To know if Apple is doomed or not

‘Apple is doomed’ is a recurring mantra of tech / business analysts. Should we buy this omen in the perspective of the WWDC 2016 keynote?

To wrap up 2015 fiscal year, Tim COOK tried to put in perspective the growth of his company:

To put that into some context, our growth in one year was greater than the full year revenue of almost 90% of the companies in the Fortune 500.

For the market and business analysts at wide, this is utterly frightening, and there is this on-going narrative of “Apple is doomed”. I don’t really believe that this narrative of Apple is doomed, is about the hubris of an Icarus getting his wings burnt. It’s more about a typical cognitive bias: the more successes you have, the more the probability of a failure rises. Toss a coin a hundred times and get ninety-nine heads, you will bet you­r house that the next toss will be tail. Well, you shouldn’t. The hundredth toss is not connected to the previous ones by karma, sense of guilt, or any gravitational balance. You still have a chance out of two to get heads.

But you know all that.

In regard to Apple, to be fair, there is a link from quarter to quarter, or from fiscal year to fiscal year.  There is an inertia to any business. And the bigger it is, the bigger the inertia builds up. With such tremendous success, if we were rational beings, we would probably declare that Apple’s momentum is a positive one. The chances that the company would fall abruptly is seriously diminished by all the successes it had. Let’s also not forget the epic amount of cash available to Apple if there was any need to absorb a vicious turn of event in the market. After all, cash available is one of the main reasons Microsoft or Sony are not dead yet, after failing at mobile repeatedly. It would be unfair to think that Apple would have below-average chances of using this cash strategically if needs be.

But you see, this is not convincing. Many analysts even invoke this positive momentum as something that is masking the demise of Apple as an innovating company. The narrative would change slightly and explains that COOK is surfing on JOB’s past successes, which will show soon enough. Then again, JOB passing away in October 2011 should have lead to drop this theory three or four years later.

I just say that all this is not very rational.

The thing is: no one really understands Apple because — besides what is strictly required by US laws — they are not talking about the stock market. Without a ten-year strategic plan to dissect, public R&D roadmap, a concept car of sorts shown to the press, the madness is fueled to extremes. Even after a product has been on the market for more than a year we still don’t really understand what’s at play. Frustration is a bad counsellor for stock markets.

As far as I’m concerned I’m really bad at short-term analysis. If you would ask me, I would just safely bet that Apple would make the same progression for the next quarter, as the one from last quarter. That’s a trap, though, because short-term results can be deceiving. A sudden crisis in a part of the world, extremely bad weather in China for a month or two, Trump being elected… Many things could force a sharp drop in the company’s results from quarter to quarter, while overall yearly results would end up stable or improved.

Now, what is really interesting is long-term.

Smoothing out the bumps on the road, how would you predict where Apple will be in three to five years from now? As someone dealing with innovation, my answer is straightforward: check the company culture. That’s it. No financial, brand, market or PESTEL analysis. Just find a way to get the pulse of Apple’s internal culture. That may prove difficult, but not so much.

The recent WWDC keynote in that regard was astounding. Not ALL the keynote, but these five minutes certainly were:

You could think that this is some sort of Benetton-style reverse color-washing of a company led by middle-aged white guys. I would too. But there is there an opening of sorts, the possibility that Apple is shifting gradually away from his geeky gone rich management to something else. Something that was best described in a recent article from Katie NOTOPOULOS as breaking the “Apple Man stereotype” and starting to design for women.

While it’s way too early to really tell how Bozoma SAINT JOHN will weigh in the global Apple DNA, there are very few things that Apple is not doing intently. This may just be a first step that Apple is taking to explain, or rather demonstrate that there’s a culture at play. And if anything, Apple is a corporation that has always cannibalized its own business, its own ways, to push its evolution and its growth. If you get that first signal, now it will be a matter of spotting other weak signals coming together from this direction. That would be the rise of Apple as a company still very US-centric, but also building real market-intimacy and getting closer to a more diverse world.

The term “customer intimacy” is not innocent here.

If you look at this quick montage of key announcements from the very same WWDC, you will see how Apple seems actually to defocus gradually from hardware, and refocus gradually to be the glue that links our life.

This means Apple as a Service:

[EDIT 1] Here was a video with a montage of all 3rd parties interactions demonstrated by Apple during the keynote, and all new interactions within the iOS ecosystem. Apple asked the video to be removed for copyright infringement, rightly so. So the video is no more. Instead, here is a simplest snippet on how Apple Pay is going to get integrated to websites:

[EDIT 2] After I’ve written this article, another stone in the garden of Apple as a Service appeared in the TV business… You’ll just have to follow the next bread crumbs in the following months:

If I’m right here and this is the culture refocus at play, you could recalibrate how you will form an opinion on the “Apple is doomed” narrative, and not only assess the quality of the screen or the processor speed of a given device. In such scenario, we should be spotting the rise of a new generation of key high-profile people personalities like Bozoma SAINT JOHN. Not because they are black or a woman, but because they see the world differently than the regular “Apple Man”. Because they will help nuance and adjust what is Apple to the full diversity of delivering services, that just oh slightly different in Italy or in Spain; in Beijing or in Honk-Kong. If all this makes sense, I’d like to personally bet on the next talent we’ll see appearing in the light: a Chinese woman managing a future Apple energy division…

But this is Apple.

Where are the Bozomas in your organization? Are you investing in your long-term culture evolution? Or are you just randomly investing in half a dozen startup a year to look good with an incubation program? Are you doomed or not?

Author: Philippe

Philippe has been training 200-300 startups a year since 2007, consulted for dozens of multinationals on rupture innovation or corporate incubation, and was directly involved in more than 150 startups building their market fit and scaling up their business. He also teaches business model innovation in key MBA programs whether they are in Paris or Shanghai. And since 2017, Philippe is now living in Amsterdam, one of the best European business hub around.