Can Apple Thrive Without Steve Jobs?

 
 
By David Morgenstern  |  Posted 2007-01-03
 
 
 

Can Apple Thrive Without Steve Jobs?


Ten years ago, give a week or two, Steve Jobs returned to Apple Computer, the company that he had co-founded in the now-hazy garage beginnings of the personal computer era. The company was a fiscal, organizational and technological mess.

Under Jobs leadership, the company has regained a solid, if still small, foothold in the industry, still as a manufacturer of computers as well as prominently a seller of consumer A/V devices and content services. This turnaround was no small accomplishment. For many, its a modern miracle, with Jobs being given the major share of the credit along with Svengalic status.

However, concern on the street grew in December that Jobs tenure may come to an end, not by a coup by the board of directors as happened in 1985, but from legal troubles around stock options and perhaps a cover-up.

In the streets imagination, Apple is Jobs. Or perhaps the other way around: Jobs is Apple. Whatever. This theory is still all about Jobs cracking the whip in Cupertino and speaking the Mac gospel to the public at the annual Macworld Expo and Apple Worldwide Developer Conference keynotes.

But is that right? Is this personal identification necessary for the continued success of Apple?

The latest scare stems from investigation of hundreds of companies, in and out of the tech field, for having backdated stock options. On Dec. 27, Law.com reported that federal prosecutors were examining whether Apple executives "apparently falsified" stock option documents.

On Dec. 29, Apple filed its quarterly and year-end reports and defended Jobs.

"The special committee, its independent counsel and forensic accountants have performed an exhaustive investigation of Apples stock option granting practices," according to a joint statement by Al Gore, the chairman of special committee, and Jerome York, the chairman of Apples Audit and Finance Committee.

Click here to read more about Apples filing and legal problems.

At the same time, Jobs reportedly hired his own legal team to handle his personal defense. So, things could get uglier. Or not.

Before heading into Apples existential questions about Jobs, let me give you a piece of Jobs history that you may not know: His return was foretold by prophecy.

Near on 10 years ago, I was frantically tearing up a year-in-review special report due for the Jan. 6, 1997, print edition of MacWEEK. All the timelines and stories needed rewriting to accommodate the just-announced news of Apples selection of Jobs and his NeXTstep OS. Throughout 1996, the word was that Jean Louis Gasse of Be and the companys BeOS were all but a done deal.

Do you dare to take eWEEK.coms Apple trivia challenge in honor of the companys 30th anniversary? Click here to read more.

One assignment that I handed out for this special report was an interview about Apples upcoming year with a local Silicon Valley psychic. If it was good enough for Nancy Reagan, why not for Apple?

Leander Kahney spoke to "intuitive consultant" Barbara Courtney. She said that she had clients at many tech companies, including Apple, Sun Microsystems, Hewlett-Packard and Motorola, as well as politicos in local and federal government. (And we wonder why things are the way they are?)

However, looking back on the story, Courtney fares well in the prediction department. Long before the announcement of the Apple-NeXT Software merger, the psychic predicted the return of a "shadowy figure from Apples past," Kahney wrote.

Heres a snippet from the article: "I wonder who it is that left early on that might be coming back to the company?" Courtney pondered. "I dont get a name, but it feels like [someone from] when Apple was the newest and hottest thing on the block, someone at a higher level will get reinvolved again in the same capacity. It feels like someone is coming full circle."

Wow. Of course, she backpedaled a bit on this prediction when Leander quizzed her about Be, which at the time was reportedly leading the race. We can only assume that this outside information led her astray.

Who figured that Jobs would return? Nobody. The return of Steve Jobs was a super-secret held only in the top echelons of executive management.

In addition, she had a couple of other solid hits—on the standing of then CEO Gil Amelio and his management team and the performance of Apple stock. Remember that at the time, Apple was still digesting its latest reorganization and in April had recorded a $740 million loss.

Courtney said pressure would break up the top executive team in the middle of 1997. "I dont see the team there now falling into place. I dont know whos leaving, but I would say there will be a change in one of those positions," she said in the story.

In that summer, Jobs commanded his own putsch of Apples top ranks. Amelio and Ellen Hancock departed in July, and Jobs was named CEO shortly thereafter.

The psychic also suggested that Apple stock was a good investment, countering the doomsayers then in the media and analyst ranks. Apple has been called "dead" many times, including by the editors of PC WEEK, the successor publication to eWEEK.

"When people called me and said, Oh dear, Ive got stock in Apple, I told them to hang on to it. ... If I had more disposable income I would definitely buy stock in Apple," the psychic said then.

Apples stock price was about $12 at that time in 1996; it closed around $85 the other day. Its also split twice since then. Heres a 10-year chart from InvestorGuide.com.

Next Page: The Steve Jobs difference.

The Steve Jobs Difference


With constant holiday looping of "Its a Wonderful Life" fresh in our memories, its easy to wonder what might happen were Jobs removed from Apples picture. (It wouldnt take much of an imagination to figure the changes in reality if Jobs hadnt been born at all, which is the character George Bailey uncovers in the movie.)

Still, even with Clarence the Angel in mind, it would be difficult to target Apple strategic decisions over the past 10 years where Jobs didnt make a personal difference. So, the Apple-Jobs/Jobs-Apple identification isnt hooey.

However, looking through the long list of accomplishments over the decade, it seems to me that there were a small number of decisions and events that only Jobs could carry out and be successful. These were moments—most in the early part of his latest tenure—that relied upon Jobs authenticity as a founder of the company as well as the communication that he still had a personal stake in Apples direction.

Heres my shortlist for these crucial events:

  • Reassuring the Mac base. In the summer of 1997, the Mac faithful were confused and despairing. Apple was losing money, its bifurcated BSD Unix-based Rhapsody-Classic OS road map was confusing, and the platform was losing ground in its traditional stronghold markets.

    Worse, were rumors that Microsoft might pull the plug on Mac development. Microsoft Office was the glue that kept the Mac holding on in some businesses and the enterprise. And MS Word was the leading word processor on the Mac (and still is) and was a central component for the professional content creation workflows on the Mac platform.

    Jobs took the stage of the Boston Macworld Expo and rallied the audience of Mac VIPs, analysts and developers. This was no lovefest, however, and Jobs was greeted on many occasions with boos and catcalls.

    The most reassuring thing to many that day was that Apple would settle its ongoing patent lawsuit with Microsoft, with Redmond guaranteeing Mac versions of Office for another five years. There were other parts of the deal, including a minor investment ($150 million) by Microsoft in Apple stock.

    "Apple lives in an ecosystem. And it needs help from other partners; it needs to help other partners," Jobs said. "Relationships that are destructive dont help anybody in this industry as it is today. During the last several weeks, weve looked at relationships. One [relationship] stood out as one that hasnt been going so well, but has the potential to be great for both companies: Microsoft."

    This message was greeted with a mix of applause and groans. The crowd grew more boisterous as Jobs ran through the details of the deal. You can hear some of the reaction on this YouTube video clip.

    Is a "perfect storm" of Mac upgrade sales on the horizon? Click here to read more.

    Still, Jobs kept his cool, and this message was generally accepted in the months that followed.

    "We have to let go of the notion that for Apple to win, Microsoft has to lose. We have to embrace the notion that for Apple to win, Apple has to do a really good job. If we screw up, its our fault," Jobs continued.

    Next Page: Jobs keeps developers on the Mac and navigates the Intel transition.

    Keeping Mac Developers and


    the Intel Transition">

  • Reassuring developers. For the 1997 Apple Worldwide Developers Conference, fewer than 1,800 developers showed up. This was half the attendance of years past.

    Before the confab, MacWEEK reporters checked the pulse of developers, and the mood was dark.

    "Apple has squandered the attention that I was willing to pay over the course of the past few years, and most especially during the past few months. Its time for me to pay attention to vial development platforms," one developer said, pointing to the Windows market.

    Worse, when the NeXT squad arrived in Cupertino, they came as heroes riding in to save the day (meaning they were seen as conquerors by the existing Classic Mac and Copland teams). There was a lot of bad blood inside the software groups over who knew best for the Mac and the Mac interface.

    It took Apple a good year and a half to sort out the road maps and to present a new vision for the future of the Classic Mac OS and the new Unix-based one, now called Mac OS X. The plan that Jobs presented in the spring of 1998 included a refined and workable plan to run Classic applications under OS X; Quartz, a new PDF-based graphics engine; and a laughable schedule that predicted the release of Mac OS X Version 1.0 in fall of 1999.

    Jobs spent a lot of time at these conferences talking to developers in town-hall meetings. I witnessed one of these sessions, where he was very ingratiating to the audience. This personal effort helped restore the confidence of ISVs—along with increasing sales of iMacs and PowerMac hardware.

    Should Microsoft take a page from Apple with the transition to Windows Vista? Click here to read more.

    This transition could have gone terribly wrong. But it didnt. Apple now has a growing group of large and small developers writing for the platform, which is the largest base of Unix desktops.

    For comparison with the dog days of 1997, there were some 4,200 developers from 48 countries at the 2006 WWDC in San Francisco, not counting the 1,000 Apple engineers. More than a half-million people are registered with Apples Developer Connection site, the company said, although many of them must be enthusiasts, IT managers and other fellow travelers.

  • The transition to Intel. Analysts say Apple may sell some 9 million Macs this year. And at next weeks Macworld Expo in San Francisco, we may hear how well the companys lines of Intel Macs sold in the last quarter or the year gone by. On the anecdotal front, I can attest that every time I checked out an Apple store, there seemed to be a line, and it wasnt all about iPods. Macs were heading out the doors, especially notebooks.

    With this success, its hard to remember back to the 2005 developers conference when Jobs revealed Apples shift to Intel processors.

    "Its good news, but one of the scariest things Apple has announced in long time," said Leonard Rosenthal, chief innovation officer at PDF tool vendor Apago, of Alpharetta, Ga., immediately after the 2005 WWDC announcement. While he said it was the "right decision," he told me that sales could take a hit. "Theres big-time uncertainty."

    Notice the comments of Eric Prentice, CEO of Dr. Bott, a Wilsonville, Ore., peripheral vendor. He worried over the number of times that Jobs had reiterated a line about Apples health during the speech, as if that repetition were somehow a sign that the company really wasnt in good shape and that developers needed extra doses of assurance.

    "But I have faith in Steve," Prentice said.

    Again, we see the trust of the Mac community in the word of Steve Jobs. He said the transition would be good for the platform, and we buy the message.

    Of course, Ive left off many other important actions that Jobs had a hand in, and some readers may consider them even more important. But Ive focused on something only Jobs seems to possess: the trust of the Mac industry.

    So we return to the question: Can Apple do without Steve Jobs?

    Perhaps the answer can be found in another question: Do we see the need for Jobs to spend this trust capital in the near future?

    I dont see it. Is there a problem or looming transition on the order of OS X? Certainly not in the future move toward 64-bit computing. Or in content services on the consumer side.

    The installed base appears content, although the summers issues with the MacBook notebook may herald a concern for the future.

    Mac sales are up, and Mac customers are purchasing software and peripherals. From what I hear from developers, Mac customers still purchase more third-party products than their Windows counterparts.

    To succeed, Apple must continue to execute on its plans. Thats what Jobs said in 1997. And that can be accomplished without Steve Jobs.

    Please note that Im not saying Apple would be better off without Jobs. No way. Hes amazing and entertaining. I wish him only health and job security for the years ahead.

    But the current FUD around his status should stop.

    What do you think? Can Apple, the Mac and the iPod do without Steve Jobs? Let us know here.

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