Editor's note: This story was co-written by CNET staffers Donald Bell, Greg Sandoval, Josh Lowensohn, Kent German, and Scott Stein.
Most Apple watchers figure very little will change at Steve Jobs' company over the next few years. There's plenty of product plans in the works and his executive team--with a few exceptions--looks set for the next few years.
The real question is what happens after that, when the plans that will be made without Jobs in Apple's corner office begin to bear fruit, or languish.
The company, which has grown to become the second-most valuable in the world following Jobs' return in 1996, has made a big part of its business the promise of the future. New products like the iPod, iPhone, and iPad have set Apple apart from being just another Silicon Valley hardware and software maker and into a taste maker.
Much of that taste has been attributed to Jobs, whose attention to detail and focus on secrecy has been the stuff of legend. A Jobs anecdote shared by Google's Vic Gundotra yesterday noted that Jobs once called him on a Sunday morning to discuss the importance of fixing the gradient in a single letter of Google's logo so that it would appear just right on the iPhone's screen. Will Apple still have that obsessive attention to detail without Jobs running the show?
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The first place to look is, a seasoned Apple veteran who served as Jobs' day-to-day replacement when Jobs went on medical leaves in 2004, 2009, and in January of this year.
Cook's been Apple's chief operating officer for seven years and a fixture on financial calls, shareholders meetings, and public events. But one big difference between him and Jobs is that he's not the showman. He's not the one whose presentation style people have written books about, and that has people running nearly on top of each other into auditoriums to see pitch. Instead, Cook's been a no-nonsense, methodical speaker whose presence at Apple events typically involves taking the stage to provide updates on the company's business.
But behind the scenes, Cook has been instrumental in changing how Apple makes its products, including the companies it gets parts from, and who puts it all together. That, along with major strategic decision making, has vaulted the company into becoming hugely profitable and increasingly competitive. No doubt that same strategy will continue under Cook's guidance, though one of the big questions now is who will take Cook's old spot and whether that person comes from inside the company or from elsewhere.
As noted in a story yesterday, Apple's been ready for this change, due in no small part to Jobs' first medical leave. The company has a succession plan in place, which it does not share with public due to what it says would give competitors a potential strategic advantage. Cook's placement at the top of the company is a piece of that plan.
Cook is joined by Scott Forstall, the SVP of iOS software, as well as Jonathan Ive, the SVP of industrial design. In an Apple of the future without Jobs at the helm, Forstall and Ive's roles will be under a microscope. Jobs is credited with pulling Ives out from designing prototypes of products that were going nowhere and bringing him into the inner circle of the company's design efforts. The two men are also said to have a mutual admiration and taste for design that's driven the company to create some of its most iconic products.
The question now is how Apple's design ideology will continue to evolve. Jobs will still be chairman of Apple's board of directors and involved in strategic decisions, but will that include regularly scheduled looks and inputs at each stage of new product design too? There's also the question of how much longer Ive intends to stay on in that role, or if he too is being groomed for a higher position within the company. Rumors swirled earlier this year that Ive was contemplating a departure from Apple to relocate to the U.K. following the completion of a three-year stock deal, yet Ive is still here and still in a place to shape the company's design ethos.
Then there's Forstall, who came to Apple from Jobs' NeXT venture. Forstall's software roots run deep, helping to craft the OS X operating system, and later iOS, the software that powers the iPhone, iPad, iPod Touch, Apple TV, and likely products that have not yet been announced. With iOS products already making up more than half of the company's latest quarterly revenues, how that software evolves and pushes Apple's hardware becomes increasingly important.
One other executive wild card is who Apple chooses to replace the departing Ron Johnson, the company's retail chief who is credited for successfully turning Apple's retail efforts into a 300-plus store empire that's become one of the most profitable per square foot. Earlier this year, Johnson announced that he was departing to become J.C. Penney's CEO, and Apple has not yet said who his successor will be. Apple's retail effort has become one of its big differentiations from competitors, and the person who heads up that effort has a hand in shaping where it goes.
The legacy of the iPod
At the heart of it all is Apple's product line up, and in the immediate future one product whose future is uncertain, is the iPod.
The foundation of Apple's present-day domination of both mobile computing and media rests entirely on the iPod. Its debut in 2001 was an uncharacteristic move for a name-brand computer manufacturer (then known as "Apple Computer"). But as the iPod transitioned from a high-priced novelty into a global cultural phenomenon, it changed the perception of Apple forever.
With the iPod came iTunes, and with iTunes came the end of an entire music retail industry built around physical media.
For many people, the iPod also represents the first Apple product they ever owned. As a hip and relatively affordable piece of technology, the iPod was Apple's foothold into the mass market. Through the iPod's wild popularity Apple built the momentum and brand awareness that made products like the iPhone possible.
Today, while Apple continues to sell and support an entire line of iPods (iPod Touch, iPod Nano, iPod Classic, and iPod Shuffle), it's clear that the glory days of the dedicated media player are behind us. Sales of the iPod have been on a downward trend, and Apple's most popular products--its iPhone and iPad--have distilled the iPod's functions into a single "iPod" app.
Since the arrival of the iPhone, people have speculated that Apple would one day discontinue manufacturing iPods. If that day comes, it will likely be under Cook's leadership. The iPod is no longer a major source of revenue when compared with the iPhone or iPad. That said, the iPod brand is still extremely meaningful. Also, the iPod Touch is one three Apple devices running iOS that plays an important in expanding Apple's installation base of active iOS users in their fight against rivals such as Android.
The phone of the future
Just as the iPod did much to advance the MP3 player, the iPhone had a huge role in taking the smartphone mainstream. It wasn't the first smartphone, to be sure, but it did take the technology out of the hands of corporate worker bees and put it in the hands of everyone else. Just more than four years after the first iPhone went on sale, we now have four models to contemplate, with one more on the way in the next couple of months.
In the immediate future, at least, the iPhone family will continue its steady march. Whether it is a fully revamped iPhone 5, or a minimally tweaked iPhone 4S, the design and features of the next handset are already set. And at this point, it may be already be in production. Yes, it's now unlikely that Jobs will do the official unveiling, but other execs have stood in for Jobs at media events before. If it adds hot news feature like 4G and makes it to new carriers like Sprint and T-Mobile, it will be a winner. And even if it's just an incremental upgrade, the appeal of the iPhone won't wane anytime soon.
How the iPhone develops during the next few years, however, will be interesting to watch. Apple's iPhone roadmap through the next couple of iterations is no doubt set. Absolutely, we'll see tweaks and changes, but the fundamentals of the design will likely remain the same for some time to come. And even though Jobs may not have a hand in shaping its evolution, his direction in creating the first iPhone, which continues to serve as the device family's foundation, is far more important.
The iPhone's future will depend on Apple's ability to stick to the characteristics that has made the device a success. Keeping its focus on attractive design and a clean user experience will be key. What's more, the company will have to respond to innovation in cellular technology by steadily adding new features through hardware or through changes to iOS. But above all, the company will have to retain its uncanny ability to take that technology and make it different and (sometimes) better. Finally, Apple will need to spread the iPhone's reach to more carriers in the United States and around the world. Verizon Wireless was a start, but more should come. Perhaps we could even see it land at up-and-coming prepaid operators like MetroPCS.
Of course, Apple will face strong competition for other smartphone platforms. Though WebOS is gone, Android will continue its steady drive--Google's acquisition of Motorola Mobility now adds an interesting element to that story--and Nokia and Windows Phone 7 could very well could up something cool. Responding to those challenges will take some effort, but Apple has always excelled at giving its products a unique and "must-have" aura. And even with Jobs stepping down as CEO, that likely will continue.
From iPhone to iPad
That brings us to the iPad, arguably Apple's most unique contribution to the tech world. Unlike the MP3 player, the personal computer, or the smartphone, the tablet had no clear precedent of success. We're still scratching our heads figuring out how Apple was able to take the tablet concept off the technological scrap heap and shape it into one of the most successful and influential products in recent history.
That no one has been able to create a popular rival to the iPad only adds to our confusion. It could turn out that the iPad's popularity is bolstered more by Jobs' presence than Apple would like to admit. When Jobs presented the first iPad on stage by sitting down in an comfy chair and convincing us of its place between smartphones and laptops, it was easy to take a leap of faith--we had done it before. He was the magician who had pulled the iPod and the iPhone from his hat, and he was coming back with yet another trick.
But as Apple's newest product, the iPad is also the most susceptible to weakening under Cook's reign. Competitors are racing to match the iPad's capabilities and price, and the stakes are high. As PC laptop sales are flagging, there's reason to believe that the tablet represents the future of the entire personal computer industry. If so, competitors will continue to work hard to diminish the iPad's success or die trying.
The cornerstone of the iPad's success is the cornerstone of iOS in general: apps. Short of Google, few rivals have been able to match the app selection, quality, and pace of development that Apple has been able to achieve by work closely with their developer community, and rewarding developers with a healthy cut of app profits. Should Cook loose this grip on the best and brightest app developers and top-tier mobile games, the iPad could loose some of its "magic" and consumers could be more willing to test out the competition.
Who knows how much of Apple's app developer loyalty can be credited to Jobs' charismatic leadership, but Apple would do well to show this community as much love as they can during this time of transition. Apple's profits and their products have become inextricably tied to apps, and a developer exodus could be their undoing.
Macs at the core
Long before the the iPod, iPhone and iPad, there was the Mac. The Macintosh represents the core of Apple's brand--literally.
While iOS has taken the spotlight in recent years, Apple was built on the Mac, and Mac sales have grown recently. Over the past few years, Apple's line of Macs has shifted to designs with ever-more-integrated construction, favoring sleekness over customization. The MacBook Air is the pinnacle of that aesthetic: long-life integrated battery, with non-replaceable RAM.
Optical drives are already disappearing on Macs--see the new Mac Mini and MacBook Air--and while it would be aggravating, expect them to continue to disappear as Apple's Mac App Store and downloadable software services take precedence. If desktop iMacs end up losing their optical drives altogether, expect an even thinner, lighter design to emerge as a result.
Similarly, expect a trajectory where Mac OS X inevitably fuses with iOS at some point, in spirit in or in actuality. Apple's latest OS X update, Lion, already borrows heavily from iOS visual design and multi-touch vocabulary. Apple's most recognizable forward-looking computing products are now the iPhone and iPad, and Macs will likely be aggressively nudged to join them in design spirit--though whether they'll ever make the jump to full touch screen remains to be seen, though Jobs noted just last year that the company had once tried it and said that the results were "economically terrible."
As Jobs put it,. They're utilitarian, and people expect more flexibility out of them than devices like the iPhone and iPad. No matter what happens, Macs aren't likely to give up that aspect. Macs may increasingly have interfaces designed to easily appeal to iOS users--especially young ones--but, for the next few years, expect the back end of the software to remain deep and customizable.
Slimmer, smaller, and maybe even cheaper: this looks like where Macs are destined to go next. And, ironically, the rest of the PC world is following in lock step--Intel's "Ultrabook" initiative is all about bringing the look and feel of the Mac hardware to the Windows world.
Apple in the living room
Not to be left out of the hardware talk is Apple's nascent steps into the living room with the Apple TV. It's a funny sort of product: considered a "hobby" by Apple, it's low priced enough to be a stocking stuffer but limited enough in what it does to still avoid being a must-have purchase for many.
That seems destined to change. The Apple TV now acts as a bridge for wireless video and audio thanks to AirPlay, which works with Macs, iPods, iPhones, and iPads. That wireless connectivity seems likely to be built into a next generation of products--monitors, TVs, or something similar--as well as being offered up via a small box.
The next step for Apple TV is to become a full-fledged unit for gaming and media services. Extending existing iOS apps to the Apple TV seems like a no-brainer--HBO Go, Hulu Plus, and others--as well as becoming a method of playing Nintendo Wii-like casual games on a big screen. And, the more that the iPhone and iPad can act as hyper-intelligent smart remotes to interact with that content, the more we're likely to see apps that take advantage of that dual-screen potential.
It seems logical, perhaps, that Apple might synthesize its existing monitors and the Apple TV technology to create a more flexible monitor that doubles as a TV and home entertainment device, maybe even with iOS installed on it: after all, TVs are increasingly offering built-in apps of their own. A true Apple TV could also act as a flexible home monitor for wireless computers.
Look for Apple to extend its iCloud model to the Apple TV, allowing users to stream their full collection of cloud-based purchases on an on-demand basis; this already works with TV shows, and movies will no doubt follow. Home entertainment still remains an unconquered territory outside of cable interests, with Google, Amazon, Netflix, and set-top box manufacturers offering a landscape full of patchwork content. Apple stands the most to gain by finding a clear product that synthesizes home entertainment before anyone else does and doing it in a way that's clear and packed with better content. That depends on licenses with Hollywood content, but Apple's done the same with publishers and the music industry; the Apple TV seems set to finally take a leap into a more pushed-to-the-forefront product.
Music and a future in the cloud
Besides shaping Apple's products and business strategies, music is one of the areas where Jobs has left the biggest imprint.
The iPod digital music player was one of pillars of the Apple CEO's success, certainly after returning to the company in 1996. Later, the iPod, in combination with Jobs' iTunes software and music store of the same name dismantled and rebuilt the music experience from the way consumers listen, buy, and manage their songs.
Apple used that strategy to become the No. 1 music retailer in the land, extending its influence throughout to videos and movies. The company built the kind of muscle to sometimes dictate terms to the powerful record labels. And there's no reason to believe any of that will change anytime soon now that Jobs hands the reins to Cook.
When Cook looks out over the digital music landscape, he will see a sector pretty much in Apple's control. The industry is supposedly shifting to the cloud. Music fans will no longer store and manage songs on PCs, but will allow companies to do this for them from their servers. Consumers, sometime in the near future, are expected to access their music from these third-party servers from Web-connected devices.
There are lots of new and large competitors, Google and Spotify among them. But Apple has developed its own version of this new distribution with the iCloud. Cook will also see iTunes executives who have been around for years. Apple's gadgets, especially the iPhone, are still the favored music players, and Apple's hold on music appears as secure as ever.
But what about the relationships that Jobs forged over a decade of dealing with top label honchos? Well, Jobs can still get on the phone with Sony Music Group chief Doug Morris, who once called Jobs the "smartest man in music." Before Sony, Morris was chairman and CEO at Universal Music Group for years.
Other than Morris though, most of the honchos at the labels are new. Jobs has watched as leaders of the top four record labels have come and gone. Edgar Bronfman Jr., Warner Music Group's former CEO, stepped down last week.
So what about Jobs' ideas, his attention to detail, his ability to know what consumers want before they do?
Those are the intangibles that Apple could miss the most. Jobs was the one who recognized that after Napster came along and digital piracy began to grow that the labels were vulnerable and he could all but dictate his own terms for a legal online service. It was Jobs who was inspired after seeing one of the first Walkman tape players to create the iPod. There were other digital music players out there, but it was Jobs who knew how to build and market one that consumers would flip over.
One more question: does Cook have the stature, the clout, and the credibility with consumers to call the label chiefs "greedy" and "technologically innocent" and when he writes an open letter calling for the music labels to strip their songs of copy protections, will public scorn rain down on them?
Jobs could get that done..
Therein lies some of the mystery about how the next few years shake out. Cook is not Jobs, but that doesn't mean Cook can't handily carry out plans Jobs set in motion years ago, as well as put into place plans of his own. And don't discount the fact that Jobs continues to stay on as chairman of Apple's board.
Again, what will continue to be of intense interest is what, if anything changes in the near-term under Cook's leadership. Will those changes be Cook's doing, or part of a plan Jobs and Apple put together years ago? And if hard decisions are made, where did they stem from in the first place?
That guessing game can be played the same was as trying to figure out what service or Apple will release next, which is to say not easily. Something that Jobs' scaled back role is unlikely to have changed.
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