How Steve Jobs Would Fix Apple

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It is hard to see Apple in trouble.  It has massive reserves and remains one of the most powerful brands in the market, yet every week seems to contain more bad than good news for the company.   Last week part of China banned the iPhone (this will get overturned), far worse, the forecast for the Apple Watch was cut in half, which was the heart of some rather impressive doom and gloom over the firm.  Apple Stock, once a bulletproof investment has been trending down all year.  If you put $100 into Apple on January 1, it is worth $95 today.   If you go back a year it is worse, dropping closer to 30%.  Yahoo, who is looking for a new CEO, is actually outperforming Apple. 

I actually thought they did a nice job at their developer event last week, but clearly it isn’t enough, and if you think about it, you likely are seeing a lot of breakage on your iPhone, you still don’t want a new iPad, you have no desire for an Apple Watch and even Apple TV isn’t hitting you where you live yet.  And Apple PCs, well they still are a tiny part of an also troubled market.  The iPad Pro hasn’t had much of an impact yet and the extra sales from the Cisco and IBM partnerships haven’t seemed to become material. 

This reminds me a lot of Apple in the early 1990s before things really went south, granted their big problem is more Google than Microsoft, but it is the same slow decline into obscurity I saw back then.  So, since I’m pretty sure Steve Jobs isn’t coming back, let’s look at how Jobs might return Apple to its former glory. 

Fixing Apple

One of the first things Jobs did was get a huge investment from Bill Gates, about $100M, to showcase that Apple was worth investing in.  It is interesting to note that Cook apparently got Buffett to invest $1B in Apple stock in May (which apparently cost him about $30M so far this year, unless he dumped it really fast).  

The next thing he did was aggressively market Apple’s products while he figured out how to fix them.  It is clear that Apple marketing just hasn’t been what it once was.  Now part of the problem is there are so many people with Apple products now that the sense of exclusivity has largely been lost and with it the status that comes with an Apple offering. 

Apple moved down market to increase volume but that increased this problem with evaporating exclusivity and Apple needs to go back to at least presenting products as if they are designed for the elite.  

Jobs also improved Apple product quality.  As prior CEOs did what Cook has been doing by cutting product cost the products became increasingly unreliable and people won’t pay a premium for a product that is built cheaply.   Apple products are high priced, they need to go back to being the best not just different. This means reversing decisions that have been made that reduced product quality. 

Jobs took what was their PDA, a very complex and troubled product, and replaced it with the iPod, a very simple and elegant product.   They need to do the same thing with the Apple watch.  It is simply too difficult to learn to use, and the price bands are too wide – particularly given that folks make fun of buyers of the over expensive gold version.   It needs to be less of an iPhone with a band and more like an iPod with a band – Simple, elegant, and with a name more like iWatch than Apple Watch.  

They likely need to rethink the car effort and find a way to partner.  If everything else was running well the car would make an interesting addition, but with massive financial pressure on the firm, there is a good chance the car will enter the market massively underfunded.  If that happens the related failure could take the company out.  With a partner this exposure could be mitigated and, with the right partner, the project adequately funded. 

Wrapping Up:  Apple Can Be Saved

This is early on still in Apple’s slide and that means corrective action doesn’t need to be as catastrophic as Jobs’ was when he turned the company around.   But the longer it takes to fix the marketing and products the riskier the turnaround will become, and the more impossible a positive outcome.  I think Jobs’ playbook could be used one more time to focus the messaging back on status, to improve the products to match their prices, and to make the car an asset rather than a massive potential liability.  Unfortunately, firms don’t act timely because executive management is too busy putting out small fires to focus on the big one and, I expect, that is what will happen here.  Still the Buffett investment shows a reason to hope that won’t be the outcome so we’ll see what the year brings.  Here is hoping it brings a far better Apple.   




Edited by Maurice Nagle

President and Principal Analyst, Enderle Group

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