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Thoughts On Apple's Ousting Of Forstall And Browett: Asserting Cook's Authority, Solidifying Jobs' Vision

Oct. 31, 2012 6:51 AM ETApple Inc. (AAPL)44 Comments

On October 29, as the markets were closed, Apple (NASDAQ:AAPL) announced, in a terse press release, that both Scott Forstall, the head of iOS engineering, and John Browett, head of retail, were leaving the company. Forstall's responsibilities will be split up between Eddy Cue, who is taking charge of Siri and Maps, Craig Federighi, who is taking charge of iOS engineering, and Jony Ive, who is taking control of software design as well. The retail division will report to Tim Cook until a replacement retail head can be found. The suddenness of this move stunned many in the technology world, and, as with most things involving Apple, it generated a good deal of coverage. Our analysis of the situation has shown that these actions reveal the best in Apple's corporate management practices, and also show that Tim Cook is working to assert himself not simply as the Steve Jobs' replacement, but as a CEO in his own right, even as he preserves the vision that his predecessor worked his whole life to achieve. In this article, we will attempt to explain why Forstall and Browett were ousted, and why Apple's investors should view this as a positive.

Ousting Forstall & Showing that Apple is the Antithesis of Microsoft

How a company's executives interact with each other and conduct their daily business is just as essential to a company's success as what it makes. A company whose executive team does not work together is unlikely to succeed. Microsoft (MSFT) serves as proof of that. We have written about Microsoft several times before, and each article we write mentions the company's corporate culture, and its executive team, as one of the key factors holding the company back. The vicious corporate warfare that occurs inside Microsoft causes its divisions to spend more time fighting each other than

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Helix Investment Research was founded in July 2011 in order to distribute quality equity research. We tend to take a secular, thesis based approach to investing, looking for fundamental trends around the globe that transcend the vagaries of the business cycle.

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Comments (44)

KIA Investment Research profile picture
Forstall's departure is far more damaging to Apple than many realize... a HUGE mistake.

When Apple forced its mobile software leader Scott Forstall out of the company, it pushed out the most prolific inventor at the company, as measured by recent patent filings.

Forstall's name is on 166 pending patent applications. That's more than anyone at the company, according to data from investment bank MDB Capital.

"He's one of, if not the most prolific inventors at Apple," says Erin-Michael Gill, Managing Director and Chief Intellectual Property Office at MDB. "If this guy is who the data seems to imply he is, letting him leave is a huge deal." http://bit.ly/PpHjCQ
Dennis Baker profile picture
Forstall was a big part of the workhorse that's driven Apple's profits. It's definitely a concern.
I love Apple, errors and all! -------I am an 86 yr. old female.
It is but fair and prudent that Mr. Tim Cook should be given a chance to show his wares. There are too many detractors but soon it will come to pass.
I am sure Mr. Tim Cook has nothing in his mind but to guide Apple to a outstanding company on HIS WATCH that would reflect his abilities and capabilities as CEO of Apple. He was standing during Mr. Steve Jobs absence why not now where he is in the top helm.
31 Oct. 2012
Awesome Articlr!

Great to read an article written by someone who actually has something to say.

I think the changes Cook has made are excellent. Forstall was holding back software designs with his obsession with "skeuomorphic" designs - i.e. fake leather, paper planner pages, and other physical objects used as motifs. Forstall would undermine other managers if it made him look better. Overall, he was fitting in less and less.

As far as Browett goes - that was a hiring mistake, and they had the guts to correct it.

Tim Cook is looking to be one GUTSY leader and manager, willing to do what is necessary to move Apple forward. Jony Ive is the right man to shape Apple's product vision. Excellent moves all around.

I am extremely confident in Apple under his leadership.
alphafemme profile picture
I'm wowed by Tim Cook! He has shucked off the burdens to Apple and made it clear that Apple's priorities will always be great products and design that will enrich people's lives and make them happy.

Apple is Apple again. This opens the way for products that we have no inkling about yet. The wheels are turning freely again. Expect great things.

As a long-time Apple stockholder and a very long-time Apple user, my worry that started when I sadly saw Steve Jobs becoming gaunt and moving into the last phase of his life, has been lifted. Tim Cook clearly gave great thought to all aspects of these changes, and I think he made exactly the right choices. I am THRILLED!
Jonathan Ive, known by most as Jony, is now responsible for both industrial design and human interface, which essentially gives him control over all of Apple's design processes, on both the hardware and software side.
Hmm.... Who hired Browett?
haysdb profile picture
The press release was prototypical Apple. If it was "terse" than so is every other Apple press release, including their quarterly reports, which are the shortest of any major company.

The firings were sudden? Aren't they always?

Stunning? Browett's firing sure isn't. Forstall's is stunning only if you haven't been paying attention:

I agree with the comments that the grammatical issues took away from an otherwise insightful article. As an investor I had been growing concerned with Browett's missteps in the retail division. And Forstall's refusal to take public responsibility for the issues in the iOS maps is telling. All in all I view these departures as positive, and it has increased my confidence level in Tim Cook as the right leader for Apple.
msapp profile picture
Informative article, thank you.
flumeride profile picture
This article is the best analysis I've seen regarding the firing of Forstall and Browett. From what I have gathered from several other articles I had come to the conclusion that both firings are good for Apple. As a customer I have noticed a decline in customer service at the Apple stores in my area. Forstall seems to have delusions that he is the next Steve Jobs. Apparently no one else believes that to be true and most of his subordinates feel like a burden has been removed and they can get back to creating great products again.
aWannabe profile picture
Bottom line is it still shows that post Jobs there is a corporate infighting issue. And it will not disappear no matter what. The assessment of the author is it is under control and well managed now but others have a different opinion on that. Apple has gained so much power that people will do crazy stuff to get a piece of this. Cooks has to show that he is able to keep that under control over time.
Thank you for your insightful article, I enjoyed reading it. I feel very comfortable with Apple's decision and leadership.
Long Apple since 2005
There are many ways to look at the "firing" of Scott Forstall. Steve Jobs had set up a "confrontational" management organization. This forced each person to defend his ideas. In so doing, a lot of ideas got developed. Steve had the vision and was technically strong enough to make the final call on the way forward. This had worked out well for Apple in the last few years.

Well, Tim Cook is not Steve Jobs. Like everyone had alluded to here that he was going for a more "collaborative" management style, or "team" approach. This is just like what every big company is pushing for right now. There is a possibility that we may end with products designed by "committee". Well, time will tell.

Tim's firing of Scott may also be interpreted by some as "If you are not with me, you are out." Basically, if you disagree too much with your boss, you are out. I have seen this happened in several big companies. In due time, people become afraid to speak out. Well, there goes innovations and new ideas.
After reading this article, I have come to the conclusion that there was enough friction between Forestall and Ives that a fix has to be made right away before the situation gets really bad. The same kind of friction led to the departure of Fadell who pushed the idea of the iPod, Apple's first mega hit consumer product, the beginning of Apple ascendency into the largest technology company. From my recollection, Fadell and Forestall could not stand being in the same room together, which led to Fadell's eventual departure from the firm a few years ago. His latest invention, an adaptive thermostat that can regulates itself based on one's daily activity, can be found at Apple store.
User 123757 profile picture
c'mon guys in American English the singular of the english verb to be is "was" not "were"

David at Imperial Beach profile picture
By focusing on the personalities getting fired, we are losing part of the message here. Tim Cook felt that the maps problems were serious enough to warrant a letter of apology. That's big, people. It shows he recognizes the level of perfection that customers expect from Apple, recognizes that they fell short in this instance, and intends to do better in the future. And he's put the right person in charge to follow through. Jobs probably wouldn't have apologized, but that was one of his less endearing qualities.
User 123757 profile picture
What does this sentence (?) mean:

"Forstall and Jonathan Ive could not stand to be in the same room together, were much more obvious many sources, . . ."

is there an editor in the house . . . ?
Helix Investment Research profile picture
As we stated in an above comment, something seems to have gone wrong in the submission process. The phrase "much more obvious" was inserted throughout the article, and the source links to various quotes and pieces of information were removed. We will contact the editorial team to get these issues fixed.
Excellent article and read.

Finally some well deserved praise for Tim Cook. Thanks for sharing these perspectives.
Forstall seems a perfect fit for Microsoft. Departmental infighting is the culture built by Gates, where the end always justifies the means no matter who and what it hurts.

Gates was old school in ways, and the above was one of the worst ways. With that toxic Gates culture in place, Microsoft can never be like Apple for its employees and will always suffer for it.
some CNBC people said these firings were a negative, but as I have read further, and confirmed by this article, it was the right thing to do. Jobs spoke highly of Ives and Cook on many occasions, they seem to be the heart of Apple now. As an aside, the iPad mini is delayed two weeks on all models, sold out. I guess it wasn't too expensive after all.
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