Apple in good stead for now, but long-term challenges ahead

Summary:Company's executives, product roadmap and new CEO Tim Cooks will ensure continued success following Steve Jobs' resignation, but Apple faces challenges in long-term, caution analysts.

Apple's "talented" executives, well-set product roadmap and new CEO Tim Cook, will be able to shoulder the impact of Steve Jobs' resignation, but the company's market leader position may be slightly shaken in the long term, analysts observe.

While it was Jobs' vision that had been the driving force behind Apple's product innovation, executing the ideas around the innovation would have involved many talented employees and not just Jobs, said Pranabesh Nath, Asia-Pacific ICT practice industry manager at Frost & Sullivan. He told ZDNet Asia in an e-mail that it was likely Apple had already established a good pipeline of products to be developed.

Jobs announced Thursday his resignation as CEO, with former COO Cook taking over the helm, saying in a note to the company's board members and Apple community that he was no longer able to meet his duties as CEO. Plagued by various health problems over the past few years, the face behind Apple had been on a leave of absence since January and last appeared on stage in June to unveil the company's iOS 5 and iCloud initiatives.

Van Baker, research vice president of Gartner's retail and consumer technologies, noted that it would be a loss for Apple as Jobs would no longer be directly involved in Apple's day-to-day business. Baker added that Cupertino's culture reflected Steve's values, and his influence would be felt for a long time.

"I think Apple will continue to enjoy great success in the consumer technology market as they have a very strong product lineup, and they execute their business plans extremely well," the California-based analyst told ZDNet Asia in an e-mail. "There are also many talented executives at Apple so there is no reason to expect anything other than continued success."

In addition, Jobs would still serve as chairman and continue to have a role within the company, at least, in the short term, noted Jan Dawson, chief telecoms analyst at Ovum. Jobs also had been involved in major decisions and continued to set strategy in two previous periods when his failing health prompted extended absences, Dawson said in a statement Thursday. Hence, his new role as the company's chairman suggested that this would continue to be the case.

Apple's shares fell after news about Jobs' resignation broke, driven by fears that Apple would not continue to perform without Jobs as CEO, Dawson noted. Apple's stock fell by 5 percent closing at US$357.02.

One shareholder, real estate businessman Santoso, told ZDNet Asia he was confident the drop in the value of his Apple shares was temporary, as he believed Cook would "continue to do a good job".

According to Dawson, the new CEO was considered by most to be a particularly strong operational leader as he had managed the company well during Jobs' absence.

"Since many of Apple's current challenges revolve around producing sufficient inventory to satisfy demand, these talents will be in high demand and suit Cook well to lead the business," he said.

When contacted, Apple told ZDNet Asia it had no further comments on Jobs' resignation, other that the company's press announcement on its Web site.

"While Apple may always be about innovating products, I expect its culture and the resultant market focus to shift in the long term, subtly or otherwise."

-- Pranabesh Nath
Frost & Sullivan

Challenges in long-term
Longer term, though, there are reasonable grounds to believe Apple may face greater challenges, Dawson added in his statement, noting that while Cook had been a "safe pair of hands" as an operational leader, he does not have a reputation as a visionary.

In addition, if Jobs' health was the reason behind his resignation as many had speculated, and his condition worsened to the point where he would no longer be involved even in the occasional decision-making at the company, there would be reasons to fear the company would struggle to emulate its recent success, the Ovum analyst warned.

"Should the time ever come when Steve Jobs no longer has a role with the company, Cook will have to rely on others in Apple's senior leadership team to provide an ongoing strategic vision, and there is no single figure that obviously fills that role going forward," he said.

Nath of Frost & Sullivan agreed that in the short term, things were "not looking too bad", considering that Jobs remains in Apple at some level, but said it was "very hard to say" this would be true in the long term.

"The culture of a company is definitely dictated from the top and this culture permeates every aspect, department or unit of the organization," he explained. "While Apple may always be about innovative products, I expect this culture and the resultant market focus to shift in the long term, subtly or otherwise."

Consumers ZDNet Asia contacted had mixed reactions to Jobs' resignation. James Tan, who regularly used Apple products, said in a phone interview that he was "flabbergasted" as he saw Jobs as the pillar of Apple. "I cannot believe he is gone just like that," Tan said.

However, corporate banker Foong Wei Siang told ZDNet Asia: "Steve is done with his Job; it's time for Tim to Cook something awesome."

Innovate, keep business model
According to Nath, Apple is already doing a lot of things that will help Cupertino make record sales of its product and retain this edge, and the company will have to take innovation to the next level. He noted that many Apple products such as the iPad tablet were not the first in the market, but merely transformed an existing idea into "something that everybody would lust for".

"The next level is really to consistently come out with genuine innovations that haven't been done before by anybody," Nath said.

Gartner's Baker, however, pointed toward status quo, noting that Apple should keep doing what it has been doing to maintain its lead. "With the success the company has enjoyed, there is no reason to change the business model," he said.

Topics: IT Employment, CXO, Hardware

About

Elly grew up on the adrenaline of crime fiction and it spurred her interest in cybercrime, privacy and the terror on the dark side of IT. At ZDNet Asia, she has made it her mission to warn readers of upcoming security threats, while also covering other tech issues.

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