Tim Cook one year on: how's Apple doing?
25th Aug 2012 | 09:00
The head of the world's most valuable company
Tim Cook: how's it going?
When Tim Cook took over as CEO in 2011, many pundits predicted the end of the company. Without Steve Jobs, they said, Apple was doomed.
Since then Apple has become even more successful. Apple fans say that's because Tim Cook is the right man for the job, the keeper of Steve Jobs' flame, but critics say he just hasn't had enough time to mess things up yet. So who's right?
Tim Cook has been with Apple since 1998. Under his watch Apple has become one of the most profitable companies the world has seen. Cook is the man who delivered Steve Jobs' promises.
Describing inventory - warehouses full of unsold kit - as "fundamentally evil", Cook subcontracted Apple's manufacturing, almost eliminating inventory and making Apple amazingly profitable. Where other electronics firms struggle with single-digit profit margins, Apple's gross margins can be higher than 45%.
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Cook also negotiated deals and invested in suppliers to guarantee that when Apple needs components, it gets them - often at the expense of rivals, who can't get parts in the right quantities and at the right price. As one industry insider put it: "If it weren't for Tim Cook, the iPad would cost $5,000."
Apple might have survived without Cook, but it almost certainly wouldn't have thrived. Without his mastery of Apple's manufacturing and distribution, Apple wouldn't be shaping up to become the first trillion-dollar corporation in history.
Workaholism aside, Cook (who is known for his 4.30am emails) is very different to the man he succeeded. Cook is understated and softly spoken, a thoughtful man who's happy to share the limelight. When he unveiled the iPhone 4S, his first post-Jobs keynote, Cook delegated most of the presentation to other Apple executives. That wasn't just first-night nerves, either, as the launch of this year's new iPad was a similarly egalitarian affair.
By all accounts, Tim Cook is a very likeable man, but still has a core of steel. As CNN reports, in 1998, Cook held a meeting to discuss a problem in China. "This is really bad. Someone should be in China driving this," he said. Half an hour later, he turned to Apple's Operations Executive Sabih Khan and said: "Why are you still here?" Khan got the message and was on the next plane to China.
One thing Cook doesn't do, though, is go ballistic. Compared to him, Steve Jobs was the Incredible Hulk.
While, to the best of our knowledge, Steve Jobs never turned green or smashed up a tank, his rages were famous. But were they effective? Jobs' penchant for yelling at and even humiliating staff isn't necessarily the reason Apple is so successful. It's possible that Apple thrived despite Jobs' bullying, not because of it.
There's no doubt that Steve Jobs' self-belief did Apple an enormous amount of good. It took Apple from a garage to the rich list, and Jobs' insistence on perfection meant when he demanded the impossible of Apple's engineers, they delivered it.
However, while his instincts were often right his petulant behaviour often made enemies for Apple. Apple is hated as much as it is loved, and in many cases, that's because of Jobs: the Jobs who hit out at environmentalists who said Apple could be a better corporate citizen; the Jobs who was dismissive of concerns about sweatshop labour; the Jobs whose response to genuine concerns was often to pretend they didn't exist; the Jobs who was a bully with an ego the size of a planet.
Tim Cook isn't like that, and while business isn't a popularity contest, Jobsian tantrums don't always work. Take Android, for example, a "f***ing stolen product" that Jobs vowed to wage "thermonuclear war" against. "I will spend my last dying breath if I need to, and I will spend every penny of Apple's $40 billion in the bank, to right this wrong… I'm going to destroy Android," Jobs told biographer Walter Isaacson.
So how's that war going? Samsung - one of Android's biggest cheerleaders - is now the world's biggest smartphone vendor, and Apple is losing as many lawsuits as it's winning. Jobs' war is an unwinnable one, and Tim Cook knows it.
That's why he's currently negotiating with Samsung to end the two firms' ongoing eye-for-an-eye lawsuits. Speaking to financial analysts during April's earnings call, Cook said he has "always hated litigation, and I continue to hate it… I highly prefer to settle versus battle."
That doesn't mean he's a pushover, though: "The key thing is that Apple does not become the developer for the world. We need people to invent their own stuff," he added. But unlike Jobs, he's not on an anti-Android crusade. If tit-for-tat legislation isn't helping Apple, Cook will kill it.
Tim Cook: The nice man cometh
Cook isn't just more affable than Jobs. He's more generous too. In February, he told Apple staff that he'd donated $100 million of Apple's money to charities, with $50 million to hospitals and a further $50 million to Product Red.
Apple now matches employees' charitable donations to the tune of $10,000 per employee per year, and it appears to be more charitable to employees and investors too: under Cook's watch Apple has introduced dividend payments for shareholders and deep product discounts for staff.
It's in stark contrast to Steve Jobs, who reportedly told employees that giving money to charity was a waste of time. He also believed dividends wasted cash that Apple could better spend on making new products.
The dividend issue shows another difference between Jobs and Cook. Writing on The Street, Jim Cramer was one of several analysts who believed that Cook's timing was terrible. "What bothered me was that this was a very special weekend for Apple, the weekend the iPad hit the stores, and… the dividend stole the thunder from the actual story, a new device that I think is taking America by storm." Jobs, it's safe to say, wouldn't have let that happen.
In May, Tim Cook achieved something Jobs couldn't: offloading the burden of updating Java to Oracle. Jobs spent years trying to persuade Oracle to take responsibility for Java on OS X. And now, in the wake of the Flashback Trojan horse, Tim Cook has managed just that.
Tim Cook, then, is a smart guy. But is he a product guy? Speaking to Forbes, former Apple engineering Vice President Max Paley said Apple's engineer-driven culture appears to be changing. "I've been told that any meeting of significance is now always populated by project management and global-supply management," he said. "When I was there, engineering decided what we wanted, and it was the job of product management and supply management to go get it. It shows a shift in priority."
Apple watchers have two concerns: whether Jobs left Apple with enough product ideas to keep the company on top for another few years; the second is while Cook may be a genius when it comes to business, he might not be a genius when it comes to products. The fear is when the products Jobs oversaw run out, that'll be the end of the Apple we know and love.
Critics argue the evidence is right in front of us. The biggest Cook-era products so far, the iPhone 4S, the new iPad and the latest Apple TV, are minor upgrades to existing products, and if rumours of an iPad mini are correct, then Cook is signing off on products that Steve Jobs rejected. He's already green-lighted the new Apple TV interface which, according to former Apple TV engineer Michael Margolis, was "tossed out five years ago because SJ didn't like it. Now there is nobody to say 'no' to bad design."
When Steve said no
It's important to take Steve Jobs' dismissals with a pinch of salt, as he often derided products Apple would go on to make. He dismissed tablets ("People want keyboards"), mobile phones ("We didn't think we'd do well in the cellphone business") and ebooks ("People don't read any more"), among many, many others.
Jobs' dismissal of seven-inch tablets and Apple TV designs could have been because they weren't right at the time. The idea that Jobs wouldn't have unveiled the iPhone 4S is odd, too, as Jobs was still involved in Apple during its development.
Apple has always made incremental updates: the iPhone 3GS was a relatively minor update to the iPhone 3G. And concerns about Apple's ability to design more great products are rather insulting to Jonathan Ive, whose group remains one of the most talented design teams in the world.
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Is Tim the right man to run Apple? Perhaps the best people to ask are the ones who actually work there. US careers site Glassdoor surveys top firms' employees, and, in March, Apple staff gave Tim Cook a 97% approval rating, placing him above every other CEO in the tech industry. That suggests that when Cook promised to defend Jobs' legacy, he meant it.
Tim Cook is measured whereas Steve Jobs was explosive, Cook is inclusive whereas Jobs was arrogant, and Cook is pragmatic whereas Jobs was destructive. But they share one key attribute: a genuine passion for Apple, its products and its customers.