Without Steve Jobs, Apple will fail

Summary:Steve Jobs taking his second medical leave of absence from Apple -- announced yesterday via an email -- led to a temporary slump in the stock price, because it raised doubts about the company's future. Every investor knows that Apple has been an unprecedented success with Jobs at the helm, and a busted flush without him.

Steve Jobs taking his second medical leave of absence from Apple -- announced yesterday via an email -- led to a temporary slump in the stock price, because it raised doubts about the company's future. Every investor knows that Apple has been an unprecedented success with Jobs at the helm, and a busted flush without him. And now Jobs is 55, the succession is on the agenda, whether he recovers his health or not.

It's true that Apple performed perfectly well during Jobs's previous leave of absence, for a liver transplant. Although the stock went down temporarily on the news, it recovered, then went on to new highs. However, Apple is now the world's second most valuable corporation, after Exxon, and its share price is based on assumptions about growth and profitability that, without Jobs, might be difficult to meet.

During the past decade at Apple, Jobs has scored three or perhaps four enormous, game-changing hits with the iPod, iTunes, iPhone and iPad. Few companies have more than two blockbusters and most don't even manage one. This is such an uncommon level of success that I don't think even Jobs could repeat it ... which suggests that Apple without Jobs has no realistic chance.

So the real question is how long Jobs's successors can keep up the development of the current product lines, and that's not an easy one to answer. We know iPad 2 is nearly here to fix the defects in the first version, and iPhone 5 is obviously well on the way, but there are no guarantees of any more ground-breaking innovations.

There is certainly plenty of room for global expansion, because Apple is relatively weak outside the USA. However, global success is likely to be limited by Apple's traditionally high profit margins, and its very limited product lines. Some people think differently enough to want more choice than is provided by Jobs's (mostly) one-size-fits-all approach, and most of the people in the biggest new potential markets -- Brazil, Russia, India, China -- can't afford iThings even if they want them.

Apple's global penetration is also likely to be limited by competition, particularly from products based on Google's Android operating system. This is improving much more rapidly than Apple's iOS, and it's being used on a growing number of devices from an increasing number of suppliers. Android phones have already overtaken the iPhone in the US; worldwide, Apple could be marginalised, as it was in the personal computer market.

Apple can hold its margins and add another $50 billion to the $50 billion it already has in the bank, and in purely capitalistic terms, this would be a win. However, it will still lose the majority of the market.

There are, of course, too many unknowns to be even remotely sure about anything. Perhaps the biggest unknown is what's currently on Apple's roadmap, including variants of the iPhone and iPad. (Apple filled a range of niches at different prices with various types of iPod. There's no reason why it couldn't do the same with the iPhone and iPad.) There could even be a successful Apple TV in the works -- a TV set, rather than the struggling set-top box. So, although Jobs is known to be a control-freak and is uniquely identified with Apple, the bandwagon would keep rolling for a while even without him driving.

But there is one known, which is that Jobs is Apple's supreme marketeer and showman, and at that he is irreplaceable. Other companies can produce products that rival or surpass Apple's, but nobody else can command the world stage -- and the world's press -- like Jobs. He is the messiah of shiny shiny bits of plastic, and there will never be another.

Can the cult of Apple thrive without its supreme leader? In the short term, yes. In the long term, I doubt it.

Topics: Tech Industry

About

Jack Schofield spent the 1970s editing photography magazines before becoming editor of an early UK computer magazine, Practical Computing. In 1983, he started writing a weekly computer column for the Guardian, and joined the staff to launch the newspaper's weekly computer supplement in 1985. This section launched the Guardian’s first webs... Full Bio

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