Great Debate: After Jobs, can Apple maintain the momentum?

Summary:Can Apple maintain its momentum in a post-Jobs world? Jason Hiner and Jason Perlow face off. Join the debate and cast your vote.

Jason Hiner

Jason Hiner

Stay the course

or

Must grow up

Jason Perlow

Jason Perlow

Best Argument: Must grow up

The moderator has delivered a final verdict.

Opening Statements

Yes. Apple will stay on track

Jason Hiner: Irreplaceable as Steve Jobs is, Apple has three factors that will keep the company on the right track.

First, Apple is in great shape in the smartphone and tablet markets, both of which are poised for explosive growth. Apple simply needs to iterate wisely, even conservatively to continue its success. It's safe to assume that Jobs himself has helped set the direction and strategy of these two product lines for the next several iterations.

Second, Apple and Steve Jobs have been preparing for this for a long time. Jobs put the right people in key positions to keep Apple moving and innovating in the ways he preferred. As long as his hand-picked leaders stick around, Apple will be fine. The real test will come in several years when the hand-off is made from Steve's leaders to the next generation.

Third, the myth of Jobs is going to sustain the company for a while. The principles he used in building products, organizing the company, marketing, hiring, are ones the company will use for years to guide decision-making.

No. Can't continue on great toys alone

Jason Perlow: For the past 15 years, Apple has been a consumer product-oriented company and reflected the vision of a single iconic leader -- Steve Jobs, its dreamer and Walt Disney-like figure who created its current success formula.

The company needs to figure out what it wants to be when it grows up. Yes, consumer products should continue to be an important focus area, but Apple cannot continue on great toys alone.

Apple's revenue is highly based on an annuity or semi-annuity model of repeat customers. Repeat customers are bread and butter, but they do not represent growth.

Post-Jobs, Apple must exist in a world of constantly improving commoditized technology being created by its competitors, as well as enterprises seeking next-generation, integrated solutions that it is not currently offering. Ones which are arguably more open and can more easily attract the partners needed to create solutions.

Anything other than moving on to the next Insanely Great thing should be considered an unnecessary distraction.

The Rebuttal

  • Great Debate Moderator

    Apple mediocrity?

    It's ridiculously difficult to stay on top. Is Apple unique or will it look like every other company in 5 years?

    Posted by Lawrence Dignan

    Still different, maybe not as much

    Apple will still be guided by the principles of Steve Jobs and the vision he put in place for products and the way to run a business, but it's destined to become a nicer and more mediocre company over time -- even if it remains an industry icon and one of the most recognizable brands on the planet. Jobs was absolutely maniacal about quality, and he could get away with it because he was Steve Jobs and was an industry icon. His successors won't be able to get away with that -- at least to the same extent -- without key people quitting.

    Jason Hiner

    I am for Stay the course

    Different Company.

    I think it will be a somewhat different company in 5 years. No company is immune to change, particularly after losing someone that was essentially the company's heartbeat. Apple is going to be forced to adapt to change, or it has to become a change agent in and of itself. Nobody can predict exactly how internal and external forces are going to affect them, because the industry itself is in the middle of undergoing a lot of changes as a whole.

    Jason Perlow

    I am for Must grow up

  • Great Debate Moderator

    What about the iPad?

    Give me the 2 year and 5 year view on sales and pricing for the tablet.

    Posted by Lawrence Dignan

    It's going to level out

    The iPad is destined to level out to about 50% market share in 2-3 years and then it's likely to stay there for a while. The price for the entry level model will likely be $299 within a couple years. I don't see it getting cheaper than $199 (maybe an iCloud-only version with minimal storage at that price). Still, even when iPad levels out, it's going to be the biggest player in a skyrocketing market.

    Jason Hiner

    I am for Stay the course

    Solid two years, then all bets are off.

    I think it is reasonable to expect that iPad will continue their very strong annuity stream for the next two years, especially if there are significant product enhancements coming down the pipeline. However, beyond the next two years, things are likely to change as Android (Google's own flavor and Amazon's "mutant" in Kindle Fire) continues its growth by increasing tablet mindshare with Ice Cream Sandwich 4.x and future versions of the OS. And I expect them to be cheaper than iPads, a LOT cheaper. Amazon has already thrown down the gauntlet with this and we know Apple "Doesn't do Cheap". The reaction to Microsoft's Windows 8's radical "Metro" UI may initially be lukewarm on enterprise desktops, but enterprises will almost certainly start to look towards Windows 8 ARM tablets as being actual enterprise-capable mobile products because the partnerships for integrating with existing enterprise application infrastructure will be there. This is particularly notable if they are better suited to the BYOD model than Apple's products if Microsoft makes better tools for device provisioning, management and security partitioning available, such as with the use of mobile hypervisor technology. And for enterprises these enhancements will be somewhat more price resistant than what consumers will want in $500 iPads or $300 Android Tablets.

    Jason Perlow

    I am for Must grow up

  • Great Debate Moderator

    Price as a weapon

    Oddly enough Apple's pricing has been good for its products. Can the company keep its profit margins on products or will it fall to commodity pricing brought by rivals?

    Posted by Lawrence Dignan

    Huge weapon

    Something that Apple has done with its huge $80 billion war chest of profits is to use it, along with buying in bulk across product lines, to purchase large amounts of computer components and get them at a cheaper price than competitors. That's one of the ways it has been able to become so competitive on price. The other factor is retail. I was one of the many skeptics of Apple's retail strategy but it has turned into a major competitive advantage, because now Apple sells a huge number of products directly to its customers via online or retail. That one fact gives it a key advantage over rivals and one that isn't quickly overcome.

    Jason Hiner

    I am for Stay the course

    Uncertain future for component pricing

    I think that the tens of billions of dollars in the war chest will help secure volume pricing as well as the supply chain for Apple products but it is not the only company that is capable of doing this. Additionally, the more Apple continues to sue and alienate potential suppliers and manufacturers in Asia (Such as Samsung and Foxconn) the more self-reliant it is likely going to have to be and possibly have to become a component and ODM manufacturer itself and use its cash assets in order to build the infrastructure to guarantee that supply line. All of this is likely to drive up costs.

    Jason Perlow

    I am for Must grow up

  • Great Debate Moderator

    Is vertical integration best?

    Apple's vertically integrated approach to hardware, software and services failed once and took off once. Technology partially changed. But is Apple's integration approach a long-term winner?

    Posted by Lawrence Dignan

    Excellent, but limited

    Apple's biggest advantage right now is a hardware + software + services package that all works together (most of the time) and doesn't require a technologist to help set it up (most of the time). But, in order to make things work, Apple also has to limit your options -- so that the average user isn't overwhelmed by too many choices -- and thats where its platform runs into problems. The company has a delicate balance of how much to leave out and how much to put in when it does its vertical integration. Steve Jobs had a great feel for where the middle was. Will Apples new product gurus have the same feel? It's an open question.

    Jason Hiner

    I am for Stay the course

    Depends on who you are ultimately targeting.

    It only makes sense as long as people are willing to tolerate one or two flavors of a particular hardware/software device profile. The very fact that Apple is unable to penetrate Android's 41 percent and climbing smartphone market share is because with Android, consumers and business users have more choice over form factors and other differentiating product features. Additionally, Apple has never been about delivering the most high-end components in their devices -- they always put in "Just enough" in order to keep their costs down. With Android or even with Windows Phone/Windows 8, there will be much more product differentiation and choice over hardware features. While the one size fits all will be sufficient for some part of the consumer population, a large part of that population will want choice and variation in configuration and form factors.

    Jason Perlow

    I am for Must grow up

  • Great Debate Moderator

    Apple management MVPs

    How important is it for Apple to keep its current management team together?

    Posted by Lawrence Dignan

    Absolutely critical

    The biggest risk factor for Apple is if the current product leaders start defecting. If they stay, I think Apple is in very good shape for 3-5 years. All of them have been offered bigger jobs and bigger money to leave Apple and have chosen to stick around and help build the company, so I doubt we'll see them defect, but it's always a risk, and a big one in this case. Even if they all stay, Apple will be in for a major transitional crisis in the next generation when the company is handed off from Steve's leaders to the next set.

    Jason Hiner

    I am for Stay the course

    Very important in the short term.

    For the time being the current management team is very important, particularly VP of Industrial Design Jony Ive who Jobs doted on as his own personal aesthetic imagineering guru. If the future of the company depends on anyone at least for the next two to five years, it is probably Jony Ive. Retaining his services is extremely critical, as it is of other key staff members, such as VPs Scott Forstall (iOS lead) and Eddy Cue (Internet/iCloud) In terms of management bench it is painfully obvious that Apple is run as a very tight and integrated team, like a pit racing crew. While the company generates a huge amount of revenue and is highly valued by Wall Street, It is not a comparatively large, monolithic and ivory-tower type environment like a Microsoft or an IBM with large multiple divisions that work semi-autonomously and is able to continuously breed talent. So unlike an IBM or a Microsoft, Apple is more vulnerable to executive poaching than companies with much larger and more complex management structures.

    Jason Perlow

    I am for Must grow up

  • Great Debate Moderator

    Not sure I buy it...

    If I'm your average coder, I'm wondering about what Jobs would want. Will second guessing about what Jobs' would do be a risk to future product development?

    Posted by Lawrence Dignan

    Steve is already a myth

    The Steve Jobs myth is well-spread outside of Apple, it's even more so on the inside where it's all about customer-centric product development and attention to detail. Developers asking themselves "would Steve have approved this?" before they submit something half-baked is a good thing and it will carry the culture at Apple for a long time, I think.

    Jason Hiner

    I am for Stay the course

    Seriously rough weather ahead, but the company will endure.

    There is no question in my mind that it will create confusion and possibly result in some less than optimal design decisions. But it is an exercise that they are going to be forced into doing no matter what, so they are going to have to figure out how to resolve those moments of indecision or "What would Steve Want?" one way or another. It also may force several "Alpha Geeks" to surface at the company as opposed to just one, which may create some interesting results. For example, by allowing Ive or Forstall to make the final call in their respective areas, we might actually end up with better products than what was produced under Jobsian authoritarianism.

    Jason Perlow

    I am for Must grow up

  • Great Debate Moderator

    Options are overrated

    I'm a bit sick of options, configurations etc. I just don't want to worry about it. Can Apple's iPhone share grow with more carrier distribution?

    Posted by Lawrence Dignan

    A lot of people are sick of options

    This is really the one area where Apple is ahead of the market. Most people are sick of fiddling with technology. That's why products like iPod, Flip Video, and even this new camera, the Lytro, have absolutely nailed it. They are products that don't require a manual or a call to the techies in your company (or your family). To some people in IT, I think this comes across as a little intellectually insulting sometimes, because some of the best stuff takes a little while to learn but you get great benefits on the other side once you figure it out. However, other technologists have embraced no-fuss products because they don't have to spend as much time babysitting them (or their owners). That's where Apple is starting to win over some business in the enterprise -- it's from the leaders who have embraced the idea of putting an iPhone or a Mac in someone's hands and then they make fewer calls to IT.

    Jason Hiner

    I am for Stay the course

    Who the hell wants an iPhone on a crappy network?

    We're looking ultimately at the consolidation of the mobile carrier industry on a global scale. AT&T may or may not end up owning T-Mobile but I think it is pretty much assured that with Sprint's massive financial problems that it too will end up becoming assimilated by somebody else or end up in oblivion. Sure, you got other small regional carriers out there, but I don't think they are going to make a huge impact on the bottom line. AT&T and Verizon will still be the two biggest fish in the pond and will be responsible for the lion's share of the market in North America. And if we see any similar sort of consolidation in Europe, Asia and Africa, the situation will be similar.

    Jason Perlow

    I am for Must grow up

  • Great Debate Moderator

    Speaking of Cook

    What approach should Cook take? And is Steve Jobs' advice to not worry about what he'd do valid?

    Posted by Lawrence Dignan

    Cook won't be spectacular

    Cook doesn't have to be Jobs. He's not going to be spectacular. He'll execute. He'll do a good job of talking to Wall Street bankers. He'll make good hires, and he'll let most of the product leaders in the company do the talking. He helped Jobs build the kind of innovation machine that he wanted and now it's time to execute the heck out of it. He will.

    Jason Hiner

    I am for Stay the course

    A culture of consensus and team building, like the original HP.

    Everything we have heard about Tim Cook is that he is a genuinely nice guy who is well organized and works really well with others and who is much more willing to actually listen to people. He appears to share Jobs' traits for meticulousness, but that's about the only area in which they are similar. That alone is going to create a completely different dynamic at the company. I think he should focus on his strengths and build more of a culture of consensus and agreement and become a purely engineering company focused on creating high-quality products -- more like the original HP of Walter Hewlett and Dave Packard, the company that Steve Jobs had huge admiration for. And to some extent, I think the Apple of Tim Cook should try to be more like Google, despite the fact that Jobs had an immense distaste for the way they do things. Sometimes creative chaos, when controlled, can produce positive results.

    Jason Perlow

    I am for Must grow up

  • Great Debate Moderator

    Next question: Enterprise expansion...

    Do you think Apple will target the enterprise? Why or why not?

    Posted by Lawrence Dignan

    Yes, but not in the traditional way

    Steve Jobs hated the enterprise. He even said that outright in an interview at All Things D in recent years. The enterprise lost him the PC battle in the 80s and it seems like he never forgot that. So, even though the enterprise was all over the iPhone and iPad, Apple never went after it very hard. I think Cook will change that. Apple isn't going to go nuts on the enterprise, but I expect that Cook, who comes from an enterprise background, will quietly court the enterprise and devote more resources to it. The enterprise doesn't trust Android much, so Apple has a huge opportunity there.

    Jason Hiner

    I am for Stay the course

    Really depends if Cook's IBM DNA asserts itself.

    I have recently written that addressing the enterprise would be the logical thing for Apple to do in order to break into new markets. If anyone has the DNA or wherewithal to do this, it is Apple CEO Tim Cook, who has the Insane Greatness of a Steve Jobs hand-picked management team behind him as well as his own twelve years of experience creating and developing enterprise partnerships at IBM's Personal Systems division. To do this, however, will require a great deal of work in as well as money and time in terms of being able to cultivate partnerships -- something that Apple has never been good at doing. Apple stinks at this precisely in the way that Microsoft or even Google doesn't "Get it" when it comes to consumers, to use Steve Jobs' own language. It will require a lot of work and a lot of money to make a footprint in a part of the computer industry that Apple in the past has failed to make any traction in and has no future guarantee of measurable success in, and it will also require some loss of control and partner assistance in order to pull off. In the age of Steve Jobs the very idea of losing any kind of control was impossible. Under Tim Cook, who knows.

    Jason Perlow

    I am for Must grow up

  • Great Debate Moderator

    Having a few Hiner technical difficulties.

    fyi

    Posted by Lawrence Dignan

  • Great Debate Moderator

    Let's look at new markets then...

    The biographer of Steve Jobs, Walter Isaacson, has indicated that TV is next on Apple's list as a market to disrupt. Will it be successful? Why or why not? And Mr. Perlow let's try NOT to write War and Peace this time.

    Posted by Lawrence Dignan

    I still doubt it

    Steve Jobs grew up loving Sony and used it as the company he modeled Apple after, so it's no surprise that his biography has revealed that he wanted to do a TV. As I have always said, I just do not see Apple getting into this business. There's simply not a lot of room to innovate. What more do people want out of their TVs that they're not getting now? Mostly, they want to be able to control their content. Does Apple have to build a whole TV set in order to change the content game? I don't think so. I also don't think the entertainment industry will let Apple be the big digital player like it became in the music business. And, not having Jobs around to push the TV in this case may actually help Apple.

    Jason Hiner

    I am for Stay the course

    TVs? Sure. Successful? Unassured.

    Yes. The product is coming. But Whether that is some sort of new, more advanced set-top than the current Apple TV or an actual television with various Apple technologies integrated into it remains to be seen. However, should an actual Apple-branded intelligent TV get launched it would not be without its own challenges. Apple would have to provide a tremendous amount of value add in order to challenge the commodity TV pricing of the SONYs, Sharp's, Samsungs and Vizios of the world. Additionally, besides the price points, one has to consider the complex content relationships that would have to be forged in addition to agreements with the service providers to carry a lot of streaming traffic. Apple may have to buy or create their own CDN infrastructure in order to pull this off accordingly, at least for the customers that will have the bandwidth to be able to use a product like this in the first place.

    Jason Perlow

    I am for Must grow up

  • Great Debate Moderator

    It's been a big week in Apple...

    The Steve Jobs bio has landed and it appears that Apple's co-founder was confident that the company's succession was ready to go forward. Overall, though I'm skeptical about the growth rates because of the law of averages. Defend your side. Why will Apple keep and grow its momentum? Or why will it lose it? Also for readers of the Great Debate, the answers will automatically refresh.

    Posted by Lawrence Dignan

    The boulder will roll down the hill

    Even if we just look at smartphones and tablets -- which are going to be Apple's two core businesses going forward -- it's clear that the company is well-positioned enough to maintain sizable market share and big profits over the next 2-3 years. And, that's even without much product innovation and it doesn't count the company branching into or growing new businesses. Apple's combination of building an A+ solution in hardware, software, and services is why it's on top, and it's difficult to see any of its competitors catching up any time soon.

    Jason Hiner

    I am for Stay the course

    Momentum can only be assured by taking on new markets.

    It would be very easy to argue that due to the company's huge $80B cash larders and dedicated customer following that the Apple will keep its momentum despite the loss of the company's founder and head "Imagineer". However the reality is that the company is at an inflection point and has an annuity-based revenue model where existing customers upgrade to the latest and greatest version of an i-product every 2 years, and that iPads really are cannibalizing the sales of not only Apple's competitors' notebook computers but also their own MacBooks. To maintain momentum, Apple not only has to keep banging out the "hits" with new and exciting versions of its existing product line but it also has to expand into new markets. I have suggested elsewhere that the enterprise would be a great place for Apple to do this but it would take a radical shift of company ideology to approach anything other than new consumer markets. It is also worth mentioning that not only is Apple facing challenges of expansion but it is going to face heavy competition with ever-improving versions of Android (which according to recent market reports has been making a sizable dent in the iPad's tablet market share and continues to occupy the #1 position in smartphone market share) and also Windows Phone and Windows 8. I am also not going to under-estimate what Jeff Bezos and Amazon are capable of doing either, as evidenced by the very strong initial sales of the Kindle Fire.

    Jason Perlow

    I am for Must grow up

Closing Statements

Only imbeciles could derail Apple

Jason Hiner

While Apple will never be the same without Steve Jobs, the company has so much forward momentum that it would have to be run by a bunch of complete imbeciles to derail its progress over the next 2-3 years. Fortunately for Apple, it’s going to be run by Jobs’ hand-picked product leaders. As long as they stick around, Apple is likely to stay the course.

One of the things we’ve learned from Walter Isaacson’s biography is that over the past decade Steve Jobs wasn’t just trying to build great products, he was trying to build an innovation machine that would continue to create products at the intersection of technology and liberal arts for long after he bowed out of the company. If he did half as good of a job with the company-building as he did with the products, then Apple will be in good shape.

Apple must return from Neverland

Jason Perlow

Steve Jobs was the computer industry's embodiment of Peter Pan. He never wanted Apple to grow up. And that is what made him and his company special. "Stay Hungry and Stay Foolish" was a Jobsian-centric philosophy that worked well while he alone stayed at the center of the company's universe. But Steve Jobs is no longer with us.

Apple's management and engineering bench could always rely on Steve to bless every product release or major business decision. Now they will have to make the important decisions completely on their own.

The company must return from Neverland, without its Peter, and face the culture shock of leaving their traditional consumer-only comfort zone and entering new markets such as the enterprise in order to sustain growth.

Tim Cook may never be Steve Jobs. But he's a sharp businessman who plays well with others -- a requirement for building the framework of a harmonious Apple corporate culture that will last another three decades and beyond.

 

Perlow by a nose

Lawrence Dignan

This debate was tough for one reason---time frame. Depending on what time frame you consider, either Jason could be right. In a one to two year time frame, Hiner is probably correct and Apple will stay the course, thrive financially, deliver an iPad 3, iPhone 5 and a kick-butt TV.

In the long run, I'm with Perlow. Apple will have to change/adapt and be increasingly threatened. However, Apple could milk the enterprise and probably add another $50 billion in annual revenue in five years. I don't have a crystal ball for either time frame so I merely have to judge this debate. As far as illustrating his points and making the case, I'll give Perlow the win by a slim margin.

Doc's final thoughtsIN PARTNERSHIP WITH Ricoh

Doc

First of all, Doc is very confused because both sides of the debate are Jasons this round. Give an old guy a break. Couldn’t one of you just be Tony for the week?

To Jason H, you’re only partly right (or is it partly wrong?). Apple will, most likely, be fine for the foreseeable future. But don’t be so sure about the long-term prospects for the company. We’ve seen massive company failures plenty of times before in all kinds of markets. Today’s Apple is tomorrow’s Krispy Kreme, if you catch my drift.

And to Jason P, you’re wrong too (though you’re also right a little). Apple, can, indeed, continue on great toys alone. What’s wrong with great toys? Especially when they appeal to all generations and to a global market. I’d love to have my share of the electronic toy market. And Apple defines the space.

But I agree with you that Steve is an undeniable influence on the company. This will make it really tough for current leadership as everyone in the company will be asking the question “what would Steve do?” Well, at some point it can’t be about Steve anymore and will become about the new guy, who won’t be new by then.

Great companies are almost always about great leadership. We still have to see about the current crop of Apple executives – good odds, but still unproven in a post-Jobs environment. Good luck to them all. We need you.

Topics: Great Debate

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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