[doubleconfess]

Apple has been an outlier kind of performer under Steve Jobs, because Jobs was an outlier kind of human being. All I take away from that article is that people better start tempering their expectations of this new Apple, because once the product pipeline that Jobs oversaw is depleted, what we have left is merely a "very good" company built on a great foundation.

So much of the article seemed to point out the Tim Cook was friendlier in terms of investor relationships, but who cares about that (from a technologist point of view)? I mean, the biggest indicator of the shift in their priorities is that they took 100 billion dollars in cash and used it for stock buybacks and dividends. Can you imagine Google doing such a thing? They would never dream of this, because they are too busy re-investing their profits with their big-picture potentially world changing research projects.

But hey, kudos for Tim Cook for not trying to be someone he is not, he's a money and operations guy. So money and operations will get looked at at the expensive of innovation. But this is not good for those who are used to miracles from Apple:

"It looks like it has become a more conservative execution engine rather than a pushing-the-envelope engineering engine," says Max Paley, a former engineering vice president who worked at Apple for 14 years until late 2011.

"I've been told that any meeting of significance is now always populated by project management and global-supply management," he says. "When I was there, engineering decided what we wanted, and it was the job of product management and supply management to go get it. It shows a shift in priority."

Yuck. The geek inside dies a little at reading this.

[alain94040]

"I've been told that any meeting of significance is now always populated by project management and global-supply management," he says. "When I was there, engineering decided what we wanted, and it was the job of product management and supply management to go get it. It shows a shift in priority."

As an engineer, I understand why you are scared that "global-supply management" is getting involved. But you forget that the volumes that Apple works at have changed in the last 10 years, to the point where new products need to be manufactured at launch, in quantity that no one else in the industry has ever heard off. Good old days where you could manufacture 1 million iPhones in the first quarter and be happy, those days are over.

So pay a bit of respect to global-supply management. Manufacturing is actually as respectable as engineering. Just different concepts, but both optimize under heavy constraints to achieve near-impossible goals (at least at Apple).

[cube13]

I think that a lot of people that only have experience with software see "Supply Chain Management", and think a suit who's only there to be an impediment to creating stuff.

They're really not. They're easily as important to the successful design and production of hardware as any of the engineers. The engineers come up with the ideas and products. Supply chain management and manufacturing are the ones that make those products and get them out to the public.

The supply chain people are the ones who are going out and negotiating the contracts for parts, and are the ones who are responsible for making sure that everything is getting shipped at the proper time(and for the proper price). It's a lot of work, and good supply managers aren't there to order the engineers around. They're there to work with them, and make sure that everyone involved knows exactly what risks every change will have on the final product.

[Anechoic]

Manufacturing is actually as respectable as engineering

Small nit: manufacturing is engineering. Integrating manufacturing into the electrical/mechanical/software engineering process makes good sense.

[excuse-me]

Apple's real innovation is in supply management (well that and iTunes)

Anyone can make a thin smooth aluminium laptop. Being in the position of making the premium priced top of the range product, while paying far less for your components than your big box competitors and having such a stranglehold hold on supplies of those components that you can keep competitors out is amazing.

It's as if Audi not only made great cars - but also had all the worlds supply of tires and engines and was paying half as much as chevy for them!

[csmeder]

I feel like this is ignoring the tough decisions Job's made when they didn't have the supply chain. The original iPod was priced at US$399 and US$499. It had very few features and most people called it lame.

When Job's decided to remove floppy disk drives and made iMacs that you couldn't upgrade the components from computers people called it lame. (This really upset people)

When the first iPad came out most people called it lame. (Has everyone already forgotten this? People were screaming it was going to fail, because it didn't run OSX).

To dismiss Apples success as only dependent on supply chain management is missing the mark in my opinion. Apples success in a large way hinged on Jobs ability to make decisions that in the immediate would piss people off but in the long term seem obvious.

[excuse-me]

Apple's CURRENT (and future) $$$$ success is now because of their supply chain.

Yes they have some very nice products - but what has moved them from a niche supplier of shiny toys for the 'money > sense' crowd to a gaziilion $$ market cap - is that their excellence in delivering on these products.

A lot of this feeds into the the products. They don't need cheesy Blah inside stickers because they don't need to earn that extra $0.50 They don't have to bend over to the demands of Walmart buyers or chase the latest fad because they are in a position to decide the fad.

But they don't have a unique technical skill. They have an Intel CPU, an NVidia card and a li-ion battery in an aluminium case with a Unix OS and a pretty gui. It's delivering this package at that price with that margin that now makes them special.

[Fluxx]

While I don't disagree that Apple's technical skill isn't best of breed, where Apple has shined - both now and in the past - is their ruthless determination and focus on UX and HCI. Apple goes further than any company on the planet to make technology devices (computers, laptops, music players, tablets, etc) that delight their users and just work and make them happier and more productive.

Apple doesn't have "cheesy blah inside" stickers because that doesn't delight users and make the product better to use. They're stupid. Apple also doesn't chase fads because fads are just that, "a fad" and rarely do fads have long lasting staying power like a good product should.

[excuse-me]

I'm not sure that Apple's UX is that much better than Windows7/Gnome/Unity. They have done a very good job of making it easy for you to buy from them with the integration of iTunes but a single button mouse and a single menubar at the top doesn't necessarily make every app easier to use.

Where they do shine is in build quality and user experience which comes from owning the entire product - HW/OS/sales channel/support - and having enough margin to do it well. That's the difference between them and an equally specced Sony laptop running Windows.

It's the profit margin that really makes them special. Sony used to make products of this design and build quality but then to compete had to cut costs and so quality and had to accept the bloatware and stickers. Apple's brilliance has been in managing the process so that they can cut production costs while increasing quality and adding more stuff.

I give a huge amount of credit to Cook for this. Jobs demanding rounded corners on dialogs or sticking to a single button mouse whatever focus groups said was good technical leadership, Ive's produce design is great. But dominating the manufacture and supply network to the extent that Apple have done and with the effectiveness they have done is a major achievement and is not easy.

Look at Boeing having to delay the 7E7 because it couldn't get rivets - while Apple has 747 freighters booked ready to fly new products straight to the store the day they are released.

[polyfractal]

And, importantly, it is because of Tim Cook that they have such a great supply chain.

[bjelkeman-again]

I would argue that Apple's innovation is also in the operating systems and the applications they provide. iOS and Mac OS X is for my use far superior to any of the alternatives. Not everyone likes them, but everyone around me (90%-95% or so) have switched to Apple operating systems and hardware due to ease of use. This together with the fully integrated experience: OS, app store, media store (iTunes), hardware is why the competition is floundering. This stack is costly and hard to compete with.

[jshen]

"Anyone can make a thin smooth aluminium laptop. "

Wow, that's a false framing of reality. You also fail to acknowledge that apple won the product fight before they had a stranglehold on supplies.

[hkmurakami]

If I remember correctly, it was a breakthrough in Apple's materials research that enabled the aluminum frame for their particular laptop designs.

[ryannielsen]

I mean, the biggest indicator of the shift in their priorities is that they took 100 billion dollars in cash and used it for stock buybacks and dividends. Can you imagine Google doing such a thing? They would never dream of this, because they are too busy re-investing their profits with their big-picture potentially world changing research projects.

Apple's executing a $45B buyback and dividend program that's expected to run over three years.

They made $6B in profit last quarter.

Thus, while they're losing $45B over three years, if they keep on track, they'll make far more than $72B during that same period of time. (That's assuming they never make more or less than $6B a quarter over the next three years... in Q1, they made $13B in profit.)

The buyback and dividends make investors happy and keep Apple's stock from being diluted by employee grants and options, and those programs can be done with the company still making solid profits. Seems like a win-win.

And don't think Apple's not reinvesting profits for future products and innovations. If anything, Apple's track record over the past 14 years should be a clear sign that they're always aggressively reinvesting profit in improving every part of their business, and are always quietly working on something new.

Finally, the person quoted was one point of view, and we have no perspective on how he left Apple. Your inner geek doesn't need to be that worried.

[cube13]

>Thus, while they're losing $45B over three years, if they keep on track, they'll make far more than $72B during that same period of time. (That's assuming they never make more or less than $6B a quarter over the next three years... in Q1, they made $13B in profit.)

They're not really "losing" $45 billion with the buyback. They're spending $45 billion in cash(which they have) to get $45 billion in stock. The end result, since they don't need to get a loan to execute the buyback would be basically nothing on their books(unrealistically assuming the stock doesn't move at all).

[ryannielsen]

Fair point, thank you for the clarification

The overall point I was trying to make is even though they're giving up some cash, they're making more than enough each quarter to cover that loss of liquid capital. Apple's buyback and dividend programs should have zero impact on their ability to fund R&D or to invest in future products. (Assuming they continue their long trend of year-over-year revenue growth, of course.)

[sp332]

Imagine an engineer knowing there's less NAND flash available and it's getting more expensive. So they can focus on giving the software a smaller storage footprint. Now the product is the same, but because engineering and global-supply management worked together, the product is cheaper.

[pork]

That's not innovation, that's incremental optimization.

[niketdesai]

I'm sorry, but this is a highly naive point of view. You could have had an iPhone in 2005 for an amount of money you probably wouldn't be able to part with. These products still have to be produced in quantity and therefore supply chain innovation is just as critical as the design and engineering itself. Apple doesn't market it that way, but the disparity in cost to sell price is one of the reasons they have been able to do so well and fund their next endeavors.

Apple doesn't design and build buildings, which are expensive, time consuming, and generally done in small quantities.

They design products meant to reach millions of people and as such design and engineering of that feat is innovative in its own right.

Your statement, taken more broadly, would dismiss the work of companies like Tesla and SpaceX. Their goals are to bring their unique products to a wider market providing a next generation experience.

I mean, I guess it would be cool if it was just Elon Musk rolling around in his single space ship or Tesla Roadster. But it's much more exciting that this can be the case for many people.

[easp]

You think that innovation, whatever the hell that is, doesn't require a lot of incremental optimizations?

As has been endlessly observed, the Mac drew heavily on the innovative ideas at Xerox PARC, but it added many refinements, including affordability. Similarly, there were other mp3 players before the iPod, and other smartphones before the iPhone, but part of what set Apple apart was bringing all those capabilities together in a way that was greater than the sum of the parts. That doesn't mean that the parts are unimportant.

[sp332]

Well I said "the project is the same" but what if it wasn't? What if the engineers focus on building features that take less space instead of ones that requires multiple megs of new code? Or what if they can tell the global supply people years in advance what new hardware they'll need (more accelerometers, more accurate touch sensors, or different antennas for upcoming 5 GHz wifi support, etc.).

[bostonpete]

Either way, it's adding value.

[andyman1080]

Surprised to see so many responses without a fact check on this: "the biggest indicator of the shift in their priorities is that they took 100 billion dollars in cash and used it for stock buybacks and dividends."

The dividend and stock repurchase will be more than paid for out of operating cash flow. In other words, even with them the cash pile will increase.

Look at some of the analysis that Horace Dediu is doing to observe that Apple is actually investing a tremendous amount of capital ($7B this year) in as yet unknown equipment, maybe real estate. (http://www.asymco.com/2012/05/22/up-to-eleven/) That's not including the billions they spend on R&D. If that's not reinvesting profit in a big picture way, I don't know what is.

[drzaiusapelord]

>Yuck. The geek inside dies a little at reading this.

Is it possible to be as big and successful as Apple but also maintain some kind of startup pro-geek mentality? Was this mentality ever there in recent years? My understanding it was something of a Jobs-led dictatorship that worked because Jobs had good judgement and good taste. I suspect most meetings have global-supply management involved. Apple makes items on the scale of tens of millions. Input from the guys who make that happen past the finished prototype stage is going to be important.

I'm never sure what to think about these articles. They come out every so often for every big company. A few months ago it was how Google is getting too corporate. Or how Facebook is working its employees too hard. The inner gossip of how companies are run, especially by bitter ex-employees, isn't usually useful information.

[lysol]

Jonathan Ive still works there. Don't start freaking out just yet.

[nodata]

Don't forget that Jobs picked Cook.

[VinzO]

He also picked Sculley. I hope he learnt from his mistake. Anyway I guess it will be very difficult to find someone with a vision for new products as good as he had.

[raverbashing]

Yes

But when Jobs picked Sculley, he was young and inexperienced. He probably had never worked with 'an MBA' so he didn't know what to watch for

Also, the relationship with Sculley went downside fast. When things don't match, this is usually what happens.

[flomo]

Sculley actually had a great 'product guy' for a while in JL Gassee. The Mac II and Powerbook lines were excellent, and the profits were huge. It was only later on when things started going off the rails.

[mikeash]

Jobs also picked the G4 Cube. He made mistakes, and Cook may have been one. Certainly it could end up being an excellent move, but only time will tell.

[alexqgb]

I'm always amazed that more people don't recognize the Cube as one of the most successful design manifestos in corporate history. Unlike the successful-in-their-time Candy iMacs, the Cube introduced a hardware design DNA that permiated virtually everything that followed it. Those traces remain clearly visible today - more than a decade later - in what could be fairly described as the world's most valuable product line.

For Jobs, a private or merely theoretical manifesto wouldn't have been enough. Apple designs everything from the concept to the manufacturing process to the unboxing and initial startup experience. For a something to be a true design reference, it had to cover all these bases. That means it needed to be a real product that actually shipped. Which it did.

If you measure the return using everything that followed its lead - which includes the flagship store - it has recovered its investment a bazillion times over. Whatever else the Cube may have been, it was not a mistake. The one-button hockey puck mouse with the too-short cable? That was a mistake.

[parenthesis]

Yes. The Mac Mini is a smaller Cube. The iMac is a squished-out Cube with a screen on the side. Like the Cube, they (and other Apple products) are personal computers that are more consumer appliance/device than the traditional tower or rack.

Another way of looking at the Cube (and its successors) is that it's a `desktop laptop'.

[alexqgb]

It's more than conceptual lineage - geometrically, the Mac Pro was a 1st gen. mini flipped on its side then amended with handles and vents. And the precise curve of the corresponding corners is repeated on the MacBook Pros. And the iPhone. And the iPad.

Now, identify one - just one - computer that shared those trademark corners when the Cube came out. Nothing else looked even remotely like it, including Apple's earlier products. Now, there's little - if anything - done by Apple that doesn't mesh with the Cube beautifully. Even the individual keys on the current wireless keyboard (which I'm using to type this) and the trackpad off to the side are clearly post-Cube, and entierly consistant with the direction it set...a decade ago.

In terms of towering achievements in industrial design, the Cube is to computing what the 1927 Yankees are to baseball.

[spenrose]

Well bowled. See also: the original Macbook Air.

[ralfd]

I think Cooks leadership will turn out fine. And the real test will be whom he chooses. These big companies remind me of the roman empire. When the Principate put capable man to power the results were exceptional. When the barracks emperors came to power only to be repeatedly murdered again (cough Yahoo cough) it all crumbled.