Inside Scoop: Apple shakes up management team
For those looking for signs of change in a post-Steve Jobs Apple, yesterday was your day.
No, it wasn't a miss on earnings, or a product that was perceived to be disappointingly iterative instead of groundbreaking. Nor was it an ad campaign that just felt a bit off.
The changes came as part of one of the most drastic adjustments to Apple's top management since Jobs stepped down, and at a time when Apple finds itself on the defensive. The company has missed Wall Street's earnings expectations for two straight quarters and it is still smarting after a rare technology flub surrounding its foray into mapping software. Meanwhile, Apple's retail stores, a veritable money machine for the company, have been tarnished with reports of cutbacks and mismanagement.
So it was that CEO Tim Cook lowered the boom on two of Apple's top executives -- one in charge of iOS, the other in charge of retail. Recent hire John Browett is out of his retail gig immediately, while iOS chief Scott Forstall is set to leave next year.
The departures are not the first for Apple since Cook took over, though the first one was a bit of a false start that's been temporarily reversed. Bob Mansfield, who announced plans to retire as the chief of hardware for the company in June, ended up staying on at the company as part of a management shuffle in August. Yesterday Apple said he'd once again be running a group that's now expanded to cover its semiconductor and wireless efforts, the foundational lifeblood of its mobile hardware business.
What's driving curiosity, though, is Forstall's departure, which is now being reported as an ouster. Whatever the reason, the change has once again brought up Apple's succession plan, something that has not been questioned since Jobs passed away last year. In the years leading up to that event, and throughout separate bouts of sick leave, the big question was just who was going to run the show after Jobs.
Apple's immediate answer was Cook, who hit the ground running. In his first year, the company kept a tight timetable of product launches, set new sales records, and managed to keep interest high despite numerous leaks. Though Apple's past year has not been spotless.
Several of the company's recent product initiatives have fallen flat or worse, raising questions about whether the post-Jobs Apple can maintain the impossibly high benchmark established by its legendary co-founder. Jobs didn't do everything right himself, but some of his company's efforts since his passing have arguably been just a bit off compared to the glory days. For instance:
- Siri, Apple's voice assistant. The software was introduced as the headline feature of the iPhone 4S and can now be found on Apple's latest iPads and iPod touch. The voice assistant was promised as a robotic tool that required no special directions to use and that would get better over time. Users, however, found it clunky, and Apple's claims overreaching.
- Genius ads. Ad spots featuring a young male Apple tech support guy in the wild, helping the helpless with their technology and, sometimes, life problems. Critics said the ads hit all the wrong notes, making Apple's customers appear bumbling, mixed with mean-spirited knocks at competitors. The ads, which debuted during the summer Olympics, disappeared from television less than two weeks after their debut. The company went a step further and wiped them off the Web a few weeks after that.
- Maps 2.0. Apple's completely revamped mapping software in iOS 6 left users complaining about errors and inaccuracies. Cook publicly apologized for the software, promising to make improvements, an apology Forstall is now said to have refused to sign.
- iPad mini. The jury's out on this one until the device goes on sale this Friday, but critics have already called into question the price and some of the features when stacked up against competing devices. That leads us to...
Competition in mobile
Apple had the wireless industry on its heels after unveiling the original iPhone more than five years ago, but the wow factor has slowly ebbed with each new iteration of its breakthrough smartphone.
Now, Apple isn't the one breaking ground on new technology and features. The marquee upgrades to the iPhone 5 -- its larger display and ability to connect to faster 4G LTE networks -- has been in competing phones for more than a year. While the iPhone 5 remains tremendously successful and popular, Apple can no longer claim any significant lead over its competitors. Instead, its competitors are toying around with features such as NFC chips for mobile payments and wireless charging -- features that may not be proven, but demonstrate a willingness to take risks.
Android is now the dominant mobile platform in the industry, with Samsung alone selling roughly twice as many smartphones as Apple in the third quarter, according to IDC. Smartphones such as the Galaxy S3 generate nearly as much buzz as the iPhone 5.
Likewise, carriers have steadily been attempting to wean themselves off of the iPhone, which require larger than normal subsidies paid to Apple. AT&T will launch a tidal wave of smartphones from HTC, LG, Nokia, and Sony this holiday season in the hopes of getting away from its iPhone addiction, while Verizon Wireless already gets a majority of its smartphone sales from Android devices.
In other words, instead of being the overwhelming favorite, Apple finds itself in a street fight with myriad high-end smartphones all angling for the same consumers.
On the tablet side, Apple's iPad dominance also appears to be waning. While it remains the clear leader, other compelling options have sprung up, including Amazon's Kindle Fire HD and Google's Nexus 7, both of which are more competitively priced than Apple's newly unveiled iPad Mini. It's telling that after the iPad Mini's $329 starting price was announced, many gadget enthusiasts were quicker to debate whether it was worth the money than to issue slam-dunk declarations of love.
All eyes remain on Apple -- and Cook -- as to how the company shapes and builds its product lineup, and how (or if) it will pioneer new areas the way it did with phones and tablets.
If Cook gets this right, this management change could just be a step on the way to keep Apple's wild growth and innovation going. And if it backfires, there's no shortage of rivals waiting to take advantage of any stumbles.