A couple of comments on my recent post about Apple’s (AAPL) cash and cash-like assets got me thinking. Some were speculating on what Apple might do with the money. Major acquisition? Lots of minor acquisitions? Who knows?
You know it’s really what Apple doesn’t do that makes the company profitable. At last year’s All Things Digital Conference (video also available here), Steve Jobs explained a bit about why Adobe Flash was left out of the iPhone and iPad (around the 4:20 mark. It’s a 90-minute video)
In Steve’s words “Apple is a company that …doesn’t have the most resources of everybody in the world.” (Could’ve fooled me.) And it succeed by “choosing what horses to ride really carefully” – essentially picking the right technologies.
Choose wisely, Steve says, and you can save an “enormous amount of work vs trying to do everything,” so you can put energy into the stuff you do well.
That means Apple sometimes has to decide to give up on certain technologies if it means the difference between a great product or just an average product. Apple doesn’t waste a lot of time on stuff that can interfere with a great product. That meant no Flash for iPhone and iPads, just as it meant no more floppy disc drives back in the late 1990s.
So if I have this straight, because Apple views itself as having limited resources, it doesn’t waste a lot of time or resources trying to capture every perceived market niche. That means the cash piles up compared with companies where they do “try to do everything.”
“Saying no”: When resources were really limited in 1997
Remember that open letter to Research In Motion (RIMM) executives that an anonymous RIM employee wrote? This employee admitted that he has “lost confidence” in the company? He specficially said he wanted every RIM exeutive to watch this video.
It’s also of Steve Jobs – a much younger Steve – addressing the Worldwide Developers Conference back in 1997 (when you could have bought an AAPL share for around $5). That’s just after Steve came back to Apple after having left in 1985.
It’s another long video, I’m afraid, but he laid out a vision for a company with far fewer products (there seemed to be dozens of Mac models back then) so that the few that remained would be the ones customers most wanted (and the Newton didn’t make the cut).
And that’s when Apple’s resources were really limited – like almost nothing in the bank. In the video (around 5:50), Steve said that while many people believe focusing is about saying yes, it’s really about “saying no”
Obviously Apple’s resources are far less limited now than they were back in 1997, but the lesson is clear. Regardless of how much money you have in the back, success is largely the result of what you don’t do. And Apple is pretty good at saying no. Disclosure: I am long AAPL.