Month: August 2011

After Steve Jobs stepped down as CEO last week, Katherine Noyes wrote a particularly stupid piece on why Apple needs to embrace open source. 

 For business users, the company’s extreme vertical integration has not only created a daunting case of vendor lock-in, but has worked against the compatibility and interoperability that are most needed in this global and collaborative world.

Essentially, her argument boils down to the advantages that she perceives open-source to have, and why Apple is ultimately doomed with a closed-source strategy. 

 As far as I can surmise, Android is not winning based on some perceived merits of its usefulness, style or other subjective qualities. Rather, the reason it is (and will always be) beating iOS in market share is because it’s cheap to implement and free for third-party vendors to customise. 

Let’s examine two parallel realities in their neverending hypothetical. In the first, let’s assume Android were released on an exclusive piece of hardware anually. Here, Android is not open-source and manufacturing rights are licensed to a single hardware company. In this instance, Android probably would not be a serious iOS competitor. Note, for instance, the struggles of WebOS and Windows Phone 7. The former is a proprietary OS released on just a few devices over the course of its life so far. The latter OS exists on more phones, but is still largely irrelevant in the market. It’s a shame, as both of these are fine operating systems. 

In both cases, taking a vaguely similar strategy to the iPhone has failed. One may argue about whether it was marketing, implementation, hardware or whatever, but the reality is that a closed Android system would also probably be relegated to a similar scrap heap.

In the second scenario, iOS is released in 2007 to many manufacturers, with open, cheap (or free) licensing terms. My wager is that most vendors would opt to broadly install and promote iOS, even if Apple created the iPhone at the same time. Android would still arrive in 2008 with similar terms, but it probably  wouldn’t achieve anywhere near the success it has.

Noyes is probably right that open-source can dominate the market. But I don’t think Apple cares that much about their market share. See, although comScore’s recent report shows Apple with a 27% market share, Boy Genius Report reports Apple earning a whopping 66% of industry profits. At this point, market share isn’t that important to them. I think they’d like to increase a little by luring away BlackBerry customers, but they know they can’t win against a cheap operating system, especially when carriers and vendors can customise it as they wish.

Coming back to the Noyes piece, it’s worth noting that Apple does open-source some of their OS X developments. They also develop WebKit, the second-most popular browser engine around, and one that is open source. Apple does embrace this world of open and transparent, when it suits them. But it clearly does not serve them well in their mobile operating system. And, despite Android being on more phones than any other smartphone OS, it’s also not serving them well either.

The Ex-CEO

It’s important to know what Jobs’ main function at Apple was before attempting to predict what the future of the company holds. Many news stories paint Jobs as an omnipresent micro-manager and, while that may have been the case when he took back the reins in 1997, Apple is a very different company now. It’s progressed from near-irrelevance to the trend-setting behemoth in the last 14 years.

In that time, Jobs’ role has changed. He afforded ever-increasing control to other executives, instilling them with the same mindset of elegance in simplicity that has defined the modern-day Apple. He has officially been on medical leave since January of this year, but has continued to oversee new deals and contracts, and unveil new products. His contribution is greater than the products he helped bring to market, and more over-reaching than Apple’s rise to marketplace giant. Steve Jobs leaves in his wake a company forged in his vision. That won’t change.

The New CEO

Perhaps this entire article could be replaced with, “Look, it’s going to be Tim Cook, and that’s that.”

“On Succeeding Steve Jobs” — John Gruber

It’s always been Tim Cook. He’s part of the Apple dream team^[1]. I’m surprised there was such frenzied speculation regarding Jobs’ successor, because it was so blatantly obvious.

Tim Cook is an executive that doesn’t really speak publicly, aside from at quarterly earnings calls and the rare keynote. That doesn’t mean his contributions aren’t felt. To give just one example, in 1996, Apple had 54 days of total retail inventory. Cook got that down to a low of 0.4 days. He is a machine.

The Future, Or Something Like It

AAPL is down a little over 5% in after-hours trading. Those who have the slightest whiff of respect for Jobs are concerned about his health. But at Apple, all will be well. I can only hope the same for Steve himself.

 

Stay hungry, stay foolish.

 

1. Steve Jobs, Tim Cook, Jonny Ive, Bertrand Serlet and Ron Johnson. Each has played an enormous role in defining Apple today. Only two of those five retain the positions that made the company, but their impact is greater than the bodies that remain. [↑]