More services-oriented than ever, Tim Cook's Apple has entered the consolidation phase as smartphone sales level off. Steve Jobs’ successor is addressing this crucial step with a cool head.
Year took up current function: 2011
Turnover in 2018: $265.5bn
After eight years of managing Apple alone, Tim Cook has emerged from the long shadow of his storied predecessor. The past few years have been fairly positive for the visionary brand: free from the weight of Steve Jobs' legacy, Cook has nonetheless remained true to it, and Apple continues to set the pace in product design. Suffice to say that anxiety was at its peak when the new CEO dismissed some key figures from the company at the start of his mandate. In 2012, the benching of developer Scott Forstall, prime contractor of the iOS operating system, sowed seeds of doubt in people’s minds. What would the departure of such a talented engineer mean in terms of industrial losses? Added to that, Chief Creative Director Jonathan "Jony" Ive left last June. This time, in order to not make waves, Cook entered into an official partnership with Love From, the firm that Jony Ive created.
The (some might say irksome) personality traits of Steve Jobs’ successor, namely his keen sense of business management and his search for all-round profits, are proving to be his best assets today. In a short period of time, Tim Cook has put the court of the late Sun King Steve Jobs into orbit, each of his favourites determined to ensure that their department presides over Apple’s fate. This has allowed the company to stay the course and even to put the backs of doubting investors against the wall: they don’t like the company’s choices; well, then they should leave! This is hardly the behaviour of a weak character – an accusation that has been levelled at him in certain quarters.
Shrewdness and consolidation
With Tim Cook, it is better to forget the mysticism to which Steve Jobs had accustomed his worshippers. In place of a high-priest of tech dispensing great marketing wisdom, Cook is a pragmatist, aware of the economic twists and turns that need to be taken to keep the brand in the firmament. The CEO, who joined Apple in 1998, worked for IBM for 12 years at the beginning of his career, where he observed how a company known for its ability to innovate in the 1980s declined like a Roman empire of IT.
His leadership at Apple is typical of a company in the consolidation phase. In July of this year, he bought Intel's modem division for $1 billion. The goal of this acquisition was to control the entire value chain, in order to be able to produce devices from A to Z. Each computer component can now be stamped with the Apple logo and production made cheaper because of the ability to control costs.
Tim Cook’s investments in research and development promise renewed creativity: $4.2 billion was invested in 2018 (Apple had not invested as much in R&D since 2003), an unmistakable sign of things to come, even if other heavyweights in the sector spend more on their forward planning (7.9% of turnover for Apple against 13.4% for Microsoft, for example).
Apple as a service
The declining sales of the iPhone, Apple’s flagship product, mark the end of a lucrative business logic. Sales seem to have levelled off in Western markets while the price of products marked with the famous fruit prevent it from competing with Samsung, Huawei and Oppo, the winning trio of the mobile phone market last year, especially in emerging countries. For the first time since 2012, the iPhone represents less than half of Apple’s turnover. This is a development for which the company was prepared: its stores are leading distribution (the Apple Store) and payment (Apple Pay) ecosystems in sectors such as music and digital books.
The success of Apple’s development on the services segment seems assured, with a diversification linked to content with high emotional capital (cultural industries and TV streaming available shortly). But the tech giant faces much competition in this space too. As the competitors proliferate, time will tell how Cook and his team navigate the constantly shifting landscapes of media and tech.