On Thursday morning, shares of Apple are going to plummet. As a journalist who covers the company, I'm ethically restricted from investing. But you're not, and so I have one word for you: Buy. There's a good chance that you'll get a once-in-a-lifetime opportunity to invest at a discount in a firm that will continue to define and dominate the tech industry. There are few sure things in tech, but this is something you can take to the bank: Apple isn't going to die now that Steve Jobs has resigned as CEO. It's not even going to stumble.
I don't mean to dismiss Jobs' contributions. He has been as central to Apple's success as one man has ever been to any firm in the history of business. But Jobs' achievement wasn't just to transform Apple from a failing enterprise into a staggeringly successful one. More important was how he turned it around—by remaking it from top to bottom, installing a series of brilliant managers, unbeatable processes, and a few guiding business principles that are now permanently baked into its corporate culture. Apple today operates in the image of Steve Jobs—and it's going to remain that way long after he's gone.
You can see this in just about every aspect of its business. Take, for instance, the brutal efficiency of its production line. Apple used to be derided as a maker of well-designed, overpriced baubles. Under Jobs and Tim Cook—the former chief operating officer, now the CEO—it has mastered the global production process in a way that no other company can match. Apple makes more devices, at lower cost, with fewer defects than any other firm in the world. And it does this year after year, on a schedule so strict we follow it with the seasons (iPhones in the summer, iPods in the fall, iPads on the spring). As a result, Apple can now beat most of its competitors on price and profit.
Not only is the iPad one of the cheapest tablets in its class, but Apple also makes more money from it than other companies make on more expensive devices, a pattern that holds in many of its other products. In this way, Jobs has done something that must be unprecedented in the consumer goods business: He's turned a luxury brand into a mainstream one while still hanging on to luxury profits.
This last thing—hanging on to profits—is another central tenet of Jobs' leadership, one that isn't going go away after he's gone. Indeed, if you were to sum up Jobs' entire approach to business in a single pithy line, it would go something like this: Make good stuff. Make it cheap. Sell it for more than you make it.
I know this sounds obvious to the point of being ridiculous, but this strategy is considered passé by much of the rest of the tech world. Companies in Silicon Valley give away their products for free or even sell them at a loss, hoping to make money from ads, digital content, tech support, or various other low-margin ancillary services.
Jobs eschews these gimmicks. Under his tenure, Apple has set out to make money on every single thing it does, sometimes to a fault (until recently it was still charging for its online e-mail services). This has sometimes held back Apple's market share, much to the annoyance of pundits and stock analysts. Back in the netbook era, Jobs was constantly hounded about how Apple seemed doomed to fall under the threat of ultra-cheap computers. But Jobs has never gone after market share if it meant sacrificing profits, and that has paid off. Though Apple sells very few of the world's computers, it now makes more than a third of the PC industry's operating profits. Don't expect this to change after he's gone.
Jobs will also be remembered for fostering a climate of absolute secrecy and, relatedly, for his brilliance at marketing. As a journalist covering Apple, I hate both these things. I can never take anything that Apple does or says at face value, because it views the press as a pack of guerilla marketers. If I were an investor in Apple, though, I wouldn't want the company to change its stance in any way. Apple's approach to journalists—to string us along for months, building up the sort of anticipation that pushes us to live-blog every one of its events—wouldn't work if it didn't make great products. But lots of companies make great products. Apple gets more press than just about any of them, and it wins that attention because its secrecy and marketing fuel a consumer demand that we journalists can't ignore. And then the coverage fuels more interest, which fuels more coverage … and so on.
Apple has mastered this buzz-engineering technique in the last four years, when it introduced two new products—the iPhone and the iPad—that created two entirely new product categories. As a matter of marketing, neither of these devices was an obviously easy sell. A phone without buttons? A tablet computer that filled no clear need? But Apple worked the press, and barraged every corner of television and print with enough ads and product placements to make its new gizmos irresistible. By the time the iPhone and iPad hit the streets, folks were willing to plunk down hundreds of dollars, sight unseen. And this will keep happening after Jobs is gone.
Apple will surely change in small ways. The Stevenote—Jobs' fluid, engaging, product-unveiling keynote address—will turn into an on-stage committee, with execs taking turns unveiling products, none of them with the panache that Jobs brought to the task. We're also unlikely to see Tim Cook dash off e-mails to curious customers, and I don't think Cook will take the same keen interest in software design or typography. (There are others at Apple who certainly will, though.) But none of these things are central to Apple's success. On the big stuff, Jobs and Apple have achieved a total mindmeld. He'll be gone, but it'll be impossible for Jobs to be forgotten.
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