Cook Replacement Rumors Smolder
Apr 22, 2013 12:03 PM PT
Steve Jobs left big shoes to fill, and rumors circulated this week that Apple CEO Tim Cook may not be living up to expectations. This comes as Apple's stock closed at a 52-week low last Friday.
Adding to the company's misery, Apple reportedly has earned the nickname "Poison Apple" with some Asian suppliers who are finding its high standards and low price expectations somewhat hard to meet. Some suppliers reportedly may reduce their reliance on the iPhone maker as competition increases from Samsung and other rivals.
"The fact is that the market for smartphones has become very commoditized," said Chris Silva, industry analyst at the Altimeter Group. "Apple is now trying to find their way in a market they no longer own."
Apple did not respond to our request for further details.
Not Up to the Jobs
Long before Steve Jobs died in 2011, questions abounded over who could fill his shoes -- and black turtleneck -- and guide the company he founded? The answer has always been most likely no one. Anyone who tried was inevitably going to be compared to Jobs.
Apple was in an enviable position at the top of the corporate heap, but that left it with nowhere to go but down. That's not an easy situation for any compay, and now that Apple has begun to slip, it's easy to peg its troubles on Cook.
"Apple was a company designed around a visionary guy with massive marketing -- people manipulation -- skills, said Rob Enderle, principal analyst at the Enderle Group.
"Cook is a logistics guy good at everything Jobs wasn't, but with no skills in Jobs' core areas," he pointed out.
"That is why Jobs kept him on board -- he was non-threatening," Enderle told MacNewsWorld. "But he has exactly the opposite skills needed to do the job, and Apple is suffering as a result. With the company in what appears to be a major slide approaching 50 percent of its one-time high, it would be unusual for the board not to make a change."
Time and Again
When Jobs died, the market was changing, and Cook has had to steer the company through uncertain terrain. When the iPod came out in 2001, it revolutionized the portable music player, but when the iPhone came out in 2007, it practically invented the touchscreen smartphone market.
Now with iOS and Android neck and neck for the top platform spot, and Windows Phone and BlackBerry 10 fighting for No. 3, Apple no longer owns the category.
"It was right place, right time. They introduced the iPhone, and this was a game-changing product," Silva told MacNewsWorld. "The iPhone, iPod and iPad all had a meteoric rise -- but look at the MacBook line. It has had plodding success compared to the offerings from Dell or HP."
For Apple to remain successful, it needs to recapture that buzz, and that could be hard when its products are more of the same with each new release. Yet this weakness could also be the company's strength going forward.
"They need to move where the excitement isn't always in the hardware, but in the services," Silva suggested. "What they need to do, and what they should do is focus on the software. That is the key to getting new uses to the iPhone while ensuring that existing customers stay loyal as well."
The more Apple stays the same, the more things change in these markets -- but the company's woes are likely magnified to some degree.
"The fact is that despite its plummeting share price, Apple remains enormously successful and profitable by virtually any measure," said Charles King, principal analyst at Pund-IT.
"Even in its reduced state, the company's market cap is $373 billion, and its annual earnings per share is $43.66," he noted.
"Compare that to Dell's $23.19 billion market cap and $1.55 EPS, or HP's $37.71 billion market cap and $3.50 EPS," King added.
Still, "the rocket rise of Apple's stock was also due in large part to the company's mythic indomitability," he acknowledged.
When Steve Jobs died, it took a body blow but Apple also has been buffeted by the continuing rise of Android and the corresponding success of Samsung and other companies that weren't cowed by the Apple myth, King told MacNewsWorld.
"Toss in the laggardly pace of development and the lack of transformational new products -- and despite its demonstrable success, the company appears to be in a tailspin," he added.
Action and Reaction
Given that Apple has in essence created new markets for devices that people didn't even know they needed, it is hard to see that the company is in anything close to bad shape -- but perception is everything.
"If the market acted and reacted logically, Apple and Cook would be in fine shape," said King. "That's not the case, however -- meaning that the company's board may be looking for an excuse to trip Cook onto the point of his sword and hire someone new.
"That might not be a bad thing -- a proactive, innovative new leader might be what it takes to kick-start Apple's product development," he observed. "But a poor leadership choice might be all it takes to turn Apple's seeming tailspin into an outright stall."
To guard against that possiblity, Apple might be wise to keep Cook while still finding a way to fill the void that Jobs' death left for the iconic brand.
"Cook isn't incompetent, [but] he isn't well matched to the CEO job," said Enderle. "The trick for the board is to find a way to replace what they lost with Jobs without losing Cook's contributions in the process."