning about such dangers in the future? Will they begin to believe they are investing in Steve Jobs’ health and they are having the wool pulled over their eyes. Apple is not Jobs’ personal fiefdom any more ‘ he has many investors along for the ride.
It is a small step from there to not believing the next thing he says about the company’s product direction ‘ is Apple planning a netbook? Does Apple want to end its exclusive deal with AT&T, and open up to Verizon or others, or is it comfortable making a higher margin from a third of the market, than a lower margin from all the market? Will Apple launch a supersized iPod Touch? These are the questions that are being asked in the market of Apple today, and will we believe what Apple says it will do next?
There is always a tendency to believe that things will stay the same ‘ Apple has always been this successful surely, and it has always been led by Jobs ‘ hasn’t it? Well we know neither of those are true ‘ Apple lost Steve Jobs, and then re-acquired his Next start-up, and put him back in charge, and even then Apple had a market capitalization of under $10 billion a few years into his second term.
Jobs is not immortal, and companies do change, and if Jobs leaves or retires or worse, his appointees will be unlikely to be given a free ride and a chance to manage the company themselves and there WILL be a struggle for power. Struggles for power usually result in impoverished leadership and an inability to make clear decisions ‘ ask Time Warner.
Today we know that we cannot believe anything that Apple says about Steve Jobs’ health, tomorrow this tendency to not believe may broaden.
So the news that Jobs is back will lift the share price, if it needed lifting, but all companies that make it to the top of investor sentiment gather increasing scrutiny, and every statement out of Apple, from now on, will be accompanied by questions about whether or not it is actually true. At least until Mister Jobs wows us with some new variation on the Apple plan to conquer consumer electronics.
Our own assessment is that the mobile phone market is Nokia’s to lose, but that Apple has its eyes on global domination of this space or at least the profitable end of it. But its continued obsessive secrecy, its constant eye for creating revolutions in any given space and then evolving from there, means that there is much work to be done.
Android’s challenge, on the face of it, is compelling ‘ system openness and many of the best applications. Nokia can copy each Google Android step and stay in good shape. But as these markets consolidate, as players like Motorola fall out of contention, there seems to be little room for a company that people are unsure of in any way especially if it eschews true system openness. Apple is behaving as Microsoft did in the past ‘ fighting for control of the hearts and minds of developers through its App Store, but with systems that are proprietary and with half an eye on their application markets itself.
Right now we suspect that developers out there are not slavishly preparing to follow Steve Jobs to the ends of the earth, but instead making sure that they are not stung by supporting Apple, the way developers of PC software were stung by supporting Microsoft 20 years earlier. A simple policy of writing code for Apple, but also offering it on Palm, Android and Java App Stores and also pushing for its inclusion in Nokia’s Ovi, will mean that developer power alone will not win Apple this war. Honestly.