8 ms·

Jobs made Apple great by ignoring profit

81 points by 6ren 15y ago

blvr 15y ago
> Most companies cannot bring themselves to make decisions that result in the market for their existing core products being completely destroyed. When they consider it from a financial perspective, it just doesn’t make sense to create new products at the risk of jeopardizing your profitable, existing products. All Apple's profitable, existing products are eventually made unprofitable by shoddier but equally capable clones. Think Windows, Android, the myriad of MP3 players you can pick up for tens of dollars. The only way they maintain profitability is by bein innovative and creating new markets that they can dominate for a short while (and by generating brand loyalty for their older products because of their new products). So there isn't a profitability vs. innovation dilema for Apple. For them being innovative is being profitable.
dthunt 15y ago
Apple is the company that sells $3000 laptops that are comparable to most $1200-1500 laptops, but are slightly prettier and less serviceable and $70 keyboards with broken debouncers. If you're going to write an article about 'ignoring profit' cite some specific products and how they were priced cheaply, or get off the frickin' pot.
- dthunt 15y ago
  lulz. The author's bio. This says it all. Clayton M. Christensen is the Robert and Jane Cizik Professor of Business Administration at the Harvard Business School, and is regarded as the world’s foremost expert on innovation and growth. James Allworth is a Fellow at the Forum for Growth and Innovation at Harvard Business School.
- enko 15y ago
  > $3000 laptops that are comparable to most $1200-1500 laptops, but are slightly prettier and less serviceable So all those people who buy them are just stupid then, are they? What nonsense. This is little better than trolling.
  - dthunt 15y ago
    You said it, not me. There are people who care very much about the visuals. They're not stupid for paying extra.
  - Gigablah 15y ago
    Perhaps a better comparison would be the Apple Store's $400 price tag for 8GB RAM modules when you can get it for around $100 normally. I don't think the "customer service" is worth $300.
- gnaffle 15y ago
  My guess is that many executives at competing companies think just like this: Apple just sells "slightly prettier" laptops at a premium. So they give their designers the job of making the products "slightly prettier", and then they are surprised when these products fail to compete with Apple.
- redguava 15y ago
  This comment may have been relevant many years ago, but these days companies are struggling to compete with Apple on price (notably Macbook Airs, iPads, etc).
  - john2x 15y ago
    I'm in the market for a nice lightweight laptop for development. I was amazed to see that the best one I can get is a Macbook Air. Other brands don't even come close to it, with regards to price:quality ratio. Heck, even ignoring quality the Air still beats other ultrabooks. My friends have a hard time admitting that an Apple product is actually the saner choice.
shingen 15y ago
That makes for a great headline, but it's wrong. He absolutely did not ignore profit: he understood its proper place better than most. Jobs loved profit. He understood that the best products, marketed properly, can produce extraordinary profits. He wanted his products to generate a lot of profit so he could keep plowing that necessary profit back into producing ever better insanely great creations. He most certainly did not eschew profits, he understood not to put the profit before the product. There's a very big and critical difference between eschewing profits and knowing their place.
- Jarred 15y ago
  Can you cite where you learned this from (Steve Jobs' view on profits)?
  - shingen 15y ago
    In his biography he talks about the importance of Apple generating a profit in order to re-invest into producing new products. That healthy profits were not only necessary but desirable to that end. I believe he has also said as much in interviews in talking in general about the nature of business (I will try to dig those up). It's why he recognized that a company was the best vehicle to use to marry his love of the arts with technology, as he is quoted in his book. It's perfectly logical, as it's not cheap to do what Apple does when it comes to creating. There's a reason they just hit $100 billion in cash - Jobs knew full well the value of profit and what it should properly be used for. They know the value and safety in being able to build what you want to, and not being constrained for oxygen due to low cash or debt or lack of profits.
    - kokey 15y ago
      The way I see it is that because he wants to be profitable by innovating and delivering great products, he was aware that he should not let innovation be hampered by profit motives. This is especially important in the market he was operating in, and working around this problem gave them an edge.
  - batista 15y ago
Jare 15y ago
This headline/article is missing the word 'short-term' in a few places.
ramblerman 15y ago
What a naively written article. Jobs was indeed a visionary with a passion for technology. But he was an extremely shrewd businessman. igadgets are all manufactured (by hand) in china, in a factory that consists of 300,000 workers! They might easily work 12 hour days, 6 days a week. And suicide is rampant. This keeps costs as low as possible, and allows apple to focus it's big profit on further innovation. Fair game in my opinion, I'm not one to judge the morals on this issue, But call a spade a spade.
- meric 15y ago
  Jobs actually tried to set up a custom factory to build computers in the 80's. He learnt from that lesson why it wasn't a good idea. (read this from an older version of an "unauthorised" biography).
- swombat 15y ago
  igadgets are all manufactured (by hand) in china, in a factory that consists of 300,000 workers! They might easily work 12 hour days, 6 days a week. And suicide is rampant. Are Sony gadgets manufactured any differently? Also, considering Apple is probably the only major consumer electronics company to actually be transparent about working conditions (unlike the others who also do the same thing but don't care), it's not only unfair, but seriously biased "hateboy" fare to keep picking on them about that, especially out of context for no apparent reason.
  - willvarfar 15y ago
    Apple is also famous for supply chain management and embargoes; if that isn't profit focus what is?
  - blvr 15y ago
    You're missing the point. ramblerman was just pointing out that Steve Jobs actually was interested in profitability and if he wasn't he probably wouldn't have moved manufacturing to China.
  - ramblerman 15y ago
    no sony, microsoft and many others employ the services of foxcon. I own a few apple products, I wouldn't consider myself a "hateboy". I just think Steve Jobs should be called a businessman, and not some idealist who didn't care about profit.
beggi 15y ago
I don't think Jobs ignored profits at all. His aim was to create a company that makes products that people love and more money to Apple enabled more of their creativity. I do think one of the things that make Apple very different is that they are not afraid of cannibalizing their own business for an even bigger market, and also they're better than most at recognizing what that market is.
mrich 15y ago
Easy counter-argument: If Apple is placing the customer first, why not sell the product at half the price (thus only 5% profit margin), wouldn't that make more customers even more happier? Branching out to different fields )i.e. iPod) than your current bread-and-butter is not ignoring profits, it is being smart and realizing there are opportunities in other markets.
- shingen 15y ago
  Interestingly, Apple is placing the customer first by charging what they do. Why? Because you couldn't do what Apple does with a 5% profit margin. They can ignore Wall Street, creditors (which they don't have), sharks, hostile investors (Carl Icahn etc), and so on all because they generate a healthy profit. Who thinks it would be a good situation for Apple to be begging at Bill Gates' (ala 1997; whomever it might be) knees in the future if something goes wrong with an iPhone launch? I'm betting their customers don't think it would be good. If Apple's customers love their products, it's in the interest of those customers to keep funding Apple's ability to keep doing what it does. What Apple does costs a lot of money. One slip at their scale could easily cost $10 billion. A 5% margin would not cover that. If their next data center costs $5 billion in cash to build due to ever increasing scale and complexity, and they had had 5% margins all this time, it might be a stretch to pull it off (maybe with debt). If the global complexities of navigating a world wide mobile product increase to ever bigger scale, that 5% margin wouldn't cut it. I couldn't imagine trying to manage the iPhone at 100 million in sales, on a 5% margin. They're not selling jelly beans. How about if Foxconn keeps having to raise wages by 15% to 25% per year for the next ten years. Again, 5% margins would not cut it. Or if that did happen, and Apple then finds it more cost effective to build completely automated robotic assembly systems, but it costs $20 billion to R&D and construct that... and so on and so forth.
  - mrich 15y ago
    Would you ask your bank to raise the interest on your mortgage so they can become more independent and offer you another mortgage later?
    - 15y ago
novusordo 15y ago
While I don't agree with the headline the points made in the actual article are great. When a business makes a lot of money from a single source new ideas can seem too risky or even harmfull to existing profits. Jobs ability to look beyond the current paradigm above all that was unique.
keeptrying 15y ago
He didnt ignore profit, he focussed on value. Value that most no one else could see.
jmtame 15y ago
“I don’t understand,” Jobs said at the product review meeting. “You’re going to ship a million [printers] and not make money on these? This is nuts.”
- ceejayoz 15y ago
  Ignoring profits and ignoring losses are very significantly different things.
davmar 15y ago
wrong. from his 2007 iphone keynote intro: 26m game consoles sold, 94m digital cameras, 135m MP3 players, 209m PCs, 957m phones... 1% market share is 10 million phones. "Exactly what we're trying to do, 1% market share in 2008, 10 million units and we'll go from there." http://www.blogcdn.com/www.engadget.com/media/2007/01/dsc_0245.jpg http://www.blogcdn.com/www.engadget.com/media/2007/01/dsc_02... they were thinking about profit. rest assured.
guynamedloren 15y ago
"Apple is in the process of disrupting itself right now .... Most companies cannot bring themselves to make decisions that result in the market for their existing core products being completely destroyed". First of all, I'm pretty sure the notebook market is not being completely destroyed by tablets. Yeah, tablets are blowing up, and yeah, notebook sales are probably taking a hit, but lets be real. This claim is grossly exaggerated to the point that it is just not true. The notebook market has not been destroyed. And disrupting itself? Really? Identifying a new product that has the potential to be hugely successful and profitable while possibly taking a small slice out the sales of an existing product means Apple is disrupting itself? Another word to describe this is 'innovation'. And anyway, I'm not even sure iPads are hurting Apple's notebook sales. I haven't done my research, but I've heard that it may in fact be the other way around - that the Macbook Air is hurting iPad sales. Seems like the author just picked up the latest buzzword, and he's a bit fuzzy on what it really means. Apple is undoubtedly innovative and fantastic at what they do, but please stop fluffing up disruptive.
- marcusf 15y ago
  People tend to shove disruptive in wherever they can - I guess because it sounds cool. _Cannibalize_ might be better here? Anyway, it's hard to argue Apple didn't cannibalize on its own iPod sales when it introduced the iPhone, and with some mild success. Not all companies seem willing to do that. I guess what I'm saying is that if you just sed disrupt for cannibalize, the argument makes more sense.
- vacri 15y ago
  Notebooks aren't taking a hit, desktops are.
  - guynamedloren 15y ago
    Desktops are taking a hit from iPad sales? Hmm.. have a link to back this up? Not doubting you - I'm genuinely curious. By the way - even if iPad sales are higher than (Apple) desktop sales, and if iPad sales are on the rise and desktop sales on in decline, please do not assume that desktop sales are taking a hit because of iPads.
Intermernet 15y ago
A company with that many patent suits underway cares not for profit? Pull the other one, it's got iBells on it.
super_mario 15y ago
Too bad Apple today is an appliance company, making entertainment devices for technophobes concerned solely with low support costs and above all profit. At one point they made computers that were even appealing to software developers and the UNIX crowd. Those days are over.
tcarnell 15y ago
eh? they build phones in China - the other side of the world with a massive language and culture barrier with the sole purpose of saving money - how are they NOT thinking about profit !!!
rsanchez1 15y ago
Well, once you make a product that practically prints money, profit is one thing you can ignore. It will just happen.
zaidf 15y ago
The thing about people like Jobs is that their definition of "ignoring" still means that they put more thought and effort into thinking about profit than your typical founder who is obsessed about profits. They simply operate at a different scale.
bickfordb 15y ago
This is an absurd argument. Apple's profit margins have always been significantly higher than any other competing electronics or computer manufacturer.

81 points by 6ren 15y ago

blvr 15y ago

> Most companies cannot bring themselves to make decisions that result in the market for their existing core products being completely destroyed. When they consider it from a financial perspective, it just doesn’t make sense to create new products at the risk of jeopardizing your profitable, existing products. All Apple's profitable, existing products are eventually made unprofitable by shoddier but equally capable clones. Think Windows, Android, the myriad of MP3 players you can pick up for tens of dollars. The only way they maintain profitability is by bein innovative and creating new markets that they can dominate for a short while (and by generating brand loyalty for their older products because of their new products). So there isn't a profitability vs. innovation dilema for Apple. For them being innovative is being profitable.

dthunt 15y ago

Apple is the company that sells $3000 laptops that are comparable to most $1200-1500 laptops, but are slightly prettier and less serviceable and $70 keyboards with broken debouncers. If you're going to write an article about 'ignoring profit' cite some specific products and how they were priced cheaply, or get off the frickin' pot.

dthunt 15y ago
lulz. The author's bio. This says it all. Clayton M. Christensen is the Robert and Jane Cizik Professor of Business Administration at the Harvard Business School, and is regarded as the world’s foremost expert on innovation and growth. James Allworth is a Fellow at the Forum for Growth and Innovation at Harvard Business School.
enko 15y ago
> $3000 laptops that are comparable to most $1200-1500 laptops, but are slightly prettier and less serviceable So all those people who buy them are just stupid then, are they? What nonsense. This is little better than trolling.
- dthunt 15y ago
  You said it, not me. There are people who care very much about the visuals. They're not stupid for paying extra.
- Gigablah 15y ago
  Perhaps a better comparison would be the Apple Store's $400 price tag for 8GB RAM modules when you can get it for around $100 normally. I don't think the "customer service" is worth $300.
gnaffle 15y ago
My guess is that many executives at competing companies think just like this: Apple just sells "slightly prettier" laptops at a premium. So they give their designers the job of making the products "slightly prettier", and then they are surprised when these products fail to compete with Apple.
redguava 15y ago
This comment may have been relevant many years ago, but these days companies are struggling to compete with Apple on price (notably Macbook Airs, iPads, etc).
- john2x 15y ago
  I'm in the market for a nice lightweight laptop for development. I was amazed to see that the best one I can get is a Macbook Air. Other brands don't even come close to it, with regards to price:quality ratio. Heck, even ignoring quality the Air still beats other ultrabooks. My friends have a hard time admitting that an Apple product is actually the saner choice.

shingen 15y ago

That makes for a great headline, but it's wrong. He absolutely did not ignore profit: he understood its proper place better than most. Jobs loved profit. He understood that the best products, marketed properly, can produce extraordinary profits. He wanted his products to generate a lot of profit so he could keep plowing that necessary profit back into producing ever better insanely great creations. He most certainly did not eschew profits, he understood not to put the profit before the product. There's a very big and critical difference between eschewing profits and knowing their place.

Jarred 15y ago
Can you cite where you learned this from (Steve Jobs' view on profits)?
- shingen 15y ago
  In his biography he talks about the importance of Apple generating a profit in order to re-invest into producing new products. That healthy profits were not only necessary but desirable to that end. I believe he has also said as much in interviews in talking in general about the nature of business (I will try to dig those up). It's why he recognized that a company was the best vehicle to use to marry his love of the arts with technology, as he is quoted in his book. It's perfectly logical, as it's not cheap to do what Apple does when it comes to creating. There's a reason they just hit $100 billion in cash - Jobs knew full well the value of profit and what it should properly be used for. They know the value and safety in being able to build what you want to, and not being constrained for oxygen due to low cash or debt or lack of profits.
  - kokey 15y ago
    The way I see it is that because he wants to be profitable by innovating and delivering great products, he was aware that he should not let innovation be hampered by profit motives. This is especially important in the market he was operating in, and working around this problem gave them an edge.
- batista 15y ago

Jare 15y ago

This headline/article is missing the word 'short-term' in a few places.

ramblerman 15y ago

What a naively written article. Jobs was indeed a visionary with a passion for technology. But he was an extremely shrewd businessman. igadgets are all manufactured (by hand) in china, in a factory that consists of 300,000 workers! They might easily work 12 hour days, 6 days a week. And suicide is rampant. This keeps costs as low as possible, and allows apple to focus it's big profit on further innovation. Fair game in my opinion, I'm not one to judge the morals on this issue, But call a spade a spade.

meric 15y ago
Jobs actually tried to set up a custom factory to build computers in the 80's. He learnt from that lesson why it wasn't a good idea. (read this from an older version of an "unauthorised" biography).
swombat 15y ago
igadgets are all manufactured (by hand) in china, in a factory that consists of 300,000 workers! They might easily work 12 hour days, 6 days a week. And suicide is rampant. Are Sony gadgets manufactured any differently? Also, considering Apple is probably the only major consumer electronics company to actually be transparent about working conditions (unlike the others who also do the same thing but don't care), it's not only unfair, but seriously biased "hateboy" fare to keep picking on them about that, especially out of context for no apparent reason.
- willvarfar 15y ago
  Apple is also famous for supply chain management and embargoes; if that isn't profit focus what is?
- blvr 15y ago
  You're missing the point. ramblerman was just pointing out that Steve Jobs actually was interested in profitability and if he wasn't he probably wouldn't have moved manufacturing to China.
- ramblerman 15y ago
  no sony, microsoft and many others employ the services of foxcon. I own a few apple products, I wouldn't consider myself a "hateboy". I just think Steve Jobs should be called a businessman, and not some idealist who didn't care about profit.

beggi 15y ago

I don't think Jobs ignored profits at all. His aim was to create a company that makes products that people love and more money to Apple enabled more of their creativity. I do think one of the things that make Apple very different is that they are not afraid of cannibalizing their own business for an even bigger market, and also they're better than most at recognizing what that market is.

mrich 15y ago

Easy counter-argument: If Apple is placing the customer first, why not sell the product at half the price (thus only 5% profit margin), wouldn't that make more customers even more happier? Branching out to different fields )i.e. iPod) than your current bread-and-butter is not ignoring profits, it is being smart and realizing there are opportunities in other markets.

shingen 15y ago
Interestingly, Apple is placing the customer first by charging what they do. Why? Because you couldn't do what Apple does with a 5% profit margin. They can ignore Wall Street, creditors (which they don't have), sharks, hostile investors (Carl Icahn etc), and so on all because they generate a healthy profit. Who thinks it would be a good situation for Apple to be begging at Bill Gates' (ala 1997; whomever it might be) knees in the future if something goes wrong with an iPhone launch? I'm betting their customers don't think it would be good. If Apple's customers love their products, it's in the interest of those customers to keep funding Apple's ability to keep doing what it does. What Apple does costs a lot of money. One slip at their scale could easily cost $10 billion. A 5% margin would not cover that. If their next data center costs $5 billion in cash to build due to ever increasing scale and complexity, and they had had 5% margins all this time, it might be a stretch to pull it off (maybe with debt). If the global complexities of navigating a world wide mobile product increase to ever bigger scale, that 5% margin wouldn't cut it. I couldn't imagine trying to manage the iPhone at 100 million in sales, on a 5% margin. They're not selling jelly beans. How about if Foxconn keeps having to raise wages by 15% to 25% per year for the next ten years. Again, 5% margins would not cut it. Or if that did happen, and Apple then finds it more cost effective to build completely automated robotic assembly systems, but it costs $20 billion to R&D and construct that... and so on and so forth.
- mrich 15y ago
  Would you ask your bank to raise the interest on your mortgage so they can become more independent and offer you another mortgage later?
  - 15y ago

novusordo 15y ago

While I don't agree with the headline the points made in the actual article are great. When a business makes a lot of money from a single source new ideas can seem too risky or even harmfull to existing profits. Jobs ability to look beyond the current paradigm above all that was unique.

keeptrying 15y ago

He didnt ignore profit, he focussed on value. Value that most no one else could see.

jmtame 15y ago

“I don’t understand,” Jobs said at the product review meeting. “You’re going to ship a million [printers] and not make money on these? This is nuts.”

ceejayoz 15y ago
Ignoring profits and ignoring losses are very significantly different things.

davmar 15y ago

wrong. from his 2007 iphone keynote intro: 26m game consoles sold, 94m digital cameras, 135m MP3 players, 209m PCs, 957m phones... 1% market share is 10 million phones. "Exactly what we're trying to do, 1% market share in 2008, 10 million units and we'll go from there." http://www.blogcdn.com/www.engadget.com/media/2007/01/dsc_0245.jpg http://www.blogcdn.com/www.engadget.com/media/2007/01/dsc_02... they were thinking about profit. rest assured.

guynamedloren 15y ago

"Apple is in the process of disrupting itself right now .... Most companies cannot bring themselves to make decisions that result in the market for their existing core products being completely destroyed". First of all, I'm pretty sure the notebook market is not being completely destroyed by tablets. Yeah, tablets are blowing up, and yeah, notebook sales are probably taking a hit, but lets be real. This claim is grossly exaggerated to the point that it is just not true. The notebook market has not been destroyed. And disrupting itself? Really? Identifying a new product that has the potential to be hugely successful and profitable while possibly taking a small slice out the sales of an existing product means Apple is disrupting itself? Another word to describe this is 'innovation'. And anyway, I'm not even sure iPads are hurting Apple's notebook sales. I haven't done my research, but I've heard that it may in fact be the other way around - that the Macbook Air is hurting iPad sales. Seems like the author just picked up the latest buzzword, and he's a bit fuzzy on what it really means. Apple is undoubtedly innovative and fantastic at what they do, but please stop fluffing up disruptive.

marcusf 15y ago
People tend to shove disruptive in wherever they can - I guess because it sounds cool. _Cannibalize_ might be better here? Anyway, it's hard to argue Apple didn't cannibalize on its own iPod sales when it introduced the iPhone, and with some mild success. Not all companies seem willing to do that. I guess what I'm saying is that if you just sed disrupt for cannibalize, the argument makes more sense.
vacri 15y ago
Notebooks aren't taking a hit, desktops are.
- guynamedloren 15y ago
  Desktops are taking a hit from iPad sales? Hmm.. have a link to back this up? Not doubting you - I'm genuinely curious. By the way - even if iPad sales are higher than (Apple) desktop sales, and if iPad sales are on the rise and desktop sales on in decline, please do not assume that desktop sales are taking a hit because of iPads.

Intermernet 15y ago

A company with that many patent suits underway cares not for profit? Pull the other one, it's got iBells on it.

super_mario 15y ago

Too bad Apple today is an appliance company, making entertainment devices for technophobes concerned solely with low support costs and above all profit. At one point they made computers that were even appealing to software developers and the UNIX crowd. Those days are over.

tcarnell 15y ago

eh? they build phones in China - the other side of the world with a massive language and culture barrier with the sole purpose of saving money - how are they NOT thinking about profit !!!

rsanchez1 15y ago

Well, once you make a product that practically prints money, profit is one thing you can ignore. It will just happen.

zaidf 15y ago

The thing about people like Jobs is that their definition of "ignoring" still means that they put more thought and effort into thinking about profit than your typical founder who is obsessed about profits. They simply operate at a different scale.

bickfordb 15y ago

This is an absurd argument. Apple's profit margins have always been significantly higher than any other competing electronics or computer manufacturer.