Apple on the defensive?

by Ian Rosenwach on 1.20.2014

Instead of the round-the-block lines that have greeted Apple product introductions in China and other countries in the past, only about a dozen customers showed up to buy iPhones at the opening of a store in Beijing – despite the presence of a special guest, the Apple chief executive, Timothy D. Cook. (NYT)

I admire Apple as much as any company, but it’s time to take a sober look at the current state of the firm. Apple and Tim Cook are starting to look more on the defensive than Apple ever has before.

Allow me to explain.

Two days after Google bought Nest for $3.2B this headline was prominently featured in the WSJ

Apple CEO Signals Company Plans to Broaden China Mobile Alliance

Tim Cook Expects Deal With China Mobile Will Boost Sales in World’s Largest Smartphone Market

The fact that Apple has a deal with China Mobile to offer the iPhone to their Chinese consumers is NOT news. I’ll repeat – there is no news here.

The article serves as a retrospective of the Apple/China Mobile deal (six years in the making, access to a large market, etc.) and touts Apple’s CEO Tim Cook on his “major coup.” There’s even this –

The agreement is in part the result of a different approach Mr. Cook took from Apple’s late founder and former chief executive Steve Jobs

This is the sort of PR/media response you see from companies on the defensive; not Apple.

My suspicion is that Apple proactively granted the WSJ access to Cook so he could talk up the China Mobile deal. This level of access is bound to result in mostly positive press, at least if the WSJ wants access again in the future. I also think this was meant to take the spotlight off the Google/Nest deal and paint the company in a positive light.

This is not unusual of course, it’s just not what I’ve come to expect from Apple.

Attracting the Best and the Brightest 

“The amount of things that I learned from them, personally, in the same meetings that they learned from me, personally…the two way interchange of what was for me intellectual happiness and the stimulation of being able to go back and forth, and really create a new world together – and in a different way than either of us had imagined – that was personally exciting to me,” he said. (Tony Fadell, formerly at Apple and now founder of Nest, at DLD, from TNW)

The fact that Google bought Nest is bringing up tough questions at Apple (as it should). Yes, there’s the fact that an Apple competitor acquired a leading software + hardware company in a large emerging market. Yes, Nest is home to a slew of former Apple employees who could share some of the secret sauce. True, Google now has an installed base of “internet of things” users to gleam valuable insights from that user base.

Those are all causes for concern, but I don’t think any of these things are the biggest red flag.

The biggest concern is that some of Apple’s best former employees, including one of the central designers of the iPod, were attracted to work at Google. These are the same people who experienced Apple’s heyday; could they see a glimpse of that at Google?

This attraction/halo effect is the type of thing you can’t easily replicate and takes years to build. That is the real cause for concern and should cause some soul searching in Cupertino.

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