Month: Jun 2017

Corporate Culture

Steve’s DNA will always be the base for Apple. It’s the case now. I want it to be the case in 50 years, whoever’s the CEO. I want it to be the case in 100 years, whoever’s CEO. Because that is what this company is about. His ethos should drive that—the attention to detail, the care, the ­simplicity, the focus on the user and the user experience, the focus on building the best, the focus that good isn’t good enough, that it has to be great, or in his words, “insanely great,” that we should own the proprietary technology that we work with because that’s the only way you can control your future and control your quality and user experience. And you should have the courage to walk away and be honest with yourself when you do something wrong, that you shouldn’t be so married to your position and your pride that you can’t say, “I’m changing directions.” These kind of things, these guardrails, should be the basis for Apple a century from now. It’s like the Constitution, which is the guide for the United States. It should not change. We should revere it.

In an interview with Bloomberg's Megan Murphy, Tim Cook describes the DNA, the Constituion of Apple. There are some things to note here.

  1. There is no mention at all that relates to WHAT Apple will do or create. There is no mention of computers, silicon, software, artificial intelligence, art, luxury or anything to do with the final product, other than a focus on customer experience and building the best.
    2. It is all about the HOW. The attention to detail and the aspiration to be "insanely great". Controlling core parts to make sure that Apple can do this.

One day, smartphones will cease to be as important as they are today. In fact, it's even probable that computers, software and even artificial intelligence will become commodities within the current century. Companies that are predicated on indexing all of the world's information or AI or robots, may find themselves clinging on to a commoditised utility.

Apple's DNA transcend this. Apple has a value system that is future proof in the span of centuries. Even if Apple decides one day to exit the smartphone market, the DNA can live on and Apple will likely continue to prosper (although maybe at a smaller scale).

There are not too many companies that last even for a few decades. The average life expectancy of an S&P 500 company is now a mere 15 years. Probabilisticly, only a few of the tech bemoths of today will make it to 2040. When the babies born today enter the workforce, out of Apple, Google, Microsoft, Amazon, Facebook, and Samsung, they will most likely only encounter a couple.

When we look at the dominant companies of today, we should keep in mind that we are looking at what IBM, Sun Microsystems, HP, Xerox, Sears, Nokia looked like in their respective heydays. The formulae for companies that continue to prosper for decades and even centuries is still not well understood by the business academia, but I think that it is noteable that Apple's DNA is future proof.

Quick Thoughts on the 2017 WWDC Keynote

  1. HomePod illustrates very clearly how Apple thinks differently from the rest of Silicon Valley. Here, Apple is going after a market that exists and a need that has been explicitly sought after by consumers. Apple is simply providing a significantly better solution to this market. This is similar to how the iPod entered a market already built and served by the Sony Walkman, and is similar to how the iPhone entered one already built by Nokia and Blackberry. This is in contrast to Amazon and Google who are trying to create a new market. The market adoption dynamics will be very different.
  2. Safari’s tracker blocking solution is interesting and will protect users privacy. Importantly, customers have noticed and have been worried about the spooky retargeting ads, and by providing a remedy for this, Apple will position itself well. Equally important however is that this will not significantly change the dynamics of the advertising market. My position is that targeting itself has not significantly contributed to the shift to digital marketing, and only to the relative market share among the digital advertising networks and Google/Facebook. The real driver of ad spend is still eyeballs and has been this way for decades. Neither ad blocking nor tracker blocking will change this. My prediction remains unchanged that Google will continue strong growth for the next few years, but will drop to single digit growth around 2020 due to saturation of the digital advertising market as a whole and competition from Facebook.
  3. The iOS 11 improvements for the iPad are hugely significant, especially in combination with the work that Apple has been doing with IBM and other corporate IT vendors/consultants. Although there still likely remain obstacles that will not make the iPad a true replacement for laptops, the improvements are large enough to encourage many people to give the iPad a second look as a work machine. We can safely predict an uptick of iPad revenue going into the later half of 2017.