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Apple: Beyond Steve Jobs

Posted: 11 Oct 2011 ?? ?Print Version ?Bookmark and Share

Keywords:Steve Jobs? Apple CEO? iPhone 4S?

Goodbye, Steve Jobs. The co-founder, chairman, and former CEO of Apple Inc. and one of the technology world's most innovative minds died Wednesday, October 5, 2011. He was 56. Jobs will be sorely missed by his family, colleagues, friends, and even foes. Jobs came, conquered, and left a lasting legacy. We mourn his passing but, just as equally, celebrate the life he lived and the impact he has had on the electronics industry.

Now the company he built and rescued must go on without him. Apple was on the verge of collapsing when Jobs returned to the company more than 10 years ago, but by the time of his passing, it had become hugely profitable!the world's highest-valued company by market capitalization, incredibly feared by competitors and deliriously loved by shareholders and fans. The Jobs mystique played a part, even though analysts continue to discount this, arguing (with merit) that Apple was more than one individual, and that the late chairman was a great motivator who drove his team to excellence, rather than the one solely responsible for its success.

That's true, but it represents only half the story. In Jobs, Apple had an unparalleled marketing engine. The huge success Apple had following his return only helped to elevate him to a select group of individuals who became so closely identified with their companies that the two identities!corporate and personal!fused into one. Jobs alone was worth billions in marketing value and goodwill. So, as we mourn his passing, we must also look more closely at what Apple is without Jobs. Some analysts have said it will remain highly valued even without Jobs, but I doubt this, and recent events indicate I might be right.

Jobs had been sick for a while. But even when he handed over the CEO position to to Timothy Cook on August 24, the Apple cofounder was named chairman of the board of directors, a position that previously didn't exist at Apple. Jobs' death less than two months later indicates he must have been very sick at the time, so why did he cling to Apple, and why did the board appoint such a sick person to this important position, knowing he was near death? The answer lies in the Jobs aura. The company probably wanted to phase out his involvement gradually, so as not to start a stockholder panic.

In the next few weeks!after leaving enough time to mourn Jobs!analysts will start asking the serious questions some of us have been raising recently. I expect valuations and price targets for Apple's stock to come under pressure. There will also be a closer assessment of the company's offerings, its overall strategy, and its relationship with telecoms.

How long will Apple be on top?
Apple's iPhone line has pushed the company to the top of the smartphone market. However, the recently launched iPhone 4S proves smartphones are no longer about big breakthroughs but in taking small steps forward. Read the article here.

Let me set the stage. Apple, despite its giddy success, is in a challenging, commodity business. The company sells PCs, digital music players, phones, and tablet PCs!all commodity products susceptible to severe price erosion. The difference between Apple and the competition is that it does what it does much better, and it sells not just a product, but an experience, leaving the user willing to pay a premium for the extras, the user interface, the Apple ecosystem, and the "coolness" of the product.

But does that mean Apple is immune to the commoditization of its market? It is as exposed. Apple's strategy is to stay several steps ahead of the price erosion, and the company deserves credit for doing this. However, recent cuts in tablet prices by rivals like Hewlett-Packard Co. and Research In Motion Ltd, and the unveiling of a set of cheaper tablets from Inc. tell us a sea change is coming. The market is headed for a price war that not even Apple can fully deflect.

The recently launched Apple iPhone 4S didn't quite wow the market, for instance, because it lacked "killer" features. Many of the updates were already in competing products. Rick Merritt captured the main question on many people's minds in a recent EE Times article, "Click here to find out more!

Apple leads smartphone wars... for how long?"

Apple's management will be asked similar questions in the future, this time with the intense ferocity analysts did not display while Jobs was alive.

- Bolaji Ojo

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