No Jobs at Apple, Inc.?

To be or not to be, that is the question! Will Apple survive the absence of Steve J0bs?

Before I share my thoughts on this topic, I’d like to mention that the timing of the announcement was superb; only Apple could have done it.

I’m sure this has been in the works for some time, and it is possible that because of his poor health, SJ did not show up in NYC for the launch of the Verizon iPhone. It has also been rumored that of late, he has been coming to 1 Infinite Loop only about twice a week, having lunch in his office rather than at the company cafeteria, etc. It is quite probable that Tim Cook has been running the entire Apple operations, behind the scenes, for some time.

Announcing his indefinite medical leave on a stock market holiday in the US gave investors time to mull over the impact of Apple without SJ, and with Tim Cook running the company. While Apple stock in foreign markets dipped almost 10% on the day of the announcement, it was down only by less than 2% in the US at the end of the first post-announcment trading day. I have no doubt it will regain its value soon.

The timing was also perfect as it was the day before the 2011 Q1 results announcement, where Apple was supposed to blow past the WS expectations, and it did.

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Would Apple be the same without SJ? Probably not. Would AAPL sink or not grow as much as it has been in the recent past? Also, probably not.

SJ is the kind of individual who appears amongst us only once in a long while. The greatest genius of SJ is his instinct to foresee the needs of consumers down the road, even when they themselves, or Apple’s competitors, may not be aware of it. As SJ himself said, it is better to be where the puck (of ice hockey) is going to be, than to be where it is now.

iPad is a good example. In 2005, Bill Gates announced that within the next five years, most of the computing would be done on tablets, but his wish wasn’t granted. It took SJ, and Apple, to create a third mode of computing while the mobile computing (in laptops and netbooks) was still flourishing, despite being criticized for creating just a bigger iPod Touch which is not capable of replacing the PC. The sales were predicted to be dismal.

Besides his vision, SJ is also a charismatic speaker, and his passion for his products is obvious. In addition, the attention to detail he gives to these devices as well as the quality of Apple’s merchandise gives confidence to the buyer. As of now, while Mac is only 9% of the entire PC market (used to be 2-3% in 1990s), it commands 90% of the $1000 and above segment.

In mid-1990s, an AAPL share used to be in single figures, and the company’s annual earnings less than what they are every quarter now. The stock is trading over $300 now and Apple is the biggest tech company in the world, and the second firm largest in the US, with a market cap over 300B.

iPod is another great example of his foresight and tenacity. The criticisms of it were greater than of the iPad. Who’s going to spend $400 to buy a MP3 player? Even though the sales have dipped a shade over the last year, the iPod is still in the lead, capturing over 70% of the MP3 player market.

But the iPod story also shows us a side of SJ that will be hard to replace: his negotiating skills. Only SJ could have managed the coup de theatre that had the music industry agree to sell single songs, rather than only albums, on iTunes for 99¢ each. Later, they dropped the DRM requirements as well. Today, iTunes is the biggest store selling music and its sales top that of even the CDs. This coup de grace to the Big Albums could only have been given by SJ.

The other thing SJ is famous for is his ability to say no. When he came back to Apple in 1996, there were over two dozen models of Mac PCs; he slashed them to just four. This speaks of the confidence he has in his vision, and the sales of Macs have risen ever since. He also nixed the Newton, the granddaddy of all PDAs, although a lot of its technology was advanced to build touch-enabled devices like the iPhone and the iPad.

Finally, this confidence of saying no and flying against the wind has had a big impact on several industries, and has often changed them. As Henry Ford famously said that if he he had asked his customers, they would have wanted him to build a faster horse. The iPad and the iPod are obvious examples, but so is the iPhone.

Before 1997, when the iPhone debuted, all phones copied BlackBerry. Even the first Android was rumored to look like the BB8700. Since then, however, all phones try to look and behave like the iPhone. Flip phones that were all the rage, like the Motorola StarTac and Razr, are so passé now.

The iPhone changed the whole mobile paradigm. I remember having WiMo and Palm devices, and then the BBs. While they were great, the iPhone brought the whole new meaning to ‘mobile computing’ with a real mobile web browser and then apps. While Android is catching up fast, it still is behind the iOS eight ball. The first iPhone was about five years ahead of the competition, but is only about six months or so ahead of an Android device now. With Verizon carrying the iPhone now, however, I am sure the Android OS will suffer.

(An interesting aside: the Verizon homepage lists three kinds of phones they carry – the Feature phones, Smartphones and the iPhone! It was Google that wanted to call the Nexus a ‘Superphone’.)

Besides the iPhone, Apple has spurred on industries by being the first to use USB as their only I/O port and the first to use Wi-Fi in all their computers. It has also killed, by eliminating in it’s products, the floppy drives (both 5.25 and 3.5). All these, any many more changes, were met with initial resistance, but are industry standard now. I fear for the extinction of optical and hard drives in the next few years, as Apples discontinues their use.

Not widely known is his involvement with movies, another industry SJ changed. Having bought Pixar for a mere $10,000, its first animated movie – Toy Story – won accolades and awards. This was at a time when computer animation was in infancy and ignored. All of the movies from this studio have been box-office hits since. SJ even had Disney agree to have Pixar as a co-brand on all movies and merchandise. He is now Disney’s largest shareholder, owning 7% of the stock.

Certainly, it is not possible to have all these qualities is a single individual. However, I am certain that the executive bench at Apple have most of these qualities in committee. It is also certain that the company has been preparing for a succession for some time.

Furthermore, SJ is only the public face of Apple. He would not have succeeded without the industrial design genius of Johnny Ive or the inventory management expertise of Tim Cook. There are many others who add to complete the experience that is Apple. So Apple is prepared, IMO, to bear the brunt of SJ’s departure.

Nevertheless, while design, quality, and deliverance of new and exciting product may be assured from Apple going forward, with or without SJ, the biggest hit the company will take is the force of personality SJ brings to the negotiating table.This would be very important for Apple going forward as the company wrestles with media, print and video, to enlarge and solidify its ecosystem to provide for the iDevices and its foray into the living room with Apple TV and the rumored Apple HDTV.

In addition, no one else at Apple will have the authority and decisiveness to say no or yes to any major decision. Like the military, great corporations are not democratic.

Perhaps that is why SJ has retained the title of CEO while on medical leave, and has indicated that he will have a say in all tactical decisions at Apple, while Tim Cook runs the day-to-day operations.

All good things come to an end and it has been painfully obvious that companies deteriorate when founders leave, as it happened with HP and MS. On the bright side, there are companies, like Disney, which have maintained the vision and vigor of their founder.

Apple is now a big cap company but still acts like a startup. Companies like this don’t grow 71% year-over-year, as Apple has reported on the 18 January  Conference. In addition, SJ has been notorious at keeping teams small, about a hundred or so. That is why there are delays often, as the same teams work on all OSes, from iOS to OSX. However, this is good for the Mac platform as a whole, because the same people carry over experiences from one side to the other, unlike at MS.

The management structure at Apple will be studied in business schools for decades to come. There are never more than two or three layers of managers, so each worker has an easier time to share his idea/work with the top layer.

(Another interesting aside: Messrs. Hewlett and Packard introduced the concept of ‘coffee break’ to the American workplace. The idea was to have all levels of employees, from workers to managers, gather at one spot to share ideas; the company provided the coffee and doughnuts. Other H&P innovations: retirement plans, share in the company and flexible working schedule including work from home.)

It is a surprise that a $300B company employs only about 50,000 workers worldwide.

In conclusion, I see no danger to Apple or AAPL in the short or medium term. Who knows where we will be in 10 years?

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Will Intel go Google on Apple?

Intel has just bought the mobile chip-maker Infineon, which has the technology industry abuzz.

Intel is the biggest maker of computer ‘brains’ on the planet, and its x86 architecture has been a successful model running Microsoft Windows on PCs, so far. However, it has become clear that the mobile devices are at the threshold of overtaking the desktop computers.

Intel has developed a low-power Atom processor, but it has not been quite popular in the face of processors that use the ARM based architecture. With the purchase of Infineon, Intel gets its foot in the door of the mobile processor world. Previously, Intel had partnered with Nokia to develop a mobile platform; at that time, this was a move by these companies to counter Qualcomm cornering “…the market on vague- sounding, ultra-mobile device niches…

That project wasn’t too successful, but with the purchase of Infineon, Qualcomm, which makes ARM-based processors, beware: “Intel-Infineon deal goes far beyond handsets, putting new technologies in netbooks, tablets, embedded PCs, and more“; this could make Intel “Mobile’s next Goliath“.

In addition, it mounts a challenge to Apple’s lead of making its own A4 chip based on ARM. “…the Intel (INTC) acquisition of Infineon’s wireless unit has probably changed the balance. The move allows Intel to add an piece of the mobile puzzle that it never had before. Given its expertise in advanced semiconductor construction, the company could create a single package that would offer most of what handset manufacturers need to catch up to the iPhone, at least in terms of size and power, and still be compatible with the Android operating system.

Given Intel’s expertise in putting “…more stuff onto chips and get more chips out of a piece of silicon…“, this acquisition will be synergistic in providing Intel to “…offer bundled packages and potentially make itself economically attractive to handset vendors.

Paul Otellini, Intel’s CEO, told Liz Claman of Fox Business that about his deal, “Steve was very happy…and there were a number of competing companies for it…I think they’re very happy that Intel won the bid.”

Only time will tell if Steve Jobs remains happy about having someone providing aid and comfort to iPhone’s competitors. He has been burnt once by Eric Schmidt sitting on Apple’s Board and then coming out with an Android handset; he has to be carefully watching Intel’s moves, especially since Apple uses Infineon’s chips in the iPhone.

I would not be surprised if Apple ditches the ‘Intel-Infineon’ altogether. It could use AMD (it already uses ATI graphics, now a part of AMD) instead of Intel processors, and ramp up its in-house chip manufacture to avoid dependence on ones made by Infineon.

A case for an unlocked iPhone?

Gene Steinberg laments that AT&T, or any other US carrier, does not offer reasonable international rates, and would not unlock his son’s iPhone to use in Spain, either.
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I had a similar problem when I went overseas for three weeks last October. After a long to-and-fro with AT&T’s international ‘advisor’, she finally told me that under contract with Apple, AT&T cannot ‘SIM unlock’ the iPhone (I had the 3GS then), like they can any other handset when requested. I was forced to use another phone that I bought unlocked from Amazon.com, because I did not want to jailbreak.
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I did use Skype over Wi-Fi since all my contacts were on the iPhone, praying that nobody will place a call to me from the US when I was talking on VoIP. The 3GS did not have a separate disconnect for Wi-Fi and Cellular, and it didn’t occur to me to take out the SIM!
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I did write to Steve Jobs, then, to please issue an unlocked version of the upcoming iPhone. Apple has done so, but not in the US.
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This is indeed preposterous; I know a couple of my friends had their SIM unlocked in other cellphones. Using a prepaid SIM in the country you’re traveling is the best option for voice and data. This is especially true in Asia, where rates are very cheap.
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I had one other revelation: Carry an Airport Express on travels, especially overseas. While ethernet is available in homes and hotels worldwide, a Wi-Fi router is not that common everywhere. If you want to use Skype to place calls, you would need Wi-Fi.

Future of Android? Take 2

A week ago, I discussed the Future of Android and felt that one thing that will come to haunt Google will be the fragmentation of the OS, which will be difficult to correct because each OEM (Original Equipment Manufacturer) will tweak it differently to make it distinct in the market flooding with Android handsets, and also that this will make it difficult to upgrade to the latest version of the OS.

Well, Dell has just come out with its first handset, the Aero. It runs on version 1.5, which is 16 months old and four versions behind the current Android OS, 2.2. It is the “The ultimate example of Android’s flaws,” says Bill Snyder; “Dell’s new Aero shows yet again that the fragmented Android platform is broken and the carriers still rule idiotically“.

The venerated non-Apple blog, PC World, gives “3 Reasons to Avoid it“. Besides it being a mediocre hardware and being on AT&T, the third reason is that it has “Really Old Software“. It explains that “Dell has customized heavily the user interface on the Aero, something that would delay the company significantly if it ever decides to give Aero users a software update to the latest version of Android. Because of the old software on the Aero, many applications from the Android Market won’t be compatible with the phone, as they require 2.X version of Android, so you would be stuck with a limited selection of software add-ons to your Aero“.

Dell is not alone with this problem. Motorola has recently unveiled a successor to its Droid, the Droid X. However, in another article, PC World believes that the “Motorola’s Android 2.2 Rollout [is] a mess“, which “…is becoming an exercise in frustration“. The reasons are similar: fragmentation, and uncertainty as to when it will have a full functioning Android 2.2. Ken Segall has made a summary of this article:

• The first Android 2.2 (Froyo) upgrades to Droid failed to deliver Flash. An upgrade to the upgrade will shortly fix that.
• The overseas Droid (called Milestone) gets Froyo in late Q4, but only in Europe and Korea. Froyo is “under evaluation” for Canada, Latin America and Mexico.
• Motorola phones with pre-2.1 versions of Android won’t get Froyo anytime soon.
• The Motorola Cliq, Cliq XT and Backflip are waiting for Android 2.1, but the Devour won’t get it.
• Owners of the Droid Incredible are still waiting for their upgrade.
• The brand-spanking-new Dell Streak was delivered with Android 1.6 and won’t get an upgrade till the end of the year.
• Samsung Galaxy phones are expected to get Froyo, but no one knows when.
• The only company to “ace” the Froyo launch was … Google. Nexus One users got their upgrades back at the end of June.

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I have no doubt that the Android OS will soon become, and remain, the dominant OS. As I showed in my last article, it will populate the plethora of handsets manufactured by a number of OEMs who will fight with each other the on remaining slice of the profit pie left over by Apple and RIM.

Android is the Windows Mobile of the coming decade.

Future of iPad?

Very bright, if you believe iSuppli analyst Rhoda Alexander.

The iPad will account for an overwhelming 74.1 percent of global tablet shipments in 2010, with the remaining 25.9 percent consisting of a mix of older PC-type tablet products and competitive slates. Despite the arrival of the first real iPad competitors in 2011, Apple still will maintain a prevailing 70.4 percent share of shipments, iPad research from iSuppli bears out.  Even in 2012, the iPad will continue to control nearly two-thirds of shipments, at 61.7 percent, as the competition strives to develop ecosystems of tablet apps and content that can match up with those of Apple.

The most likely competitor to the iPad will be HP’s ‘PalmPad’, running on webOS. However, it would not be available until sometime in 2011. Also, Google has to make its ChromeOS ‘touch-enabled’, which it is not at present.

In, addition, “Competitors face some serious obstacles in their efforts to match the total iPad package, most notably competing with the growing suite of iPad-specific applications,” Alexander said.

This challenges the assessment of Acer’s Chairman JT Wang that the iPad’s market share will drop to about 20 percent, maybe less, in the near future.

I tend to believe Ms. Alexander. Matt Burns gives a reasoned analysis at the CrunchGear blog: “Did the iPad prëmptively kill the US tablet market like the Kindle and Nook killed other ebook readers?

iPhones at Target?

Well, old ones.

Target has started a program where you can trade-in your old iPhone.

Apple fanboy’s dream car?

Don’t compute and drive

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Of course, if you can afford this Mercedes-Benz S600, you must be having a chauffeur. To order, contact ZerCustoms.

The appleblog.com gives the details: “Each car comes packed to the gills with outstanding multimedia capabilities, including two iPads in the rear seats with matching Bluetooth keyboards for each. The iPads are capable of controlling every aspect of the S600′s COMAND system, including the radio, navigation system and telephone, in addition to BRABUS’ own custom multimedia functions. Don’t think you’ll be limited to offline or 3G use, either, because the car boasts its own wireless internet via UMTS and HSDPA connections.

As if that wasn’t enough, there’s also a Mac mini in the back seat that uses a drop-down 15.2-inch TFT display, Magic Mouse and USB 2.0 ports accessible to both passengers for real computing power. Finally, because you wouldn’t want to use iTunes on the Mac mini or the iPod apps on your two iPads, there’s a 64GB iPod touch in the center console that also controls the whole shebang using a custom BRABUS iOS application“.

More pictures to whet your appetite for this baby: