Apple Needs Reset, Not Elon Musk

By Doug Mohney April 29, 2016

Apple's 13 percent sales decline and subsequent stock price drop this week has lead to the usual crazy talk about how to "fix" the company.  Vivek Wadhwa has suggested the radical move of Apple buying Tesla and installing Elon Musk as the visionary white knight to "save" the company, least it follow the footsteps of HP and Compaq.  I've never been a big fan boy and have long noted the long slowdown in innovations coming out of the company, but Apple doesn't need such a radical fix and I doubt Musk would be interested.  Besides, there's a better M&A fit than Tesla.

Wadhaw's main premise assumes that Musk would be interested in selling Tesla to Apple and taking over the Big Chair. It's true that Musk has great tech chops with building Tesla cars, a forthcoming battery "gigafactory" to power cars and homes, and that previous work with PayPal.  But Elon has his plate maxed with Tesla and SpaceX, with the latter focusing on building infrastructure to ultimately colonize Mars.  His hobby is a new type of transportation called the hyperloop.

Colonize Mars or reboot Apple?  I am betting Elon will take less than 5 minutes to think about it before he decides he doesn't want to get distracted from his ultimate goal of building a multi-planetary species.  To paraphrase Steven Jobs, "Build a colony on another world or sell sugar water for the rest of your life?" (You may substitute "Apple Watches" for "sugar water" if you wish).

Supposedly Apple has been working on its own electric vehicle, but Tesla and numerous other start-ups have already flooded the field, while traditional car manufacturers are playing catchup.  Apple has over $200 billion in cash, so it could buy the $33 billion Tesla and not break a sweat, but trying to duct tape Apple and Tesla together strikes me as a cultural disaster. A merger doesn't solve the fundamental new idea generation problem Apple currently seems to be stuck in.

Instead, Apple needs to copy a page from Microsoft, another from the open source world, and build on one of its core strengths.  If that doesn't work, there's always a merger with another tech powerhouse.

Microsoft embraced a "cloud first/mobile first" strategy that seems to be working out.  Apple needs to get out of its walled-garden mentality and start to engage more actively with others.  You see this happening with its various API-ish plays for the car, home, health, search, and Siri, but these have been begrudging offerings rather than aggressive moves to get developers on board.  Microsoft and IBM, on the other hand, are falling over themselves to provide APIs for developers to work with as a boot-strapping measure to get more (paying) users onto their cloud services. 

Open-ness needs to be the second pillar beyond more APIs.  It may mean revisiting the long-held religious belief that the only company worthy to build Apple hardware is Apple, and opening up iOS and OSX for third-party licensing. Apple shows no great love for "cheaper" phones and devices, so why not let Asia third-party manufacturers give it a try?  Apple can impose order by tightly regulating code releases, the key failing of Android, making sure manufacturers same "tick" instead of having a lot of version forking.  One could argue that Apple desktop and laptop hardware has effectively stagnated to a crawl when compared to the Windows-based world.

With its public stance on encryption, Apple can say it has paid its dues on security.  It needs to expand that mindset and brand beyond the consumer world and leverage it into the business world. Enterprises are getting attacked by ransomware on a daily basis.  Apple could present an integrated, "secure" business computing environment that combines encryption, multi-factor authentication, and other assets with ease of use for both users and administrators.  Anyone burned by hackers or working in a regulated industry – finance, legal, healthcare – would have to look at an Apple-secure solution as an option. 

If those changes don't work out, and Apple continues to decline, then there's always merging with another company.  My suggestion would be Amazon.  Both companies have significant cloud assets that could benefit from economies of scale.   Amazon builds some hardware, but could benefit from Apple's eye for design and user interface—what could Apple do in designing an Amazon home-delivery drone?  And both could gain from building more real-world store fronts to complement on-line and same-day home delivery.   

Contributing Editor

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