Apple at 40 Apple is 40 years old. The leader was Steve Jobs, but he's gone and many still don't understand his core idea. The idea was Apple's control over "the user experience". That control is at risk today, and the company's future hangs in the balance as a result under the new leader.
How people use things was Jobs' lifelong obsession. The Apple II was certainly practical: it had a keyboard for input, a tape recorder for storage, a TV as interface and a printer for output. Almost immediately, Jobs was looking for something more. He found it at Xerox PARC. It became the Macintosh.
It took Microsoft a half-decade to match what the Macintosh could do in 1984, and that never got beyond the idea of pointing-and-clicking with a mouse. Behind it was a "Macintosh way" for designing programs in a consistent manner so that users could concentrate on what they were doing, rather than how they were doing it. This resulted in brand loyalty among creatives, even after cheap Windows machines flooded the market.
Jobs saw industrial design as another part of the user experience. Mac clones released during Jobs' exile were clunky, inconsistent, and focused on price rather than look-and-feel. This was anathema to him.
The user experience includes how the device fits in your hand, what it looks like, and how it's made. This is key to the iPod, arguably Jobs' comeback product. In 2009, I saw a man happily watch movies on one for 15 hours straight, during a flight to China, long before there were unlimited movies in seatbacks.
Of course, it wasn't just the design that made today's Apple possible. That was China. Apple could never make enough Macs to soak up demand and keep prices competitive. China allowed it to ramp up production. It did the same with the iPod, iPad and iPhone. Combining the obsession of user experience with China's obsession for low-cost manufacturing transformed Jobs from a mere CEO to a god in the minds of many – not just fanbois but also Wall Street. In 2011, Apple – which had been on the ropes of bankruptcy in 1997 – became the world's most valuable company at $337.2bn, measured by market cap. It hit $650bn the following year and has since gone beyond even that number. Apple has since been surpassed by Google parent Alphabet.
Now, this might be heresy, but in your correspondent's estimation, Jobs' successor, Tim Cook, is certainly not a god – not yet, anyway. And he's not a god at an important time.
The Apple Watch is Tim Cook's first big gamble as Apple's leader, and the jury remains out on the device. That's possibly why investors won't pay much more for Apple's earnings than those of IBM, and IBM is a company in a very difficult position – an enterprise IT giant, shedding workers, struggling with falling revenue. The two companies couldn't be more different.
If we were unkind, we might say IBM's current woes could be likened to Apple's 1997 period – that time in Apple's history when exiled CEO Steve Jobs returned and when Microsoft invested a revivifying $150m. What came after 1997 was iMac G3, iPad, iPhone, iPad. In a word: "turnaround." That is, if course, if things work out for IBM.
Now, back at 2016 Apple, Cook has just cut the Watch's price. Investors clearly see the Watch as an "interface to an interface" – the latter being the iPhone – rather than a device in and of itself, like the iPhone was back during its early days. That is a device that changed the status quo by introducing a new interface. Remember Steve Ballmer laughing off the iPhone?
And yet, Apple should see the Watch as a potential game-changer. Not in the way the iPod, iPhone and iPad revolutionised portable music or computing, but rather as game changer in the field of quantified self and the Internet of Things – specifically, in the harvesting of personal data for the field of medicine.
Consider that 86 per cent of America's health bill is spent dealing with preventable chronic conditions such as (some cases of) heart disease and many cases of type 2 diabetes. Better monitoring of the conditions and habits leading to them can lower the US's $3 trillion a year health care bill by hundreds of billions of dollars, while enabling longer, healthier lives.
Moreover, Apple needs the Watch. Currently we are in the era of the side effect of success of those things that propelled Apple to stratospheric market caps. From massive growth, the iPhone and iPad have left residual market saturation in both smartphones and tablets, and growth is slowing – according to analysts.
But to succeed in the collection of health data, federal standards with names like IEEE 11073, which date from 2010, need to be enhanced, deployed, and integrated with medical systems used by doctors and hospitals. That means adding encryption. It means taking responsibility for the data's security.
How can Apple do that if the FBI stands ready to break that encryption at the drop of a court order? That's why Apple's fight against the FBI mattered, and why tentative victories must become permanent ones. That danger is past – for now. What comes next is uncertain.
Jobs understood design and interface. He ridiculed and overcame the status quo and the competition – Sun Microsystems's Java, Adobe's Flash, Microsoft and Windows in general.
But the US government? Jobs never had to stand up to Uncle Sam. What we are witnessing is Cook trying to earn his spurs as an Apple deity – on the Watch, as the initiator of a new interface, and in standing up to Washington. ®