Apple is Not Sony

I'm not sure what I disagree with more, Forrester Research's glib prediction that Apple will be the next Sony (link), or the assumption that it's even possible to predict something that complicated.  Let me start with the second issue.

The longer I've been in the tech industry, the more I've come to realize that predictions about it are usually worthless. 



Leave aside the big failed dreams like nuclear-powered aircraft (link) and the transatlantic train tunnel (link).  Even products that seem relatively straightforward can be very hard to predict.  The industry thought tablets and e-books were imminent for at least a decade before someone got them right, and we're still waiting for micro fuel cells and flexible screens.

There are so many moving parts in the industry, and success depends on so many tiny details of execution, that it's basically impossible to predict even things that look, in retrospect, like they were inevitable.

If it's that hard to predict the fate of individual technologies that have been studied for decades, imagine the difficulty of predicting the fate of an entire company made up of thousands of people and numerous product lines.  What you can do is predict what could happen, and even take a guess at the odds.  We've all been collectively doing that lately with RIM and Nokia.  But even to make that kind of prediction you need to look at companies' management, products, customer base, financial status, and technologies, plus do an assessment of its competitors.  Forrester did none of that for Apple.  Instead it drew a simple little equation, based on sociological theory:  Apple was led by a charismatic founder, as was Sony.  After Sony lost its charismatic founder, the company declined.  Apple has now lost its charismatic founder, so it'll decline too.

Forrester is an excellent research firm, and I have huge respect for its quantitative market research.  But in this case I'm not buying its prediction, for a couple of reasons:

First, although it's accurate to say that Sony declined after the loss of Akio Morita, it's not clear that the company's decline was caused solely or even primarily by the loss of Morita.  Here's a chart from Yahoo Finance of Sony's stock price since 1985:



The red arrow marks 1994, the year when Morita stepped down after suffering a stroke.  Ignore the ridiculous spike in the middle caused by the Japanese economic bubble; the important point is that at its peak in 2007, 13 years after Morita left the company, Sony's stock price was double what it was when he left.  The PlayStation, Sony's most vibrant tech product today, was started under Morita but is generally credited to Ken Kutaragi and his sponsor Norio Ohga, the man who succeeded Morita.

I have no doubt at all that Akio Morita was central to the building of Sony.  But I think its decline stems from a lot more than just his departure.

In a similar vein, I am not at all persuaded that the success of Apple under Steve Jobs can be credited entirely to his presence.  I worked there for almost all the time he was gone, and Apple without Steve had a lot of strengths -- a strong engineering team, a strong product management culture, great industrial designers and artists and marketing gurus, and a beloved brand with fanatical users.  What the company didn't have, I think, was leadership capable of making all those strengths mesh.  Some of Apple's work was wonderful (the Macintosh II and the PowerBook computers come to mind), and some of it was completely forgettable.  Management was not able to get the company consistently united around a single set of long-term goals.  Instead the company lurched from initiative to initiative, some of them pushed by outside consultants, many underfunded or contradictory.  Apple's culture of passive resistance, created in part by Steve Jobs himself during his first time at the company, made the problems worse.

What Jobs brought to Apple when he returned, more than anything else, was focus.  He committed Apple to a relatively narrow set of initiatives, and made sure everyone in the company got behind them.  That let Apple's existing strengths shine through to the market.  Jobs was able to rescue Apple because it was only partially broken.

Forrester's article depicts Apple under Jobs as a company of followers who waited to be given their marching orders from on high.  That theory sounds reasonable if you don't know anyone who works at Apple, but I do.  The folks I know there are team players, but by no means are they passive followers.  I think the real risk is not that Apple without Jobs will drift, but that it may revert to its old bad habits.  Will the company's management team continue to work together, or will it fall into passive resistance?  Can Tim Cook enforce discipline without alienating the big talents (and big egos) scattered throughout the company?  Do the managers themselves recognize the need to cooperate in order to keep Apple on top?

Forrester can't know the answer to that question.  Neither do I.  Yes, at some point Apple will decline; nothing lasts forever.  But unless somebody develops the ability to read minds, we can't predict when Apple will come apart.  And in the tech industry, if you don't know when, you don't know anything.

=====

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7 comments:

Jose said...

I agree on that particular Forrester research prediction being too simple.

About "the success of Apple under Steve Jobs can be credited entirely to his presence."

I think this is valid for ANY company in the world. There is always amazing people behind any leader success, but there is also amazing people in companies that have weak leadership.

Here in Spain with last socialist gobertment we had a 30 something health minister that had no University degree, no experience, no recognition, no anything.

Then you have doctors and nurses(here doctors are not rich like in USA) that require enormous preparation working for this minister.

When the head is wrong the body goes down.

Zara is much more than Amancio Ortega, but without Amancio Ortega Zara would never had been what it is, even with the amazing people they have.

Everybody could say the same of companies like MS or Nokia. Everybody says that they have fantastic researchers and people but it does not show at the end.

"Dios, que buen vasallo, si tuviera buen señor!" is a famous Cid phrase(1000 years ago).(God how good servant if only he had good overlord).

dang1 said...

Apple was in serious trouble in 1990's because the Mac lost to Windows. Apple might be making a big splash in this, the start of mass smartphone adoption, but the iPhone losing marketshare to Android is eerilly similar to the Mac losing to Windows. This whole Android vs Apple cash-cow iPhone, just smells so much like Windows vs Mac. That ended pretty bad for Apple.

Walt French said...

@dang1, I think that similarly to the genii at Forrester, you're overly in thrall of a model that is not connected to facts. In the US, iPhones recently handily out-sold the competition, now that they're available thru almost all the carriers. Worldwide, Apple does quite well where it has distribution channels.

As Michael says, none of us given the privilege of knowing the future with certainty. But one way to fail spectacularly is to presume a simplistic model, based on a single data point. Michael decimated the Forrester model, and we only have to note that you're expecting Apple to repeat the mistakes that they made after firing Jobs, mistakes that he unsurprisingly trashed after his return.

Apple is as different as night and day from the company that lost its focus and milked its cash cow. Today's Apple is all about incredible adoption rates— more sales of iPads in 2 years than in the Mac's first 24 years.

I'm surprised that you tried to fit such an irrelevant model to the 2012 Apple, both right after Mace's showing how such models are deceptive and after 5 years of Apple's obvious discipline.

dang1 said...

4th Quarter 2011 US smartphone users: Android 46.3%, Apple 30%. 4th Quarter 2011 US smartphone sales: Android 51.7%, Apple 37%. 4th Quarter 2011 World-wide smartphone sales: Android 50.9%, Apple 23.9%. 1st Quarter 2012 smartphones: 44 million Samsung, 35 million iPhones.

TDC_123 said...

From the article I see that for a company to continually succeed it needs 'focus' which seems to be taken care of by the leader (CEO). Now Steve Jobs seemed to be a person who was always of wary entering the enterprise market which I remember from an interview, and recently Tim Cook has mentioned (http://www.engadget.com/2012/04/24/tim-cook-apple-focusing-more-on-ipad-for-enterprise/) that Apple would shift some of its focus to enterprise. Do you see these as sign not for Apple to fail but as a sign that a company which is in the process of losing focus of its core market 'the end consumer'. Whether it will lead to it's downfall who knows ?

Danny said...

Blloomberg...2007...Apple iphome will fail:


http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aRelVKWbMAv0

Prediction is worthless!

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