Apple co-founder Steve Jobs departed as CEO on August 24, 2011, 10 years ago today, putting the world’s freshly minted most valuable brand in the hands of his successor Tim Cook. Jobs died just six weeks later. Jobs is recognized as the innovative CEO and marketer behind the Mac, iPhone, iPad, iPod, iTunes, and the App Store, so Cook had large shoes to fill.
What has Tim Cook built in the last ten years?
THE MOST VALUABLE AND PROFITABLE COMPANY IN THE WORLD
The apple dwarfs oil in size.
A company that effectively pumps barrels of cash out of the earth today makes more money than one that puts a web of complicated components into smart computing gadgets. And it’s because Tim Cook painstakingly created the overseas supply chains to make it happen, contracting manufacturers like Foxconn, which employs hundreds of thousands of Chinese workers for Apple’s production lines, and delivering a remarkably consistent profit margin for years.
On the back of Tim Cook’s efforts as COO and interim CEO, Apple momentarily passed Exxon to become the world’s most valuable publicly traded business in August 2011, shortly before Jobs stepped down. Even when Saudi Arabia’s state-owned oil corporation, Saudi Aramco, was opened up for trade in 2019, it didn’t last long: Apple surpassed it in July on its way to a $2 trillion market cap, and Apple is currently approaching $2.5 trillion. It also makes more money than Saudi Aramco.
Tim Cook has built Apple into a behemoth by any criterion imaginable over the last decade. This holiday season, revenues hit a new high of $111 billion, quadrupling what they were in the same quarter of 2011. Profits more than quadrupled from $6 billion in the first quarter of 2011 to $28.8 billion in the first quarter of 2021. Apple now has about $200 billion in cash, up from $76 billion in 2011, and its workforce has grown to 147,000 full-time employees, up from 60,400 the year Jobs stepped down.
Apple now produces an average of $10,000 every second as of June 2021, with $3,600 of that being pure profit. When did you first start reading this story? By the time you finish reading this phrase, Apple is certain to have made half a million dollars.
All of these figures show how Cook’s Apple consistently churned out premium products that customers wanted, enhancing them year after year in a way that Jobs’ Apple never did. Apple sold more iPhones every year between 2013 and 2018 than it did during Jobs’ five years at the helm.
For some, the cash signs are confirmation enough that Cook has been a huge success. Without dividends, a $1,000 investment in Apple stock the week Steve Jobs stepped down would be worth over $11,000 today.
However, judging Apple only on the basis of its financial performance is only half the picture. If you were thinking Cook would be a product visionary in the vein of Steve Jobs, you’ve undoubtedly been disappointed.
HARDWARE SWINGS
Tim Cook’s Apple has yet to deliver a really game-changing hardware device — nothing on the size of the iPhone, iPad, or Mac, as renowned tech journalist Walt Mossberg wrote for us two years ago. Under Tim Cook, the most significant new Apple goods are either iPhone accessories like the Apple Watch and AirPods, or products that his company delivered because customers requested them, such as larger-screen iPhones. “Steve was certain that huge phones aren’t something we’re going to do,” says Michael Gartenberg, a tech analyst and former Apple marketing director who recalls the conversation around the iPhone 6 Plus introduction in 2014.“We’re going to do it because Tim says people want it and we have the capability to do it.”
Cook’s Apple spent years focusing on the iPad at the expense of the Mac, whether chasing Steve Jobs’ vision of a post-PC world or tackling it on his own terms, only to discover it was alienating some of its most crucial fans: the Apple developers it relied on to create iPhone and iPad apps.
(It’s especially outrageous given that the 2013 Mac Pro and 2016 MacBook Pro were intended to be Apple’s response to the notion that it had abandoned Mac power users.)
While Google and others continue to struggle to compete, the Apple Watch has become a hit product in a single category. However, part of the Apple Watch’s success is due to the fact that expectations diminish with time. It was expressly launched as a product breakthrough on par with the Mac, iPod, and iPhone when it was announced in late 2014 as Cook’s first large new product, with its digital crown promoted as “Apple’s most groundbreaking navigation tool since the iPod Click Wheel and iPhone Multi-Touch.” The argument was that it might alter your life by improving your health, and that it was also a high-end product, with an 18-karat gold Apple Watch Edition starting at $10,000.
Before ultimately finding its footing with the Apple Watch Series 3 in 2017, Apple had to rebuild the entire Watch interface and abandon the ultra-luxury variants. Aside from the occasional anecdotal stories of people whose watches spotted a fall or a heart rate increase in time to save their lives, there isn’t much evidence it’s benefiting people’s health.
Apple’s AirPods, the company’s second major wearable product under Cook, have also been a huge success. AirPods, on the other hand, are emblematic of the entire Cook era, in which an apparently obvious notion, accomplished at scale and intimately coupled to the iPhone, becomes not only a commercial but also a cultural success. “Tim Cook’s genius has been that process, that ongoing refinement of Apple,” Gartenberg adds, noting that Cook’s Apple also accomplished the seemingly impossible by switching the Mac away from Intel CPUs almost overnight.
While it’s too early to tell, the M1 chip could be one of Cook’s most significant moves: the company’s relentless efforts to improve its Arm-based iPhone processors year after year were channeled into a new M1 laptop chip that blew away the skeptics, upending our entire concept of laptop performance. Jobs may have purchased P.A. Semi in 2008 to minimize Apple’s reliance on partners to power the iPhone, but by 2011, Apple had yet to introduce its own CPU cores, much less its own graphics, in an Apple A-series chip. Cook’s Apple made it happen, and Cook celebrated by putting the new M1 chip in the iPad in April.
Still, both the AirPods and the Watch are essentially iPhone accessories, not full computing platforms: standalone Watch apps have not become a burgeoning business. Cook’s major promises have mainly fallen through: he talked about Apple’s TV initiatives for a year after Jobs’ death, only to completely relaunch the Apple TV Plus streaming service a year later. Apple’s greatest gift to the world, he’s stated, will be in health, with the Watch and the Peloton-like Fitness Plus platform serving as minor starts.
THE SERVICES TURN
Analysts would be more concerned if Tim Cook stepped away from Apple tomorrow than if a product visionary would succeed him. Instead, they would be wondering whether the next CEO will continue to turn Apple into a services firm.
Cook and Apple CFO Luca Maestri alerted financial analysts in the second quarter of 2016 to a surprising reality the business had been quietly discussing for well over a year: Apple was also becoming a services company. The App Store and the company’s other paid subscriptions were growing at a faster rate quarter over quarter and year over year, bringing in $4.8 billion in the first quarter of 2015. Apple declared its services division was the size of a Fortune 100 firm in 2017 after bringing in over $7 billion every quarter for three fiscal quarters in a row.Apple’s services revenue hit a new high of $17.5 billion last quarter, about half the size of the iPhone and more than double any other hardware category.
The App Store alone had already overtaken the company’s entire Mac and iPad businesses in 2016, as emails from the Epic v. Apple trial (#10) revealed, with just the iPhone towering above it. Movies, music, books, magazines, paid iCloud storage plans, AppleCare, Apple Pay, Apple Music, Apple Arcade, Apple TV Plus, Apple News Plus, and Apple Fitness Plus are just a few of the services that bring in billions of dollars.
Apple stopped talking about Apple Music’s paid members when it reached 60 million in June 2019, and the firm still effectively gives away Apple TV Plus for free, so it’s unclear which of these make a mark outside of the App Store.
But Cook’s eyes are set on more than just content: with Apple Pay, the Apple Card, Apple Cash, and the soon-to-be-released Apple Pay Later, the business appears to be pushing into banking as well, securing a piece of your transactions while also enslaving you to its software environment.
While some of Apple’s service upsells can be bothersome, Cook has been a champion for customer privacy, calling it a “basic human right” and famously challenging the FBI over requests that, privacy advocates agreed, could lead to governments having backdoors into users’ phones. It’s a rare tech behemoth that doesn’t make money off of your data.
Some of Apple’s service offerings date back to Steve Jobs’ time. He named 2011 the “Year of the Cloud” in an internal strategy presentation a year before his death, and said Apple should “connect all of our products together, so we can further lock customers into our ecosystem.” However, the majority of Apple’s current services were introduced during Tim Cook’s tenure, and Apple Pay in particular should be remembered as one of the company’s game-changing moves — while other phone manufacturers have a direct equivalent, it was Cook’s Apple that pioneered instant, seamless, touchless payments in large parts of the world.
GROWING PAINS
The question now is whether Apple can maintain its all-encompassing growth strategy, as cracks are beginning to appear after a decade.
Consumers, competitors, and lawmakers all over the world are coming to view Apple as just another big corporation attempting to make money in any way it can — and as the firm has grown to be responsible for a billion devices and 2 million apps, its reputation is taking a beating.
Apple has never apologized as much as it has in recent years, whether it’s for surreptitiously having human contractors listen to Siri recordings or stepping away from pushing a developer to include in-app sales.
Even as Tim Cook continues to promote Apple as a privacy firm where what happens on your phone stays on your phone, the corporation is coping with the reality of child pornography and perhaps making troubling privacy concessions as a result.
Despite Tim Cook’s sworn testimony, Apple is embroiled in lawsuits and regulatory scrutiny around the world alleging the App Store is a monopoly. While it’s unclear whether judges will agree, Apple’s internal emails do a pretty good job of showing how the company values lock-in and favors some developers over others.
Even as it tries to maintain its image as a technological leader who puts people first, Apple has enlisted the help of an army of lobbyists in California, Arizona, North Dakota, Louisiana, and Georgia, where the company reportedly threatened to pull its investment from a historically Black college if a challenge to its App Store was successful. The firm has requested that the Biden administration exert pressure on the South Korean government to refrain from passing similar legislation. Even as Apple promotes its App Store as a safe place to shop, it’s becoming clear that its 500 human reviewers don’t have enough time to spot the most egregious scams that have bilked consumers out of millions of dollars, despite emails indicating Apple has been aware of the issue for years.
Cook’s crucial supplier lines have also come under pressure, with claims that Apple ignored labor law infractions in China.
Although Apple prides itself on its secrecy culture, the firm is currently experiencing a wave of employee activism that might irrevocably alter that culture in ways beyond Cook’s control – though the company may be trying to control it unlawfully nevertheless.
Even though Tim Cook has long promoted diversity and deserves credit for being the first openly gay CEO of a Fortune 500 firm, Apple’s leadership page is still mostly white.
It’s possible that Tim Cook will not be the person to tackle these issues. He’s been with the company for 23 years, and he just told Kara Swisher that he’s not sure he’ll be there in another decade. However, few of them were issues during the Steve Jobs period; instead, many are a result of the Apple that Tim Cook created.
