What's Happening at Apple: Steve Jobs

| About: Apple Inc. (AAPL)

In part two of my “What’s going on at Apple?” mini-series, I’m wondering what the move to end the decade long tradition of the Stevenote speech at Macworld means to Apple (NASDAQ:AAPL) and its ongoing strategy. While Apple always has its own developers conference and events for the iPhone and iPod product lines as well as its so-called “Special Events," there is no gathering quite like the MacWorld Expo. While in my previous post, I argued that pulling out of MacWorld is just the next logical step in a decision to minimize investment in tradeshows, it is undeniable that the MacWorld Expo is at least a little bit more important than the rest. Only at MacWorld, did average consumers, fanatics, and general press willingly gather to listen to Steve Jobs (and, hopefully, to Phil Schiller this year) set the tone for the coming year’s consumer tech products. It was, in many respects, a state of the union address both for Apple and consumer tech.

MacWorld Expo is where Steve Jobs ™ was born. That is not Steve Jobs, the Apple co-founder or CEO, but Steve Jobs ™, the visionary and deliverer of salvation from bland tech products. No company, not even Microsoft (NASDAQ:MSFT) with Bill Gates or Google (NASDAQ:GOOG) with Sergei and Larry has a CEO that more embodies the term keyman as Apple does with Steve Jobs. Whether or not this is true, we all know that the company was an uncompetitive also ran in the personal computing industry before Steve Jobs returned from exile and transformed the Apple into a consumer tech juggernaut. It was his passion for typography and design, which inspired MacOS. Eventually, the beautifully designed and easy to use product hit parade that techies and non-techies alike have enjoyed for the last decade, and particularly in the last five years.

More importantly, the emergence of Steve Jobs ™ created a powerful competitive advantage for Apple in that Jobs himself has become a trendsetter for the entire industry. His adoring fans hang on every last word, and fall in love with any new gadget he holds up in the air. Marginal products - internet enabled phones, MP3 players, solid-state memory - become legitimate industries all with a few slides in a Keynote presentation.

Whether healthy or not, the decision to pull out of MacWorld will, in some ways, mark the end of Steve Jobs ™. After all, there is no longer a ready-made pulpit for Steve Jobs to espouse on what’s hot in tech and what’s new in Apple-land. New product announcements and other PR will be handled through the Apple website and Apple retail stores. It seems that Apple consumers and investors are finally being weaned off Steve Jobs ™ and being faced with the fear of losing Steve Jobs all together.

I wish Apple could have chosen a better way to do this. A surprise withdrawal from MacWorld Expo is not necessarily the best way to inspire confidence especially when there is already concern over the CEO’s health. In the long run, this could be a good move for Apple. Steve is 53, and hopefully, he has many good years left, but everyone gets tired and everyone ages. Bill Gates is also 53, and has already stepped away from operations at Microsoft.

A company is not built on the back of one man. In our closest example, Microsoft doesn’t seem to have missed a beat after Bill Gates stepped down. Granted, some may argue the company was already mature and no longer needed a visionary leader so much as a manager for the business. Apple is still a company very much focused on growth and diversification of its product base. Furthermore, its success is not built on entrenched, mission critical software as much as it is on hot products and a desirable brand. In this sense, it will always need a management team that shares a Steve Jobs-like mentality focus on design, innovation, and user friendliness.

The question for investors is whether or not there is someone or several ‘someones’ who could fill Steve Jobs’ shoes, and continue to execute and evolve its very solid business strategy in the event that Jobs does eventually decide to take a lesser role in the business. The problem for investors is that Apple refuses to be forthright about Jobs’ health, his intentions going forward, or any succession plan at all. While this isn’t something we ask of most companies, who would succeed Eric Schmidt if he became technology czar or 64-year old Larry Ellison? It is an issue for a company, which has willfully decided to turn its CEO into its greatest salesperson and the symbolic source of its intangible competitive advantages. For now, all we can do is speculate.

Full Disclosure: Author was long shares of AAPL and GOOG at the time of writing.

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