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Apple has been an outlier kind of performer under Steve Jobs, because Jobs was an outlier kind of human being. All I take away from that article is that people

Apple has been an outlier kind of performer under Steve Jobs, because Jobs was an outlier kind of human being. All I take away from that article is that people better start tempering their expectations of this new Apple, because once the product pipeline that Jobs oversaw is depleted, what we have left is merely a "very good" company built on a great foundation. So much of the article seemed to point out the Tim Cook was friendlier in terms of investor relationships, but who cares about that (from a technologist point of view)? I mean, the biggest indicator of the shift in their priorities is that they took 100 billion dollars in cash and used it for stock buybacks and dividends. Can you imagine Google doing such a thing? They would never dream of this, because they are too busy re-investing their profits with their big-picture potentially world changing research projects. But hey, kudos for Tim Cook for not trying to be someone he is not, he's a money and operations guy. So money and operations will get looked at at the expensive of innovation. But this is not good for those who are used to miracles from Apple: "It looks like it has become a more conservative execution engine rather than a pushing-the-envelope engineering engine," says Max Paley, a former engineering vice president who worked at Apple for 14 years until late 2011. "I've been told that any meeting of significance is now always populated by project management and global-supply management," he says. "When I was there, engineering decided what we wanted, and it was the job of product management and supply management to go get it. It shows a shift in priority." Yuck. The geek inside dies a little at reading this.

sp332 14y ago
Imagine an engineer knowing there's less NAND flash available and it's getting more expensive. So they can focus on giving the software a smaller storage footprint. Now the product is the same, but because engineering and global-supply management worked together, the product is cheaper.
- pork 14y ago
  That's not innovation, that's incremental optimization.
  - niketdesai 14y ago
    I'm sorry, but this is a highly naive point of view. You could have had an iPhone in 2005 for an amount of money you probably wouldn't be able to part with. These products still have to be produced in quantity and therefore supply chain innovation is just as critical as the design and engineering itself. Apple doesn't market it that way, but the disparity in cost to sell price is one of the reasons they have been able to do so well and fund their next endeavors. Apple doesn't design and build buildings, which are expensive, time consuming, and generally done in small quantities. They design products meant to reach millions of people and as such design and engineering of that feat is innovative in its own right. Your statement, taken more broadly, would dismiss the work of companies like Tesla and SpaceX. Their goals are to bring their unique products to a wider market providing a next generation experience. I mean, I guess it would be cool if it was just Elon Musk rolling around in his single space ship or Tesla Roadster. But it's much more exciting that this can be the case for many people.
  - bostonpete 14y ago
    Either way, it's adding value.
  - easp 14y ago
    You think that innovation, whatever the hell that is, doesn't require a lot of incremental optimizations? As has been endlessly observed, the Mac drew heavily on the innovative ideas at Xerox PARC, but it added many refinements, including affordability. Similarly, there were other mp3 players before the iPod, and other smartphones before the iPhone, but part of what set Apple apart was bringing all those capabilities together in a way that was greater than the sum of the parts. That doesn't mean that the parts are unimportant.
  - sp332 14y ago
    Well I said "the project is the same" but what if it wasn't? What if the engineers focus on building features that take less space instead of ones that requires multiple megs of new code? Or what if they can tell the global supply people years in advance what new hardware they'll need (more accelerometers, more accurate touch sensors, or different antennas for upcoming 5 GHz wifi support, etc.).
nodata 14y ago
Don't forget that Jobs picked Cook.
- mikeash 14y ago
  Jobs also picked the G4 Cube. He made mistakes, and Cook may have been one. Certainly it could end up being an excellent move, but only time will tell.
  - ralfd 14y ago
    I think Cooks leadership will turn out fine. And the real test will be whom he chooses. These big companies remind me of the roman empire. When the Principate put capable man to power the results were exceptional. When the barracks emperors came to power only to be repeatedly murdered again (cough Yahoo cough) it all crumbled.
  - alexqgb 14y ago
    I'm always amazed that more people don't recognize the Cube as one of the most successful design manifestos in corporate history. Unlike the successful-in-their-time Candy iMacs, the Cube introduced a hardware design DNA that permiated virtually everything that followed it. Those traces remain clearly visible today - more than a decade later - in what could be fairly described as the world's most valuable product line. For Jobs, a private or merely theoretical manifesto wouldn't have been enough. Apple designs everything from the concept to the manufacturing process to the unboxing and initial startup experience. For a something to be a true design reference, it had to cover all these bases. That means it needed to be a real product that actually shipped. Which it did. If you measure the return using everything that followed its lead - which includes the flagship store - it has recovered its investment a bazillion times over. Whatever else the Cube may have been, it was not a mistake. The one-button hockey puck mouse with the too-short cable? That was a mistake.
    - parenthesis 14y ago
      Yes. The Mac Mini is a smaller Cube. The iMac is a squished-out Cube with a screen on the side. Like the Cube, they (and other Apple products) are personal computers that are more consumer appliance/device than the traditional tower or rack. Another way of looking at the Cube (and its successors) is that it's a `desktop laptop'.
lysol 14y ago
Jonathan Ive still works there. Don't start freaking out just yet.
alain94040 14y ago
"I've been told that any meeting of significance is now always populated by project management and global-supply management," he says. "When I was there, engineering decided what we wanted, and it was the job of product management and supply management to go get it. It shows a shift in priority." As an engineer, I understand why you are scared that "global-supply management" is getting involved. But you forget that the volumes that Apple works at have changed in the last 10 years, to the point where new products need to be manufactured at launch, in quantity that no one else in the industry has ever heard off. Good old days where you could manufacture 1 million iPhones in the first quarter and be happy, those days are over. So pay a bit of respect to global-supply management. Manufacturing is actually as respectable as engineering. Just different concepts, but both optimize under heavy constraints to achieve near-impossible goals (at least at Apple).
- excuse-me 14y ago
  Apple's real innovation is in supply management (well that and iTunes) Anyone can make a thin smooth aluminium laptop. Being in the position of making the premium priced top of the range product, while paying far less for your components than your big box competitors and having such a stranglehold hold on supplies of those components that you can keep competitors out is amazing. It's as if Audi not only made great cars - but also had all the worlds supply of tires and engines and was paying half as much as chevy for them!
  - bjelkeman-again 14y ago
    I would argue that Apple's innovation is also in the operating systems and the applications they provide. iOS and Mac OS X is for my use far superior to any of the alternatives. Not everyone likes them, but everyone around me (90%-95% or so) have switched to Apple operating systems and hardware due to ease of use. This together with the fully integrated experience: OS, app store, media store (iTunes), hardware is why the competition is floundering. This stack is costly and hard to compete with.
  - csmeder 14y ago
    I feel like this is ignoring the tough decisions Job's made when they didn't have the supply chain. The original iPod was priced at US$399 and US$499. It had very few features and most people called it lame. When Job's decided to remove floppy disk drives and made iMacs that you couldn't upgrade the components from computers people called it lame. (This really upset people) When the first iPad came out most people called it lame. (Has everyone already forgotten this? People were screaming it was going to fail, because it didn't run OSX). To dismiss Apples success as only dependent on supply chain management is missing the mark in my opinion. Apples success in a large way hinged on Jobs ability to make decisions that in the immediate would piss people off but in the long term seem obvious.
drzaiusapelord 14y ago
>Yuck. The geek inside dies a little at reading this. Is it possible to be as big and successful as Apple but also maintain some kind of startup pro-geek mentality? Was this mentality ever there in recent years? My understanding it was something of a Jobs-led dictatorship that worked because Jobs had good judgement and good taste. I suspect most meetings have global-supply management involved. Apple makes items on the scale of tens of millions. Input from the guys who make that happen past the finished prototype stage is going to be important. I'm never sure what to think about these articles. They come out every so often for every big company. A few months ago it was how Google is getting too corporate. Or how Facebook is working its employees too hard. The inner gossip of how companies are run, especially by bitter ex-employees, isn't usually useful information.
andyman1080 14y ago
Surprised to see so many responses without a fact check on this: "the biggest indicator of the shift in their priorities is that they took 100 billion dollars in cash and used it for stock buybacks and dividends." The dividend and stock repurchase will be more than paid for out of operating cash flow. In other words, even with them the cash pile will increase. Look at some of the analysis that Horace Dediu is doing to observe that Apple is actually investing a tremendous amount of capital ($7B this year) in as yet unknown equipment, maybe real estate. (http://www.asymco.com/2012/05/22/up-to-eleven/ http://www.asymco.com/2012/05/22/up-to-eleven/) That's not including the billions they spend on R&D. If that's not reinvesting profit in a big picture way, I don't know what is.
ryannielsen 14y ago
I mean, the biggest indicator of the shift in their priorities is that they took 100 billion dollars in cash and used it for stock buybacks and dividends. Can you imagine Google doing such a thing? They would never dream of this, because they are too busy re-investing their profits with their big-picture potentially world changing research projects. Apple's executing a $45B buyback and dividend program that's expected to run over three years. They made $6B in profit last quarter. Thus, while they're losing $45B over three years, if they keep on track, they'll make far more than $72B during that same period of time. (That's assuming they never make more or less than $6B a quarter over the next three years... in Q1, they made $13B in profit.) The buyback and dividends make investors happy and keep Apple's stock from being diluted by employee grants and options, and those programs can be done with the company still making solid profits. Seems like a win-win. And don't think Apple's not reinvesting profits for future products and innovations. If anything, Apple's track record over the past 14 years should be a clear sign that they're always aggressively reinvesting profit in improving every part of their business, and are always quietly working on something new. Finally, the person quoted was one point of view, and we have no perspective on how he left Apple. Your inner geek doesn't need to be that worried.
- cube13 14y ago
  >Thus, while they're losing $45B over three years, if they keep on track, they'll make far more than $72B during that same period of time. (That's assuming they never make more or less than $6B a quarter over the next three years... in Q1, they made $13B in profit.) They're not really "losing" $45 billion with the buyback. They're spending $45 billion in cash(which they have) to get $45 billion in stock. The end result, since they don't need to get a loan to execute the buyback would be basically nothing on their books(unrealistically assuming the stock doesn't move at all).
  - ryannielsen 14y ago
    Fair point, thank you for the clarification The overall point I was trying to make is even though they're giving up some cash, they're making more than enough each quarter to cover that loss of liquid capital. Apple's buyback and dividend programs should have zero impact on their ability to fund R&D or to invest in future products. (Assuming they continue their long trend of year-over-year revenue growth, of course.)

sp332 14y ago

Imagine an engineer knowing there's less NAND flash available and it's getting more expensive. So they can focus on giving the software a smaller storage footprint. Now the product is the same, but because engineering and global-supply management worked together, the product is cheaper.

pork 14y ago
That's not innovation, that's incremental optimization.
- niketdesai 14y ago
  I'm sorry, but this is a highly naive point of view. You could have had an iPhone in 2005 for an amount of money you probably wouldn't be able to part with. These products still have to be produced in quantity and therefore supply chain innovation is just as critical as the design and engineering itself. Apple doesn't market it that way, but the disparity in cost to sell price is one of the reasons they have been able to do so well and fund their next endeavors. Apple doesn't design and build buildings, which are expensive, time consuming, and generally done in small quantities. They design products meant to reach millions of people and as such design and engineering of that feat is innovative in its own right. Your statement, taken more broadly, would dismiss the work of companies like Tesla and SpaceX. Their goals are to bring their unique products to a wider market providing a next generation experience. I mean, I guess it would be cool if it was just Elon Musk rolling around in his single space ship or Tesla Roadster. But it's much more exciting that this can be the case for many people.
- bostonpete 14y ago
  Either way, it's adding value.
- easp 14y ago
  You think that innovation, whatever the hell that is, doesn't require a lot of incremental optimizations? As has been endlessly observed, the Mac drew heavily on the innovative ideas at Xerox PARC, but it added many refinements, including affordability. Similarly, there were other mp3 players before the iPod, and other smartphones before the iPhone, but part of what set Apple apart was bringing all those capabilities together in a way that was greater than the sum of the parts. That doesn't mean that the parts are unimportant.
- sp332 14y ago
  Well I said "the project is the same" but what if it wasn't? What if the engineers focus on building features that take less space instead of ones that requires multiple megs of new code? Or what if they can tell the global supply people years in advance what new hardware they'll need (more accelerometers, more accurate touch sensors, or different antennas for upcoming 5 GHz wifi support, etc.).

nodata 14y ago

Don't forget that Jobs picked Cook.

mikeash 14y ago
Jobs also picked the G4 Cube. He made mistakes, and Cook may have been one. Certainly it could end up being an excellent move, but only time will tell.
- ralfd 14y ago
  I think Cooks leadership will turn out fine. And the real test will be whom he chooses. These big companies remind me of the roman empire. When the Principate put capable man to power the results were exceptional. When the barracks emperors came to power only to be repeatedly murdered again (cough Yahoo cough) it all crumbled.
- alexqgb 14y ago
  I'm always amazed that more people don't recognize the Cube as one of the most successful design manifestos in corporate history. Unlike the successful-in-their-time Candy iMacs, the Cube introduced a hardware design DNA that permiated virtually everything that followed it. Those traces remain clearly visible today - more than a decade later - in what could be fairly described as the world's most valuable product line. For Jobs, a private or merely theoretical manifesto wouldn't have been enough. Apple designs everything from the concept to the manufacturing process to the unboxing and initial startup experience. For a something to be a true design reference, it had to cover all these bases. That means it needed to be a real product that actually shipped. Which it did. If you measure the return using everything that followed its lead - which includes the flagship store - it has recovered its investment a bazillion times over. Whatever else the Cube may have been, it was not a mistake. The one-button hockey puck mouse with the too-short cable? That was a mistake.
  - parenthesis 14y ago
    Yes. The Mac Mini is a smaller Cube. The iMac is a squished-out Cube with a screen on the side. Like the Cube, they (and other Apple products) are personal computers that are more consumer appliance/device than the traditional tower or rack. Another way of looking at the Cube (and its successors) is that it's a `desktop laptop'.

lysol 14y ago

Jonathan Ive still works there. Don't start freaking out just yet.

alain94040 14y ago

"I've been told that any meeting of significance is now always populated by project management and global-supply management," he says. "When I was there, engineering decided what we wanted, and it was the job of product management and supply management to go get it. It shows a shift in priority." As an engineer, I understand why you are scared that "global-supply management" is getting involved. But you forget that the volumes that Apple works at have changed in the last 10 years, to the point where new products need to be manufactured at launch, in quantity that no one else in the industry has ever heard off. Good old days where you could manufacture 1 million iPhones in the first quarter and be happy, those days are over. So pay a bit of respect to global-supply management. Manufacturing is actually as respectable as engineering. Just different concepts, but both optimize under heavy constraints to achieve near-impossible goals (at least at Apple).

excuse-me 14y ago
Apple's real innovation is in supply management (well that and iTunes) Anyone can make a thin smooth aluminium laptop. Being in the position of making the premium priced top of the range product, while paying far less for your components than your big box competitors and having such a stranglehold hold on supplies of those components that you can keep competitors out is amazing. It's as if Audi not only made great cars - but also had all the worlds supply of tires and engines and was paying half as much as chevy for them!
- bjelkeman-again 14y ago
  I would argue that Apple's innovation is also in the operating systems and the applications they provide. iOS and Mac OS X is for my use far superior to any of the alternatives. Not everyone likes them, but everyone around me (90%-95% or so) have switched to Apple operating systems and hardware due to ease of use. This together with the fully integrated experience: OS, app store, media store (iTunes), hardware is why the competition is floundering. This stack is costly and hard to compete with.
- csmeder 14y ago
  I feel like this is ignoring the tough decisions Job's made when they didn't have the supply chain. The original iPod was priced at US$399 and US$499. It had very few features and most people called it lame. When Job's decided to remove floppy disk drives and made iMacs that you couldn't upgrade the components from computers people called it lame. (This really upset people) When the first iPad came out most people called it lame. (Has everyone already forgotten this? People were screaming it was going to fail, because it didn't run OSX). To dismiss Apples success as only dependent on supply chain management is missing the mark in my opinion. Apples success in a large way hinged on Jobs ability to make decisions that in the immediate would piss people off but in the long term seem obvious.

drzaiusapelord 14y ago

>Yuck. The geek inside dies a little at reading this. Is it possible to be as big and successful as Apple but also maintain some kind of startup pro-geek mentality? Was this mentality ever there in recent years? My understanding it was something of a Jobs-led dictatorship that worked because Jobs had good judgement and good taste. I suspect most meetings have global-supply management involved. Apple makes items on the scale of tens of millions. Input from the guys who make that happen past the finished prototype stage is going to be important. I'm never sure what to think about these articles. They come out every so often for every big company. A few months ago it was how Google is getting too corporate. Or how Facebook is working its employees too hard. The inner gossip of how companies are run, especially by bitter ex-employees, isn't usually useful information.

andyman1080 14y ago

Surprised to see so many responses without a fact check on this: "the biggest indicator of the shift in their priorities is that they took 100 billion dollars in cash and used it for stock buybacks and dividends." The dividend and stock repurchase will be more than paid for out of operating cash flow. In other words, even with them the cash pile will increase. Look at some of the analysis that Horace Dediu is doing to observe that Apple is actually investing a tremendous amount of capital ($7B this year) in as yet unknown equipment, maybe real estate. (http://www.asymco.com/2012/05/22/up-to-eleven/ http://www.asymco.com/2012/05/22/up-to-eleven/) That's not including the billions they spend on R&D. If that's not reinvesting profit in a big picture way, I don't know what is.

ryannielsen 14y ago

I mean, the biggest indicator of the shift in their priorities is that they took 100 billion dollars in cash and used it for stock buybacks and dividends. Can you imagine Google doing such a thing? They would never dream of this, because they are too busy re-investing their profits with their big-picture potentially world changing research projects. Apple's executing a $45B buyback and dividend program that's expected to run over three years. They made $6B in profit last quarter. Thus, while they're losing $45B over three years, if they keep on track, they'll make far more than $72B during that same period of time. (That's assuming they never make more or less than $6B a quarter over the next three years... in Q1, they made $13B in profit.) The buyback and dividends make investors happy and keep Apple's stock from being diluted by employee grants and options, and those programs can be done with the company still making solid profits. Seems like a win-win. And don't think Apple's not reinvesting profits for future products and innovations. If anything, Apple's track record over the past 14 years should be a clear sign that they're always aggressively reinvesting profit in improving every part of their business, and are always quietly working on something new. Finally, the person quoted was one point of view, and we have no perspective on how he left Apple. Your inner geek doesn't need to be that worried.

cube13 14y ago
>Thus, while they're losing $45B over three years, if they keep on track, they'll make far more than $72B during that same period of time. (That's assuming they never make more or less than $6B a quarter over the next three years... in Q1, they made $13B in profit.) They're not really "losing" $45 billion with the buyback. They're spending $45 billion in cash(which they have) to get $45 billion in stock. The end result, since they don't need to get a loan to execute the buyback would be basically nothing on their books(unrealistically assuming the stock doesn't move at all).
- ryannielsen 14y ago
  Fair point, thank you for the clarification The overall point I was trying to make is even though they're giving up some cash, they're making more than enough each quarter to cover that loss of liquid capital. Apple's buyback and dividend programs should have zero impact on their ability to fund R&D or to invest in future products. (Assuming they continue their long trend of year-over-year revenue growth, of course.)