The pitfalls of creativity
One common complaint about Apple has been follow-through. I'm still waiting for an upgrade to my Geoport modem. Seems that Apple can come up great ideas, launch them and make a buzz, but somewhere along the way, it just sort of falls off the edge.
I think that's a fair assessment. I think the reason for it, though, is that in an organizational sense we have a bit of a short attention span. I have a tremendously creative workforce. There's a million ideas and a lot of ships get launched. The deselection process is not done as scientifically as it needs to be. Some things ought to be stopped or discontinued, even if there are a few people who like them. The difficulty is that we go far enough along to get people excited about it, and then it just sort of fizzles away. We're correcting that. That's something that's got to change. What I think we have to acknowledge, and what we have to tell everybody, is that we can't do it all. There are some technologies where we are just going to have to depend on our third-party developers, who do incredibly good work anyway. We've got to stop trying to reinvent every wheel.
For example, the Geoport modem is wonderful technology, but we may not have the resources to do that. We may leave that to the third-party developers.
You've reorganized and simplified the organization into four major categories. It didn't seem you've said much about marketing. Are you happy with Apple marketing?
No. There's a lot of things I'm not happy about in marketing, including one of them: I still think we have too many cooks in the kitchen. We need to get a more focused effort. You have to understand that in a company like Apple and in most high-tech companies, your strength is sometime your weakness. Our ability to be innovative, creative, and all that is great, but it also means that you have a thousand agendas going on in parallel but not necessarily aligned with each other. What I keep telling our employees is we need to find the middle ground between not being so darn organized that we're bureaucratic, but being a little more organized than having chaos, and I think we've been a little bit more toward the chaos end. What I want to do is move it a little bit more towards the center.
In some ways, I think of Apple as someone in the '50s who built a home on a titanium mine, because along comes a new technology and suddenly your desert land is valuable. Now you've got a deal with Sun for QuickTime and Netscape for OpenDoc, and you've got deals with clone makers. When will we see Apple get more revenues from licensing than from shipping boxes?
That's a great question. I don't know when, but I do know one thing. As I described, what's been happening for the last 15 years is that in the beginning, people paid a premium to buy your box, but then over time, hardware became a commodity and prices came down and margins became razor-thin. Then, the basis for competition became which operating system you have. People paid a huge premium for which operating system you had, then over time that started to diminish. The plumbing of a modern OS within five years is all going to be the same. So this commodity swamp, if you will, is going up to the next level. So companies have got to say, "How do we position ourselves to deliver real value to the customer?" Because if you're not doing it, except for a little bit with the hardware, and it you're not doing it with the core OS, what are you doing it with? Our notion is that this next layer of stuff out there, starting with the Internet, but including QuickTime media layer and future iterations of Cyberdog is where this value is going to be. So we're going to have to change our business model over time, not instantly, but gradually migrate it over time so that [we have] revenue streams from those things people value, and we charge less for those things people don't value as much. If you think about it a little, it makes a lot of sense.
One of the divisions you've reorganized Apple into could be called consumer appliances. What does that cover and how is that different from a personal computer, which could accomplish some applications around the house?
What the personal computer industry has been so far is the general purpose computer that is capable of running zillions of applications. For Macintosh, there's something like 10,000 applications. Nobody is going to run 10,000 applications individually, but collectively, that's how many there are. The challenge is that as you go into the future, we're dealing a little bit with the chaos theory. You've got complexity that's going up exponentially. Already our operating system is on a level of complexity comparable to the network management software that runs telephony for the United States, and this is something that you buy for $99. The notion is that you have to deal with that complexity, and one way of dealing with that is to move in the direction of coming out with products that are very task-oriented. We call these "information appliances."
If you want to toast bread, you can go to the oven, turn it on, and use your general purpose device to toast bread, or you can go to your toaster and pop it in. Can you manage without a toaster? Sure you can, but it's a heck of a lot nicer to have one.
NEXT: Gil Amelio