Casting Jobs as Savior Is Premature
Since Apple Computer turned a tidy $47-million profit last quarter, it’s hard to get anyone--even the legions of Apple pessimists--to say a bad word about acting Chief Executive Steve Jobs. After all, as co-founder with a reputation as a visionary, he does take on an almost messianic air.
As for me, I haven’t been able to shake the nagging sense that Jobs is ill-suited to be cast as the “Father Knows Best” figure that so many in the Mac community seem desperate for.
Perhaps the Mac faithful should consider whether unqualified hero worship of this guy serves their interest in rebuilding Apple as an important force in personal computing.
His uneven history as an executive aside, what do his recent moves suggest about where he is taking Apple now?
Jobs’ new online-sales apparatus, charisma and sheer force of will played some role in the success of Apple’s new G3 machines and the recently profitable quarter. (We’ll know if this was a fluke in mid-April, when Apple announces the current quarter’s results.)
Also credit Jobs with killing Newton--the bulky, pricey personal digital assistant that was a millstone around Apple’s corporate neck since the day it was introduced.
And don’t forget two key moves Jobs made last summer and fall: He installed the first competent board of directors Apple’s had in ages and simplified a mystifyingly complex product line.
Jobs also dumped the ineffectual retail chains and created Apple Stores within CompUSA. Even though Mac retail sales continue to drop--1.2% of the market in January, according to Computer Intelligence of La Jolla, or between 2% and 3%, according to PC Data of Reston, Va.--the CompUSA strategy projects an upbeat approach that could ultimately build consumer confidence.
Jobs’ biggest contribution? He enforced focus on a historically unmanageable company whose survival depends on executing well in a few key areas.
But focus has come at a price. Jobs had to reduce the bloat from Apple’s payroll. Unfortunately, along with the layoffs, many of Apple’s best and brightest have fled Jobs’ dictatorial management style, flooding Silicon Valley like El Nino-generated storms. Unlike local flood plains, however, other companies have gladly soaked up the talent.
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With many departments desperately short-handed, does Apple still have the critical mass of engineering talent--or the institutional memory--needed to carry core projects forward?
That brings us to the eyebrow-raisers. Remember that Jobs sold Next Computer to Apple for $430 million--much of which he pocketed. (Soon after, he sold all but one share of his Apple stock, though in fairness, he’s now being paid exclusively in stock options.)
The NextStep operating system, the basis for Apple’s new Rhapsody OS, was the ostensible key to Apple’s future. What’s happened since Jobs took the helm? He certainly didn’t risk his NextStep proceeds with an investment in Apple. Meanwhile, Rhapsody has become close to invisible.
It’s being positioned very narrowly--as a server OS. Eventually, Apple says, it will be targeted to “power users” and someday as a mainstream OS.
“The problem is, if Rhapsody is a server OS, where is the server hardware it’s going to run on?” asks a former Apple executive. “Where are the server engineers inside Apple? They’ve all been let go.”
Jobs also killed Apple clones, with the exception of Umax, which strains on a short leash and will probably phase out its Mac business this year. Without clones, Jobs said, the Mac would recapture market share. Instead, Mac users lost the only low-priced source of Mac OS-based systems, as well as the cloners’ innovations. And Apple’s market share continues to plummet.
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Then there’s Jobs’ pricing strategy. Nearly a year into the ascent of the sub-$1,000 PC market, Apple’s least expensive offering goes for about $1,400. Granted, G3 Macs offer great performance for the price, but schools and new users don’t know that--partly because Apple’s high-tone concept ads don’t say so. Those buyers are looking at the bottom line, and they don’t see a Mac in the running.
Meanwhile, Jobs is so powerful within Apple that every candidate for permanent CEO has reportedly chosen not to work in his shadow.
Phil Schiller, Apple’s vice president for worldwide marketing, told me recently that Apple has a secret plan for company growth. If you remember the Nixon era, that should give you pause. Does Jobs really have a plausible plan--beyond showing two or three quarters of profit and declaring victory, then getting out and letting others pick up the pieces?
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Charles Piller can be reached via e-mail at cpiller@mindspring.com
