> 15/ It is incredibly clear that everyone at Apple puts strategy requirements above anything “local”. When you wonder why there isn’t more new in Notes or why Mail is missing stuff it’s because supporting a multi-year strategy trumps individual teams and that’s a good thing.
I don’t know anything about internals at Apple but I have been wondering constantly how they manage to be successful over and over again. If I had to bet, I’d say is this. I’ve worked for many companies where the ego of a product or service line boss always trumped overall strategy. It was about them not the company. Somehow Apple has succeeded in damping down this effect (I am sure it’s there but just on different level than in other companies).
One downside I can think of is that some ambitious engineers might not like being unable to make their mark on a product with an idea they have. For what it's worth, I've known too many Apple engineers decamp to Google, et al., after they got sick of the top-down management style. Google is, of course, the other extreme where products can essentially be the external manifestation of an engineer's effort to get promoted.
He definitely was a clever guy. He had an enormous ego, but he knew when it was wrong (despite him probably never accepting he was wrong in the first place)
Pretty much. There’s no big secret. Just a bunch of uncomfortable hard work to not ship junk and get everyone on the same page. It helps that title for product managers is “Vice President.”
Somehow Apple has succeeded in damping down this effect
I don’t know how Apple is organized internally but if I may be allowed to speculate, I think the way to avoid these ego issues is by moving people around constantly. If you don’t allow any team to establish a “territory” on a particular product, you may be able to get away with it.
This is not how Apple works, unlike FB or Google people stay on their teams for a long, long time.
Based on my knowledge of the company, it's pretty heavily top-down led. That would be my guess on why it's able to execute against its strategy.
But I am not sure it's particularly better at it than other tech giants. My guess for the main reason Apple is so successful is its strategy, not their execution of it: Sell expensive top-class products (even if that means being late to market), and establish strongly walled ecosystems between those products.
I think people over-estimate Apple's success. As a non-American Apple was never really popular until the iPhone came. The Macs never made it to the East, most of the world was dominated by PCs. Even with the iPod, most saw it as Walkman 2.0 rather than a completely new disruptive technology. Here in Japan, where iPhone has the highest market share than any other country on the planet, Macs are a rare sight, Airpods are not as ubiquitous as they are in NY, and I only started seeing Apple watches after they launched a tie-up with Suica.
Leaving aside the unique qualities of the Japanese market, I think this depends a lot on your definition of success.
If you believe that a major consumer products company can only be "successful" if they have universal global penetration and a user base in the hundreds of millions, that's certainly a difficult standard to meet. It's also, I'd argue, a very modern standard - nobody would've thought that way in 1995 (or even 2005).
On the other hand, if you define "success" as repeatedly shipping good and innovative products that users love over a span of ~40 years and being (mostly) insanely profitable while doing so, then it's hard to argue against Apple's success.
Apple also has a market cap of $1.5 Trillion, with a T, so there's that.
Oh yes, that's right. To me a business is successful when they are big enough in their domain that a new tech doesn't suddenly wipe them out. And they have enough money to pivot and adapt and still remain in business. That didn't happen for Apple when they were making Macs, they were same as HTC or Blackberry. Microsoft is a true success, they failed completely at Mobile market and yet here they are, doing just fine.
> Apple also has a market cap of $1.5 Trillion, with a T, so there's that.
The stock market hasn't been representative of real world for a long time now.
Valuation is fine, but as mentioned, that is short-term success. Enron was good at that. Myspace was good at that. RIM/blackberry and the nokia phones had that. And almost overnight, it's gone.
Apple is a fad that got propped up by phones. They're behind all other major computer vendors. They have a very small marketshare for phones. They have the biggest profit margin out of anyone, and it's because of literally a couple of products.
People who go for things with a huge profit margin (overpriced things) do so based on emotional response (a fad) as opposed to logical reasoning. This is why they buy a phone wrapped in glass - it's shiny. That makes them liking your product volatile. A company enjoying 15 minutes of fame on limited SKUs is not a successful company. It's a rich company, that won the lottery from people who like shiny things.
Yes, they do make things that "just work" better than the competition. They limit choice, put you behind a wall, give you no control - and there is that group of people who want that. The problem is, that group will overnight change to some new fad phone vendor that comes out, and apple will become uncool overnight. Same thing will happen to facebook, instagram, twitter, etc.
If you do take microsoft or google for example - they have a thousand eggs in a hundred baskets. This is stability. Heck, even amazon - cloud services and selling goods, book store, mechanical turk - they're in everything. Apple is selling a phone and a computer.
Even if this were true I don't think it would matter because Apple sells a lot of phones, but anyway this is a gross oversimplification of what Apple is in 2020. The services business alone - App Store, iTunes, etc. - is almost $50 billion a year. Apple nets as much money selling digital goods as Samsung does from its entire line of business.
They also make the only smartwatch consumers care about, headphones that have become status symbols, the canonical tablet (everything is an iPad even if it isn't), one of the most popular STBs in the world, and a metric ton of accessories and peripherals.
The money doesn't come from accounting fraud or tricking people; it comes from making really good stuff that lots of people want to buy.
you are exactly proving my point. they sell a lot of phones. which means a huge chunk of their revenue is 1 product. app store is not a separate product. phone goes away, store goes away. itunes? I'm sorry, but it's an archaic piece of software that people install because it's the only way to get music onto apple playback devices. you know - the iphones. phone goes away, itunes goes away. there are a million other places to get all the same music.
the apple watch? the one that only iphone users have, because they have an iphone?
headphones? who buys apple headphones for their android phone again?
ipad? the thing that runs the os and the store from the iphone, which no one who isn't interested in phones would buy? people who don't like iphones won't buy an ipad. it is literally the same target market. whoever makes the new 'cool phone to have' is going to also make a new pad. phones and pads are tied.
and the accessories for all that - again, dependent on the phone 100%.
lots of people want to buy it (if by lots you mean a tiny fraction of the people). margin is high - it's not tricking people, it's selling the product as 'premium.' that tiny percentage of people agree. it's not actually premium for everyone else, since you don't own the device, and features are limited. when's the last time you chromecast hn to your big tv screen from your iphone again? how about plugging into a friend's computer and grabbing a music folder? he doesn't have itunes, and it's not a mac. how about storing your presentation meetings and some vm images for a product demo you want to do for work - or do you need a usb flash stick for that.
it's not 'really good stuff.' it's 'fad' - who in their right mind would wrap a phone in glass - those things fall a lot. would you buy a car made of glass?
everything you gave as an example is a fad that goes away in a minute when it's not cool anymore. it's no mark of a successful company. it's like calling a guy with a #1 hit a success. do you remember 'who let the dogs out?' so does everyone else. now, the iphone is no dog. it's pretty and shiny. a better example is rico suave. he makes shampoo now i hear.
Because I'm trying to quickly compare net income across two businesses that operate under different accounting rules in varied industries but if we want to be pedantic about it and proportionally attribute OpEx to services, too:
Apple services net sales: $13.3B
Apple services cost of sales: ($4.6B)
Apple OpEx, 14%[1]: ($1.3B)
That's ~$7.4 billion in net income from services, which is as close to a 1:1 expression of services' contribution to "operating profit" as you can reasonably get in the five-minute financial analysis I'm willing to perform for an HN comment. For reference, Apple booked $11.25B profit for this quarter overall.
1. Services account for 14% of the total cost of sales, so I attribute the same amount in OpEx.
A stock’s price is theoretically the current value of a long term stream of income adjusted by the risk factor around its growth (positive or negative).
Revenue is interesting but only to the extent that it indicates earnings. This is because any two people can create two companies with a billion dollars in revenue but it is much more difficult to build one with a billion in earnings.
Valuation has only a fleeting relationship with revenue. In the traditional sense valuation is essentially the cash returned to shareholders discounted over time. Walmart’s margins are thin. That’s why their valuation is much lower
> Caveat: "Expected" does not mean fact. But it is understandable why investors believe this.
Yes, this is what I said. Stock markets factor in future potential (a little too much I think) and not just current performance. Hence their growing diversion from reality.
Except that Apples current performance demolishes Samsung, Apple is and has been far more profitable. Apple has never been highly valued either, it spent most of the last decade well below the markets average price to earnings ratio, the market was continually saying it didn’t think Apples earnings could grow, or even last.
It hasn’t been till the last year where Apple finally broke the market average and squeezed into a low 20 PE ratio. Fir comparison, Amazon hasn’t been below 60 in forever.
I don't see how? Samsung made $45B profit in 2017 vs $48B in 2017 for Apple. 2018- $49B Samsung vs $60B Apple. Even in worst cases Apple made 2x the profits as Samsung. Which means they should at least be worth half as much as Apple by your logic? But they are 5 times less than Apple right now in market cap.
Samsung has much lower quality profits. They have lower margins, and have much higher capital reinvestment requirements please, ie are forced to reinvest more of their profit back into their manufacturing plants. Essentially their profits are overstated.
Or if they were run by a felon in a country where accounting and governmental employees are highly motivated not to criticize said felons accounting practices. Then you might think twice about taking them at face value.
Apple is seen as the one to sustain those profits. The models for Samsung either see lower profits or discount them more steeply in their risk adjustments.
Sorry but there's a bunch of inconsistencies here:
>> Windows worked just as fluid as iOS when they finally got it right, but they were there too late.
Of course it was fluid - Apple was already tied down by legacy hardware by the time Windows Phone released, whereas Microsoft had the huge benefit of a higher-baseline due to exponential hardware advances.
MS weren't merely 'late' - they had no vision in this space (see: Windows Mobile pre-iPhone).
>> Apple's success is more of lack of a good competitor more than anything else
Their competitors include literally the biggest company in the world.. If what you mean is that the iPhone specifically lacks a good competitor - even though both Microsoft and Google tried everything to rectify that - then isn't that reflective of Apple's incredible execution of the iPhone strategy and not, as you suggest, that Microsoft/Google/BlackBerry/Palm/Nokia/Samsung aren't good competitors?
>> To me a business is successful when they are big enough in their domain that a new tech doesn't suddenly wipe them out
Even under this subjective definition, Apple view their 'domain' as consumer electronics, not 'mobile' or 'computers' or 'mp3 players' (something they recognised back when they renamed themselves to Apple, dropping 'Computers'). So ironically, Apple don't merely fit the 'success' criteria under your definition, but Microsoft actually don't - they had to exit their once-primary domain - Windows and consumers - and pivot to enterprise and services (which of course has worked out great for them - but by your definition it's not a success as Apple and Google's new tech would've otherwise wiped them out)
This feels like an odd definition of success but at any rate - Apple has never been wiped out, though they've come close, so I'm not sure how you can argue against their success on this basis either.
Out of curiosity (since you seem to be Japanese) how would you rate companies like Toshiba or Sharp on this scale?
> how would you rate companies like Toshiba or Sharp on this scale
Successful. Because they survived transition from electrical->electronics->semiconductors. Although Sharp may be coming to the end of it's life now because of their LCD tech.
Well Toshiba was an inch from bankruptcy and Sharp was sold to Foxconn to stave off its own impending dismemberment so now I really don't understand this definition of success.
maybe "they were successful in a period that comes quite close to where we are now"?
People forget that success is not an immutable attribute - it is the sum total of hard work and decisions that are put in every week, every month, every year, over a longer period of time. But as much as it is the product of a longer period of time, success can wax and wane throughout the decades and a company can be wiped out or acquired on less-than-favorable terms if they fail to adapt to the next large-scale change in the industry.
To declare Apple's model as a success, they will have to survive a lot longer. 3 decades into existence isn't enough to evaluate. Their model failed in desktop computers but worked well in handheld devices. Let's see how well they do in the next computing platform before we are sure of it.
Microsoft survived huge failures and also when governments came after them. And they did it in their first attempt. Apple survived only by sheer luck, not because their products or business model was designed to survive. They could be the next scapegoat of the trade war and it will take them back to their Mac days.
And Microsoft is not alone, Google essentially became MS 2.0 when they launched Android. Following MS footsteps to become successful. Which just further proves Microsoft's model.
Wow this just gets more and more confusing. Google, at 22 years old, is "MS2.0" and "successful" even though just a post ago 3 decades (though it's actually 4.5 anyways for both MS and Apple, but who's counting) wasn't enough.
Even though that's also approximately as long as Apple has been on its current success cycle anyways? If Apple had been "born" in 1998 would it be a "success" now like Google because the mac era never happened but things took off with the iMac and then the iPod?
This kinda feels like you decided on a conclusion and are now trying to backfill an explanation into it. :P
Okay so when I meant Google is "successful" was that they successfully beat MS in smartphone race and became a dominant player in the industry. They are definitely not even close to being a proper industry stalwart like Microsoft is, and it's quite possible they won't even survive the next decade if Government starts regulating them.
Apple owns the high end of the laptop and desktop computer market, their average sales price is triple everyone else. Mac sales give it over 10% of industry revenues, but even better Macintosh as a stand-alone business is by far the most profitable PC maker in the world and has been for nearly two decades.
In fact the Macintosh lineup profits are likely more than the rest of the pc makers combined.
Yes, definitely. But the article seems to suggest that Apple has enjoyed continued success for past 3 decades. But in reality they only established themselves with the iPhone. Apple's model already has a proven weakness - Microsoft. Had Microsoft created good Mobile OS around 2008-09 iPhone wouldn't have seen much success IMO.
So Apple's success is more of lack of a good competitor more than anything else. High end Android phones + Fast, stable, long term supported OS from Microsoft + Developers would have done the same thing to iPhone that PC did to Macs.
> Had Microsoft created good Mobile OS around 2008-09 iPhone wouldn't have seen much success IMO.
It sounds like you're not giving Apple enough credit for good hardware. iOS isn't the reason to get an iPhone, the physical device, the actual phone, is the reason.
If Apple allowed people to install Windows Mobile on iPhone, I think I'd still get an iPhone, and maybe would install Windows on it.
For geeks yes, but majority of the world doesn't care about specs. A Nokia or HTC phone has the same quality hardware as an iPhone. Heck HTC even licensed their unibody design to Apple which they are still using till date on the new iPhone SE. And Windows worked amazingly smooth on low end hardware like 510 too, so majority wouldn't have noticed any difference between a Snapdragon or A-series chips.
The "normal" people care more about the aesthetics of the iPhone than the hardware. Although, everyone places the phone in a case. The outer appearance helps a lot when people are buying and the software animations are still arguably better than android. Basically, Apple has somehow made a complete visual experience pleasing throughout the years and while a Nokia or HTC device can mimic functionality. They still don't give the same impression for "normal" people.
The iPod already established the Apple brand as a status symbol, so the iPhone had that leg up.
I think the issue is less that Apple did amazing things, than everyone else was being sloppy as hell with supply chain and quality control. If you look at post war consumer goods, many have great Craftsmanship. But the lure of planned obselessence and cheep outsourcing ruined most product design and execution, and Apple somehow realized there wasn't a risk of not getting the benefits of planned obselessence in making a fancier-crafted project while hardware was still improving.
They still are. PC manufacturers still can’t get touch pads right in 2020. They still ship notebooks that feel janky and don’t have the same solid feel like a MacBook does.
I was talking about a hypothetical scenario where it was Microsoft vs Apple in the mobile space instead of Google vs Apple. Windows worked just as fluid as iOS when they finally got it right, but they were there too late.
> The "normal" people care more about the aesthetics of the iPhone than the hardware.
That's exactly what I said. iPhone 6 to SE 2020 unibody design is from HTC. They made the same kind of phones on the outside.
This article was written by a former VP of software at Microsoft. You are simultaneously saying that MS is successful in some way that Apple is not and also saying that one of the folks that helped lead MS to success over the last 20 years isn’t competent enough to comment on just how competent and successful Apple has been for the last 15 years. Just drop the bitterness and read the dude’s writing, he knows what he is talking about.
There have been lots of product blunders. Maybe as many as Google has. The iPhone subsidizes it all, just like advertising does for Google, or Windows did for Microsoft, etc etc.
The crappy keyboard was Johnny Ive’s idea! The world’s best industrial designer has created a completely unaccounted for liability, Apple has been trying to buy back those shitty computers now through trade ins or hopefully waiting people out, because the whole Mac unit is going to go into the red if there’s no plan to minimize, in a defiantly anti-consumer way, mass keyboard recalls. A mote of dust breaks them!
The HomePod. Apple Music - but maybe all subscription music services are unsustainable and bad. A $1,000 monitor stand and $700 wheels. Aperture. Feedback Assistant. Xcode. Numbers. Messages. A camera that still doesn’t save to DNG? $3 for 100GB iCloud. The overpriced SSD storage that haunts every user in existence. Batteries that bloat; batteries that are not user replaceable; batteries that are drained when the device is using more power than the boxer adapter provides. Security through obscurity, like FaceID and the Secure Enclave. Lack of security - people’s passwords are so easy to guess, and iCloud contains everything. Apple Maps. Siri. iCloud versions of their productivity apps. Remember CloudKit?
These are all from the last decade. As long as the iPhone sells none of it matters.
I don’t know anything about internals at Apple but I have been wondering constantly how they manage to be successful over and over again. If I had to bet, I’d say is this. I’ve worked for many companies where the ego of a product or service line boss always trumped overall strategy. It was about them not the company. Somehow Apple has succeeded in damping down this effect (I am sure it’s there but just on different level than in other companies).