In Apple’s most recent quarterly earnings call facts and figures were bandied about by analysts and Apple honchos in the way they typically are. In the wacky way these things go, Apple reported record sales and record profit. In the category of iPhone sales, Apple sold a record number of iPhones but it didn’t meet analyst projections. Consequently, Apple’s stock took a dive in after hours trading. It’s almost like saying that the winner of the Super Bowl isn’t the winner unless they beat the point spread. These financial reporting events bear a striking resemblance to the coverage of sporting events in other ways as well. The moments when a sports reporter asks a coach about his team’s game plan is a ritual that only yields stock answers with no meaning. The same ritual occurs with these quarterly financial events. Analysts ask inane questions. They get non-answers. Life goes on. But occasionally answers pop out that actually have some real meaning.
In response to a question about the future Apple CEO Tim Cook responded this way:
I would just say innovation is as deeply embedded in everybody here and there is still so much of the world that is full of very complex products et cetera. There is never a — we don’t have – we have zero issue coming up with things we want to do that we think we can disrupt in a major way. The challenge is always to focus and to the very few that deserves all of our energy, and we’ve always done that and we’re continuing to do that.
That answer popped out right before the call ended. Here’s why its telling. Apple has zero issues finding things it wants to do that they believe they can disrupt according to its coach. I sure hope that “challenge” isn’t consuming much of Cook’s time. I’d much rather he, and his team, focus on fixing the issues with their existing product lines rather than thinking about new gadget plays they want to run.
I understand that impulse though. Apple plays in a game where they better have something new and exciting every time they take the field. And if it isn’t something new and exciting enough, record sales and record profits don’t seem to matter to the expectation setters. But then the expectation setters probably aren’t focusing on the right things either. Sadly, life is a numbers game because that’s easy to measure and easy to report on. What’s behind the numbers really matter.
Recently I’ve been harping on the fact that the latest iteration of iOS and OSX don’t measure up to Apple’s past standards. Apple promises fixes, but it isn’t moving fast enough for some. There are real folks out there who pay attention to things like phones that keep crashing randomly, and in the case of iOS 7, often.
I have a family of relatives who proudly and excitedly jumped on the iPhone bandwagon this Christmas. Gosh, they were giddy about it. Everyone in the family got a new iPhone and they bought into a family plan with Verizon. (They all got iPhone 5s models, not the 5c model.) Guess what? Just before the cutoff for returning their phones they did so. Why? Each of the five of them were experiencing crashes on their shiny new iPhones and found that unacceptable.
Apple obviously invested countless hours and resources into simultaneously producing the iPhone 5s and the iPhone 5c. Cook also admitted yesterday that the bet on the 5c didn’t work out. Apple obviously thought the iPhone 5c would help its numbers grow. They did, but not enough to please the analysts, and poorly enough that Tim Cook chose to comment on it. In the football/sports analogy that would be like the head coach calling out a player or assistant coach in one of those sideline interviews. You know he’s getting cut the next day. I bet Cook would like to have that call back on going forward with the iPhone 5c.
The bottom line is that Apple has to play the game this way. As a team it has created an aura of innovation and has to work hard to maintain that while keeping momentum with current products. When it doesn’t win with a crushing margin of victory its considered by some to be as painful as a loss. When Apple doesn’t innovate it gets called boring. So resources get devoted to the next big thing instead of fixing the inevitable problems with the current big thing. When the big bet doesn’t pay out, Apple loses.
I can’t say that fixing the problems with its operating systems would have helped Apple sell more units in the last quarter. No one knows that. But it would certainly help potential new members of the fan base feel like they are cheering for the right team. Innovation may be “deeply embedded” in Apple’s culture, as it needs to be. But paying attention to the basics needs to be as well. I would offer that Apple’s “challenge” is to focus on both simultaneously and with equal passion and resources. Cook needs to get his team to focus on blocking and tackling at the same time as they are focusing on the next gadget play.