So in the wake of Apple missing analyst expectations for sales and profits during the December quarter, some members of the media have decided that Tim Cook has to go. It’s all his fault, and they need to get someone in there to fix what ails Apple. Or maybe call a medium and contact Steve Jobs in the afterlife and get him involved once again. Calling Dr. Frankenstein!
So why should Cook go? What did he do wrong, and where were the calls for Apple to fire all those failed executives who trashed the company after Steve Jobs was sent packing in the 1980s?
The main reason appears to be the fact that Apple has been missing estimates for sales and profits in recent quarters. It’s not that Apple is necessarily failing their own guidance, but the inflated numbers from others who may be using mediums and tea leaves to arrive at those figures. Or perhaps dragging them from dark places in their anatomies.
The failures? Well, Maps for one. Steve Jobs would never have allowed that thing to be released if he were on the job. Only the lessons of history show that Jobs had his missteps too, and I’m not going to bother to list them. The journalists who clamor for Cook to go just need to do their homework.
I suppose the critics are also complaining because the iMac was late, and is still constrained. The same is true for the iPhone 4, surprisingly, production of the iPhone 5 has only recently caught up with demand, and the iPad mini won’t catch up till later this quarter. Was there a failure, or is Apple pushing the supply chain as hard as possible to get these products out in sufficient quantities?
Consider the result to sales and profits if the iMac arrived with full availability a month earlier, without production bottlenecks, and the iPhone and iPad mini weren’t similarly constrained. Imagine how the results would have fared if Mac sales were on a par with last year, or a tad ahead, and Apple moved a few million more iPhones and iPad minis during the quarter. Forget about every other factor in Apple’s numbers, and tally the results. Revenue would be several billion dollars higher, and profits would have exceeded last year. End of complaint.
If Apple’s problems occurred because of a falloff in demand, that’s one thing. If the products weren’t almost universally praised by customers, and given high marks by reviewers, that would be another. If the production problems were somehow due to a Cook screwup of some sort, that would also be a factor in considering his future at Apple.
But Cook has been doing the operations thing at Apple since the 1990s, and he’s been a tremendous success at it. If, after their best efforts, Apple can’t meet the full demand for their products, that’s actually not a bad thing. It’s only a bad thing if lots of customers lose patience and go elsewhere rather than wait for delivery, even if the shipment arrives a few weeks later.
The other argument, which also betrays serious ignorance, is the claim that Apple must revolutionize a product category every single year. How, then, do you explain the lapse of six years between the introduction of the iPod in 2001 and the launch of the iPhone in 2007? Did the arrival of the iPad in 2010 mean that Apple must now enter a three-year cycle? If so, the year is still young, and, other than the usual product refreshes, nobody outside of Apple really knows what’s on tap for this year.
Sure, Cook is still dropping broad hints about something in the TV space. That two million copies of the Apple TV were sold in the last quarter would be amazing for any company other than Apple. To them, two million is still a hobby, though I can see where it can grow into a fairly mainstream product assuming a new generation model expands the ability to control your TV experience. I am not convinced that Apple really wants — or needs — to build a TV set to make a dent in that market. A pretty smart TV with a spiffy interface and some unique control functions might be a big seller, but hardly a revolution.
On the other hand, I’m not apologizing for Tim Cook. Were he to leave tomorrow, he could retire and travel the world for the rest of his life and never worry about the next car payment or electric bill. But I don’t see evidence of his failure, and I see sensible reasons why Apple didn’t do quite as well as the financial community expected.
The next six months, however, will be the key to how Apple’s ongoing prospects are perceived. But even if the growth rate slows to “normal” levels, that’s nothing to apologize for.
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