Removing the core of Apple

Yesterday the writer of satirical blog The Secret Diary of Steve Jobs posted: “I’m totally fine, but goodbye for now.” It may be only seven words but it’s every bit as illuminating as the terse three paragraphs Jobs released as an official statement yesterday about his latest illness-related leave of absence. The exact nature of Jobs’ condition at this time is unknown, but it’s safe to assume it is serious, as it had been on three previous occasions over the last six years. The market has been predictably febrile in its reaction; shares in Apple dropping eight points before rebounding by four. Histrionics aside, the question of how the world’s trendiest company will manage without its messianic/dictatorial (choose one) CEO is worth examining, and it’s not all bad news.

So, will Jobs be missed? As a showman Jobs is irreplaceable. As a businessman the answer is less clear cut. Jobs’ relationship with Apple is more complicated than one might think. After an internal power struggle Jobs left the company in the mid-80s, founding his own software company NeXT. While he made modest gains in software development, Apple endured a cycle of ineffective CEOs, including former PepsiCo man John Scully.

Jobs returned to Apple in 1996 following its purchase of NeXT and the NeXTSTEP operating system he was overseeing became the backbone of what we now know as Mac OS X.

 

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Jobs made sure OS X appeared only on Macintosh machines and clamped down on mid-range Mac ‘clones’ manufactured by other companies. By turning Macintosh from a niche into an exclusive brand (there is a difference) Jobs put Apple back on track and created a space that allowed him explore the possibilities of the digital music market and personal technology like MP3 players.

Getting personal
Since then we have been given a succession of gamechanging software and devices aimed at consumers and early adopters: iTunes, the iPod, iPhone, a rejuvenated Macintosh line and iPad – all iconic, all triumphs of design, taking ideas largely already in the ether and repackaging them with enough flair to make them see new all over again. Ten years ago tablet PCs didn’t have enough novelty, let alone practical value to interest consumers. Their reinvention via the iPad demonstrated that all you have to do is show the audience how to use it. Over 7 million units later and the casual computing model of the device on the end of the sofa for occasional use has sunk in. You can thank a typically successful bravura presentation by Jobs for that. All this would point to a company and a man so intertwined as to share DNA, yet there’s nothing to fear from any protracted leave of absence, and we have evidence to prove it.

In 2004 Apple had its first Jobs-related health scare when he was diagnosed with pancreatic cancer. A surgical intervention in the form of a complicated ‘Whipple procedure’ put him back on track. 2009’s scare, described as a hormone imbalance, saw Jobs undergo a liver transplant. On both occasions caretaker administration worked out just fine, a good reflection on the efficiency of the Apple board that it can function without a figurehead in the short-term.

Given his form it’s safe to say Jobs’ latest scare is serious. The timing of his announcement – a US public holiday with no trading – indicates that he is still acting on his own terms and that his condition is not acute. What’s more, his official statement reiterates that while COO Tim Cook will be at the helm, Jobs will still be consulted on strategic decisions. Apple may be making significantly more money now, but the rules have not changed. So long as the company continues to release new products shareholders will remain as smug as any proud Mac fanboy.

Next month we expect an announcement about the second generation iPad. Speculation is already rife about what the next iteration of the iPhone will bring and the forthcoming OS X update Lion. Not to mention the App Store for mobile and desktop devices and what success the News Corp e-paper collaboration The Daily will have. That should be enough to keep event the most casual of investors happy in the short term.

Markets will have nothing to fear from a Jobs-free office so long as the hits keep on coming. Get well soon Steve. No rush.