Former Apple CEO John Sculley Wants Apple to Go Cheap and Skip the Innovation - Wrong, Wrong and Wrong!


When John Sculley, who at the time was the president over at PepsiCo, first joined Apple in 1983, the brilliant Jon Shirley had also just joined Microsoft, running the show behind the scenes while taming - and training - both Bill and Steve on the ins and outs of how grownups run Fortune 50 companies.

Today, the parallel would be Eric Schmidt's role at Google. Sculley was supposed to do the same thing at Apple that Shirley and Schmidt did, and keep the children - the two Steves - under control until they were grown up and ready to take back the reins.

Bill, Steve, Larry and Sergi have all grown up, and all of them retained their visionary capabilities (well, we'll temper that by suggesting that Ballmer has gone the corporate CEO route and lost his sense of vision a long time ago).

Steve Wozniak finally left Apple and though he successfully grew up on his own, though never developed a lasting Apple legacy beyond the very early years. Jobs, well, we'll never know if he became the brilliant visionary due to Sculley forcing him out of Apple, or if he succeeded by hiding in a company closet during Sculley's time there (we believe it's the latter).

In any case, Apple ultimately fell into a complete state of decay, and though others followed Scully (who now spends much of his time focused on the healthcare industry) in the CEO role after he left Apple in 1993, that decay and near destruction is directly traceable to the adopted parent having failed to not only manage, but nurture the children and their visions.

Once Jobs returned to his rightful place, the brilliant visionary was no longer bottled up, and his legacy has achieved a truly majestic and history-making level that won't be matched any time soon by anyone, including Tim Cook.

Cook, however, is brilliant from the point of view that he has - we think - successfully transitioned from apprentice to master. Yes, he brings to the game a different skill set and perhaps more of a "larger industry" outlook (think dividends, charity and other things he has changed) than Jobs entirely Apple-centric one, but that’s okay.

Cook understands Jobs legacy and his visionary insights and knows enough to keep Apple on the right path.

What is that path? We provided a number of insights on this last week, detailing why Apple will never deliver a "cheap" product and why innovation is the only direction Apple can take to remain the alpha of the technology market. These are all things Cook and his team - especially Jony Ive - intimately understand.

Here are the salient lines that summarize our thoughts from those articles:

"Apple's future is not going to depend on what the rest of the world wants Apple to do - which is to somehow become a direct competitor to Android that competes on price instead of innovation. That would be the kiss of death for Apple."

And rest assured that Apple will deliver products into the other segments of the mobile device market place. It just won't do so, as we pointed out in our earlier stories, by going "cheap" with any of them.

Wrong, Wronger, Wrongest

So when we subsequently hear that John Sculley is of the belief that Apple needs to focus on cheaper products to tap into emerging markets and to skip out on the innovation, and those thoughts become public via Bloomberg, we take a great deal of notice! Here’s what Sculley thinks:

"Apple needs to adapt to a very different world. As we go from $500 smartphones to even as low, for some companies, as $100 for a smartphone, you've got to dramatically rethink the supply chain and how you can make these products and do it profitably."

He's certainly entitled to his opinion, but we will point out that these words directly and eerily echo what got Jobs pushed out of Apple kicking and screaming all those years ago. Let's change that quote just slightly to what Jobs heard back then:

"Apple needs to adapt to a very different world. As we go from $5,000 computers to even as low, for some companies, as $1,000 for a computer, you've got to dramatically rethink the supply chain and how you can make these products and do it profitably."

Sculley did note that Tim Cook is "exactly the right leader" for Apple. But his reasons are about as wrong as can be - Sculley believes it is Cook's supply-chain experience and expertise that will get Apple through. That is so off base in our opinion - and contrary to what we noted earlier about Cook - that it leaves us in total wonder.

Scully did get one thing right when he noted that, "Samsung is an extraordinarily good competitor. The differentiation between a Samsung Galaxy and an iPhone 5 is not as great as we used to see."

But why is this the case today?

It's not because Samsung has caught up, it's because Apple hasn't raised the bar again and left Samsung to chase after it. The bar has remained static for the last several years. When technology remains static it is inevitable that the rest of the world will catch up with it.

It's remained static because Apple has failed to drive innovation at the rate it needs to. We can fully attribute this to the transition from Jobs to Cook - one doesn't go through such a transition - from "astounding visionary" to "apprentice visionary" without some major slowing down and readjustments. It was inevitable that Apple would go through such a phase.

It is also inevitable that the myopic financial analyst community merely rides with the usually tricky financial numbers in the most obvious of ways. That community is now screaming "Oh my God, Apple has lost it!" They are doing investors a huge favor though - driving Apple's stock down and making it a huge buy opportunity.

For example, following the Wall Street Journal's rather sensationalist headline last Sunday evening about Apple cutting back in its supply chain requests, the assumption immediately followed that this was due to lack of iPhone 5 demand. True? Not in the least! The much more accurate story is that the quality of the supply chain has turned out to be much better than Apple had originally forecast - which is in fact good news for those investors thinking about margins.

We'll close with the following: Sculley is as wrong today as he was when he forced Jobs out of Apple, and thank goodness Jobs raised Cook properly and nurtured him. We'll take the "apprentice visionary" Jobs left behind every day!

Edited by Braden Becker

TechZone360 Senior Editor

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