When I saw Steve Jobs introduce the iPhone in 2007 I, like the up-close-and-personal event attendees, expressed awe and delight. It was a typical masterful performance by the minister of technology-cum-humanities. Here was a single device incorporating those functions we use most in mobile devices. It was a phone, of course. But it was an iPod and it could surf the Internet and both send and receive email. It included a calendar and a contacts list. And so much more.
It’s sometimes difficult to remember the pre-iPhone world. First off, the Blackberry was king of the business world. It had a physical keyboard, after all, overwhelming its tiny screen. There were no Android devices. Nokia outsold everyone. At the time I had a Motorola RAZR, because it was small, mostly. One could have a phone in just about any shape, size, and color. Can you say “fragmented”? The iPhone revolutionized mobile devices. Period. Now everyone has gotten into the act. (Just look at devices today. Imitation is the sincerest form of flattery. But slavish copying? Come on.)
I recall Jobs remarking that Apple had “patented the hell” out of the iPhone. He added that it would take competitors five years to catch up to the original iPhone.
Well, it’s been about five years. Apple secured dozens of patents and has accused Samsung and others of infringement. In several courts Apple has prevailed, though it remains to be seen what ramifications the verdicts will have in either suppressing non-Apple devices and software or extracting license fees from competitors.
Yet, there can be little doubt that Android devices, especially, have eroded Apple’s onetime supreme dominance. I suspect that the Samsung Galaxy III is the number-one challenger to the iPhone. Reviewers give it high marks, with a majority opining that if one insists on the Android ecosystem, the Galaxy is the best there is.
Still, Apple continues to make a ton of money on its iPhone product line, which now features a fifth generation at the top. Once again, pundits proclaim that there is no better combination of hardware and software on the market in the iPhone 5. It’s lighter and faster than its predecessors and now sports a larger Retina display.
But, and you knew this was coming, uncertainty abounds regarding Apple’s future. Its stock price soared above 700 not too many weeks ago; more recently it fell below 600. (It is at $595 as I write.) In particular, how long will consumers be willing to pay a premium for superior products when there are many cheaper gadgets out there? Heck, Amazon admits to selling its new Kindle line at cost or even at a loss, rationalizing zero margins by betting on content-based revenues from its devices.
On the tablet side, Apple maintains its lead. For now. The iPad, according to industry analysts, is by far and away the superior product in the full-size category (displays of around 10 inches). However, Google and Amazon refused to cry “uncle.” Indeed, they have ushered in tablets with smaller “form factors” that have captured bigger chunks of the market. So, Apple introduced an iPad mini a couple of weeks ago. Reviewers give it high marks, though they are generally disappointed in the relatively higher price and lack of Retina display.* Nevertheless, Apple sold out of the product, as consumers rushed to order theirs online at first opportunity. If you want one, you’ll have to wait.
Not a day goes by that industry watchers predict the demise of Apple, especially now that Steve Jobs is no longer at the helm. Can Tim Cook—the engineer, for God’s sake—continue the “insanely great” legacy of the master? Will he be able to say no with the conviction and effect of Jobs? What about the internal politics of the organization? Nature abhors a vacuum. Which of Steve’s “boys” would challenge Cook’s authority and even seek to replace him?
Since the changing of the guard at Apple we’ve heard of unmistakable signs of tension and friction in the upper echelon. Scott Forstall, whom Jobs had put in charge of iOS, reportedly irritated the hell out of other VPs, not to mention those in his charge. But Forstall failed to deliver on two notable projects: Siri and maps. His clock began ticking rapidly when he refused to sign an apology statement for the latter, forcing Cook to append his signature instead. Then one of Cook’s principal hires, John Browett, pissed off retail store employees, curbing their hours and lopping off their jobs. Browett, it was said, wanted to increase margins in all those Apple stores, to hell with customer service. Wrong move, John.
So, both Forstall and Browett were dismissed from their respective positions a couple of days ago, though not exactly kicked to the curb like the Rest of Us. They’ve already made millions and will surely pocket a few more before they turn in their keys.
The twin moves bode well for the company, I think. Apple will have fewer vice presidents, more collaboration, and, most important of all, Jony Ive assuming design responsibilities across both hardware and software. It’s a shame this didn’t happen sooner. Eddie Cue, who redeemed Mobile Me, transforming it into the now-workable iCloud, will now be in charge of “services” on all fronts, including iBooks and education; he’ll also assume responsibility for maps and Siri. Craig Federighi, an exceedingly bright and seemingly amiable fellow, takes over iOS from the prickly Forstall. He continues to head up Mac OS. I look for even greater integration between Macs and iOS devices.
Cook understands that Apple can ill-afford to rest on its laurels. Like circling sharks the competition is ready to exploit any perceived weakness and move in with a presumed “killer” this or “killer” that.
Microsoft is the latest to join the circle. It certainly has the capital to invest. The bigger question is whether or not it possesses the imagination and proper instincts to take on Apple or Amazon or Google. Those traits have been profoundly lacking thus far. A long string of ridiculous comments by CEO Balmer give ample evidence of Microsoft’s cluelessness. Will customers now flock to the Surface or to the myriad other hardware devices running Windows 8 or RT? Or, is Redmond too late to make a difference.
Those who wish to sell Apple short, in multiple senses, will likely regret the posturing. Apple has more talent than its counterparts. It combines hardware and software, and will do it more elegantly and seamlessly moving forward. Jony Ive is the best in the business. And don’t forget all that cash.
Will Apple deliver brand new products over the next few years? I don’t know. The 800-pound gorilla is “television.” Jobs tantalized his biographer with a reported epiphany. So far, however, there have been no significant indications that another revolution is underway in the living room. I don’t believe Apple will produce its own TV. If it does move in this direction, I’d bet on a monster Apple TV that will be as simple to use as asking Siri where you live.
For the most part, I expect Apple products to just get better and better and better.
* As to the pricing of the smaller iPad, I have a hunch. I would think it a no-brainer that Apple will equip the next generation of the device with the Retina display. However, Apple is loath to raise prices on an established product. Rather, it improves each new iteration, leaving prices intact. I have seen some estimates that Apple’s margin on the iPad mini is between $50 and $100 a unit. The Retina display will surely cost more to produce, which means that margins will shrink—unless Apple figures out a way to enhance production efficiency, and, I suspect, the device was rushed for the holiday season, which did not give the company sufficient time to perfect the design+manufacturing process. Currently the mini is priced between the larger iPad and the iPod Touch. I’m guessing it will stay that way, even with the better display.