Tag: Apple Inc.

Apple Without Steve Jobs: How the New CEO Can ‘Think Different’

When people think of Apple, in addition to thinking of now-iconic products like the iPhone, iMac and iPad, they think of Steve Jobs, standing on a stage in his ubiquitous black turtleneck and jeans unveiling the latest in a string of innovative products from the company he co-founded in 1976.

On Wednesday, Jobs announced his resignation as CEO, ending a 14-year run that brought the company back from the brink of bankruptcy and reshaped the personal technology industry. Although Jobs, who has been on medical leave since January, will remain as chairman of the board, Apple chief operating officer Tim Cook will take over the day-to-day running of the company — and the daunting task of becoming the new face of Apple.

“There are few companies where the top person has had as much of an impact [as Jobs has had] at Apple,” Wharton management professor Michael Useem told Knowledge@Wharton for a 2009 story about Apple’s succession planning strategy.

But Apple’s success is due to more than Jobs alone, says Wharton operations and information management professor Eric Clemons. “Apple leadership has been brilliant,” he notes. “The team, clearly led by Jobs, but clearly more than Jobs alone, has become the best technology style house in the world. We pay a premium for Apple products because of how they look and how they feel foremost, and then how easy they are to use and to integrate into the rest of our technology and into our lives.”

Among Jobs’s biggest strengths were the ability to determine what the customer wanted and the will to force through “bold decisions that ultimately proved to be correct,” Clemons says. “In some ways he was indispensible. But he was never the whole story.”

Cook, who joined Apple in 1998 after stints at Compaq and IBM, also ran Apple during Jobs’s previous medical leaves. As COO, he oversaw the launch of Apple’s online store, fine-tuned its manufacturing process and revamped its customer support arm. Although Cook has appeared at least once in Jobs’s trademark black turtleneck and jeans, Wharton management professor Peter Cappelli says it would be a mistake for him to adopt a leadership style that copies Jobs. “A copy of anyone is going to come off looking bad. It will never be as good as the original, and people will spend their time focusing on the differences,” Cappelli notes. “I think [Cook] should be himself.”

But when it comes to Apple’s business strategy, Cappelli says it would be unwise to depart in any significant way from the path set under Jobs. “I think a ‘steady as she goes’ approach is a good idea, and also about the only option at this point.”

Apple shares fell 7% when news of Jobs’s departure broke Wednesday night, but the drop had narrowed to 2% by this morning. Most analysts expected the company to remain strong in the post-Jobs era, although Deutsche Bank cautioned that “risk is more likely to be centered around Apple’s three-to five-plus year product plans if/when Jobs permanently departs,” the Wall Street Journal reported.

And JMP analysts put a rare “hold” rating on the stock, noting that “it is not immediately evident to us how Apple replaces the irreplaceable and we are maintaining our neutral stance on the stock until it becomes clear — either that innovation and operational efficiencies will continue unabated under new management or that they are breaking down.”

According to Clemons, Cook must emphasize that, although Jobs is no longer at the helm, the design and strategic teams behind Apple’s success will remain intact. He says Cook could also buy back stock if the price drops temporarily. “The fundamentals of Apple as the premier high-tech design house and the premier integrated consumer technology company have not altered.”

For more on the evolution of Jobs’s career at Apple, see:

Encounters with Steve

Job-less: Steve Jobs’s Succession Plan Should Be a Top Priority for Apple

The Succession Question at Tech Firms: When’s the Right Time to Go?

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For Apple’s iCloud, the Sky’s the Limit

Apple’s iCloud begins a new era of cloud wars, in which companies like Amazon and Google vie for what may be a one-time, land-rush opportunity to attract new customers and cement their loyalty. Once a consumer stores their music, photos and other files with a service, it can create a high level of “stickiness.”

More directly, Apple’s move offers a compelling new level of convenience for gadget users. For those using strictly Apple products, at least, there will be no more relentless synchronizing of gadgets – smartphones, tablets, laptops – to keep music, photos, files and applications up to date on each. Since everything will simply sync wirelessly to a central server warehouse, updating one device becomes an instant update of every other device upon connection.

“It’s about time,” says Wharton marketing professor Peter Fader. Imagine if when you went to pick up your car at the repair shop the mechanic handed you a wrench and asked if you wouldn’t mind cranking on those last few bolts yourself. It’s almost as if we’ve been “brainwashed” into doing the tedious upkeep in synchronizing our electronic devices ourselves. Or, as Apple’s Steve Jobs put it in making the iCloud announcement: “Keeping these devices in sync is driving us crazy.”

For Fader, “This signals a whole new ballgame for everyone with a vested interest in music, ranging from Apple’s direct competitors — most notably Google and Amazon — to up-and-comers such as Pandora and Spotify.”

Apple’s announcement Monday came a few weeks after Amazon announced its new Cloud Drive and Cloud Player, which allow customers to store music and other content remotely on Amazon’s servers. In early May, Google launched its own cloud music-management service called Music Beta. Like Amazon and Apple, Google wants to manage music libraries and deliver them through the cloud. Many observers expect Facebook to jump into the market, too.

There is one big difference with Apple’s service, however: Consumers can “match” their entire music collection via the Internet with Apple’s catalogue of more than 18 million songs. iTunes Match will scan every song in users’ libraries and match them with an Apple duplicate copy already stored on Apple’s servers (in the cloud). That eliminates the need to tediously upload a whole music collection, often song by song. Apple alone can do this because of existing agreements with four major record labels. Apple will charge users $24.99 per year for the service, and the record companies earn 70% of that fee.

Some analysts point out that by distributing those revenues to recording companies, Apple in effect will allow them to recoup some fees for songs that had been copied or shared illegally among users.

“It will be fascinating to see how all of these firms will start changing their strategies and tactics to compete in the cloud, but the clear winner is the consumer – who will have a far better music consumption experience than ever before,” Fader says.

The move by Apple comes at a time when increasing attention is being devoted to the cloud by corporations that also want to simplify the process of endlessly updating applications that reside on computers and other devices. One of the biggest challenges in that effort involves security.

For more information on the future of remote music storage and players, including insight into the Amazon and Google strategies, see this Knowledge@Wharton story: With Its New Music Storage and Player, Can Amazon Deliver in the Cloud?

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An Apple for Teacher

When legislators in the state of Georgia announced recently that they were considering replacing textbooks with iPads in middle schools, the promise of electronic textbooks appeared to take another step forward.

Tommie Williams, a state Senate leader, told The Atlanta Journal-Constitution that Apple has offered to provide each student with “an iPad, wi-fi the system, provide all the books on the system, all the upgrades, all the teacher training.” The cost: $500 per student, about the cost of the least expensive iPad.

“We’re currently spending about $40 million a year on books,” Williams noted in the article. “And they last about seven years. We have books that don’t even have 9/11 [in them].” Other proponents touting  the advantages of electronic textbooks also cite the advantage of always-up-to-date books along with the potential for more interactive learning and potentially lower costs.

According to some critics, however, the tablet computers may offer a wow factor that sparks an initial engagement that soon wears off. Electronic textbooks certainly can offer continuous updates. But when it comes to costs, the evidence, so far at least, seems scarce. The New York Times reports that a Roslyn Heights, N.Y., school, which has issued iPads to 47 students in pilot programs, expects to save a small amount of money in textbook costs, even though it paid about $750 each for upgraded versions. Others argue that iPads can also cost more than they save, or that cheaper technologies can offer similar advantages.

As for the state of Georgia, The Atlanta Journal-Constitution also reported that it would cost nearly $189 million to outfit some 377,000 middle school students in the state with the iPad-based curriculum. It will take some sharp pencils to determine whether that would cost the state more or less. The article notes that the $40 million in current annual textbook costs cited by Williams does not count addition local outlays.

And while the jury remains out regarding how electronic texts and related interactive learning affects student performance, some results should be in soon. In one experiment, The Boston Globe reports that some 400 sixth- and seventh-graders in California have been using a redesigned algebra “book” on an iPad from Houghton Mifflin Harcourt Publishing. “The 400 students using the app will be able to receive feedback on practice questions, write and save notes, receive guided instruction, and access video lessons taught by Edward Burger, a Williams College mathematics professor,” notes the Globe. An independent research group is expected to tally up the results against a control group later this year “in the areas of student achievement and attitudes about learning.”

Other publishers are also experimenting vigorously to determine the contours of the more than $8 billion educational materials market going forward. But until more evidence is in regarding costs and performance, educators are unlikely to take huge steps.

Wharton marketing professor Eric T. Bradlow notes that “Everyone is still in the experimental phase with how 21st century learning will best manifest itself. No one exactly knows the effectiveness of different programs, but people are starting to try and rigorously quantify it.”

Still, for all the uncertainty, the trend towards electronic texts books looks clear, according to Wharton management professor Stephen J. Kobrin. He says that moving iPads — and more importantly tablets in general — into schools is definitely the beginning of a trend. “While I am not sure how quickly electronic textbooks will be adopted, the idea makes too much sense to be a flash in the pan. The cost of texts has escalated sharply and each edition — at least at the college level — lasts but a few years.” Electronic texts, meantime, “allow the author to update easily and offer the possibility of customizing content at a reasonable cost.”

And nearly a year after the iPad’s introduction, Bradlow agrees the promise looks bright. “I think there will be quick diffusion here because this is a good monetization opportunity [through] targeted ads, etc.,” Bradlow says. “Also, it has an enormous potential to impact the way people learn,” given the ability to bring in dynamic videos, tutorials and the like. “It leads to a much different brand of learning.”

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With Jobs on Medical Leave, What’s Next for Apple?

A shudder ran through the world’s stock markets on Monday when the news broke that Apple’s board had agreed to let Steve Jobs take open-ended medical leave. Though U.S. markets were closed because of Martin Luther King Jr. Day, the company’s shares fell more than 8% in Germany, wiping out $22 billion in market capitalization, according to one estimate. Over the next few days, Apple’s shares could fall further, as speculation swirls about the company’s prospects without Jobs at the helm.

This situation is reminiscent of January 2009, when Jobs went on medical leave for six months to receive a liver transplant as part of his treatment for a rare form of pancreatic cancer. Back then, Apple’s share prices fell more than 10%, and then recovered gradually when Jobs returned. Today, Apple’s market cap is nearly $320 billion – so the stakes are much higher for the company’s investors, employees and customers.

The critical challenge for Apple remains succession planning, as several Wharton professors noted back in 2009.  According to Michael Useem, director of Wharton’s Center for Leadership and Change Management, selecting a successor for Jobs has been challenging because “there are few companies where the top person has as much of an impact [as Jobs has had] at Apple.” Still, according to Peter Cappelli, director of Wharton’s Center for Human Resources, it is unlikely that Apple will fall apart without Jobs. “Investors get worried if they think the future of an entire company depends on a couple of key individuals. In fact, that is almost never the case. This bias — attributing the success of organizations to individuals — is pretty common. Several studies have looked to see what happens when CEOs … die unexpectedly. All the studies show that, rather than collapsing, share prices in fact actually go up. The current leaders are not that crucial. Companies don’t collapse when the leader departs, and there is some time to fill the job.”

Though Jobs is identified incredibly closely with Apple and its brand, the company does have other strong leaders. These include COO Tim Cook, who will take over day-to-day operations, and Phillip Schiller, who oversees marketing. Schiller substituted for Jobs as the keynote speaker at Macworld two years ago. With any luck, these executives and their teams will be able to steer Apple while Jobs is away.

Meanwhile, Knowledge@Wharton has this message for Jobs: We wish you a speedy recovery.

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