There is very little to be said by us at Faultline, that you won’t have already heard about both Steve Jobs new health problems and Apple’s first quarter figures. But since everybody else has given their opinion, it’s probably fair that we give ours.
First thing to say is that we have followed Jobs since the Apple II (33years ago) and wish him well, not only in his recovery, but in getting back to revolutionizing the planet. It’s fun to watch, although, as we have pointed out many times, it can sometimes be a frustrating experience and mostly it involves very little new of substance, mostly new style. But Jobs makes our job fun and shows the world how much can be done with technology which already exists.
At Faultline we have always backed Apple, since 2003, to become a Consumer Electronics behemoth and it has, and we have always credited it to the way Steve Jobs ignores the traditional ways of doing things, and tries to change the rules. It doesn’t always work, but he always tries it and when it does work, you get results like the latest quarter (see elsewhere in this issue), which has Wall Street talking up Apple as a $100 billion revenue business, and if it does four quarters like that one, Wall Street is right.
Very few of us felt initially that the iPad really did create a new product category, but what is $4.6 billion of revenue in a single quarter, a quarter where the Tablet is still in ramp up mode, if it does not signal a new product category. Most financial analysts looked at the way in which it came on the scene and felt that people didn’t NEED to have one, and that during a recession they would replace their smart phones, replace their laptops, but NOT buy a Tablet. At Faultline we FELT they were wrong, but couldn’t come up with a solid reason why. But that’s what happened. (Our report Tablets 2.0 ‘ This time Think Bigger details the future growth and usage of Tablets globally, email peter@rethink research.biz for an executive summary).
It’s like anything else that is new. People sense that it is new, that they will like being part of something that is new, and they find the money for it, regardless of their financial condition.
The first question everyone is asking is whether or not Apple can continue to shake up the world if Jobs leaves completely or even dies. First off we don’t have a concrete idea of what Jobs’ health problem is, so we don’t know whether that is likely to happen. People are trying to read huge amounts into the precise selected wording of his departure notice. We think it is fairly safe to say that the departure of Jobs from running things day to day is largely irrelevant. That fact that he remains alive and well enough to chew out the rest of his management team, even if it is only once a week, is enough to continue his dynasty. That was shown when Tim Cook led the team in Jobs’ absence while having a liver transplant.
It is only the loss of Jobs permanently from Apple that is a real threat. Cook may be good enough to run things while Jobs is protecting his back, but it is unlikely that he could hang on to power if Jobs passed away or went out of the picture completely in any other way.
There are two issues here. In a power vacuum, there would be many heirs to the throne, and Cook could become a victim of politicking. But far more likely is that Apple would no longer be given the same level of permission by its partners, to experiment. Touch screens had been on phones for years before Apple joined the party, but Apple made them work. Tablets have been around for years, and cellular operators refused to get involved with selling them, but under Apple they formed an orderly queue.
Would partners do that for Cook? Some might, but not all of them. There would be doubts and doubt eats away at belief. Cook could likely produce just as good a set of products, potentially including new product areas for Apple, but would partners take them to market with such gay abandon? Probably not. Not without the Jobs stamp of approval.
Then there’s the gambling. Jobs has always felt entitled to gamble the odd few $billion, even before Apple could afford to lose that amount, tying up supply lines, even before a new product category was established. That’s a monumental gamble which Wall Street usually discourages executives from taking. Cook may be able to make such gambles, learning at the seat of the master, but does he have the same level of nerve or investor support? That type of nerve only comes from knowing you built the house anyway, so it’s unlikely.
So as long as the story continues to be that Jobs is coming back, and as long as it does not become obvious that he is NOT coming back, then Apple will continue to perform. In the bloodbath of fighting for leadership if Jobs does not come back, few will have the nerve to steer the ship well, never mind as expertly as Jobs, and it has the potential to become a corporate catastrophe which takes with it many other companies ‘ copiers and suppliers alike. So get well soon Steve.