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Is Apple planting the seeds of its own decline?

Getty Images / Eric Risberg
Apple has continued to increase revenue under CEO Tim Cook, especially with the release of the iPhone5.
This article is more than 2 years old.

At Apple’s next board meeting, the directors will face CEO Tim Cook in executive session for a frank discussion of the company’s strategy.

It might go something like this:

“Tim, Congrats! Our stock is at all-time highs, and there’s never been more excitement over our products, including the iPhone 5. So, please tell us why are we putting at risk this positive momentum with several recent decisions that are hard to understand, and maybe even hard to justify?”

The director will continue: “Let’s start with this month’s rollout of a new proprietary dock connector, Lightning. It’s nifty and smaller, but you guys certainly haven’t made a compelling case for this being crucial this quarter, when the global economy is soft and consumer pocketbooks are stretched. Meanwhile, you risk angering millions of our loyal customers who find their existing, functional gear obsolete unless they pay $29 for an adapter.  Not to mention the tons of existing gear that will go to landfill.”

Stunned, Tim will hear the director out.

“Lightning can’t be much of a giant technological leap forward, since old gear will work with that little gizmo, but it does makes us look insensitive. Please tell us someone on your management team thought hard about using a global-standard alternative, such as micro-USB, which is legally compulsory on phones in Europe where we ourselves are using it! Please tell us you didn’t do this simply to make more revenue on all those converter sales. It doesn’t seem worth it.

“And Tim, beyond these little peripheral plugs, how about our identity? What happened to Apple’s mantra (in contrast to Microsoft) of ‘It Just Works?’ It doesn’t any longer. Look at this indictment from tech commentator John Battelle. His Apple address book breaks at 1,000 contacts. His iCal doesn’t work. He calls iPhoto a joke and says his company can’t get anything to sync. John’s covered us for 30 years and he’s been pretty damning this time around. He says our ‘productivity’ applications are terrible and ‘not ready for prime time.’

“Tim, we’re just trying to manage our image here. Did you hear the one from comedian Jimmy Fallon? ‘The designer of the iPhone bought a $17 million mansion. Too bad the new house won’t be compatible with furniture from the old one.’’’

This rant from Apple’s first-rate board is what may be in store for Cook. As a director on a half -dozen public and private boards, I can attest to that.

Now, Tim Cook is a very impressive executive. Having chatted with him briefly a few months ago, I know he would certainly listen carefully to such criticism. Among his smart, tactical answers: : Lightning is needed because it allows faster charging of the power-hungry iPhone 5, and micro-USB can’t handle all the useful audio-visual possibilities inherent in the new iPhone.

And despite the product complexity and products being “broken,” Apple is selling more than ever before, so how big a problem can it be?

Well, unless this gets fixed, it will be a big problem. Amid all Apple’s successes, the time to be asking such tough questions is now, exactly when things look brightest. When you are celebrating a “Future’s So Bright, You Have to Wear Shades” moment, the best boards celebrate while also looking for clouds behind the silver linings.

For Apple, the questions boil down to: Has Apple—in the pursuit of novelty as opposed to the profound innovations and productivity enhancements that have characterized its business restoration this decade—gone over the top? Is it still putting customers first?

The whole reason that Apple is worth more than half a trillion dollars is its great software and great design have propelled productivity gains that are a huge catalyst for its own—and global—prosperity. If that productivity propulsion starts “glitching,” the whole virtuous model risks seizing.

The evidence is anecdotal, but it is piling up:

David Pogue in The New York Times finds Apple’s Airplay multimedia standard no longer working on any machine older than a year or so. One needs to upgrade hardware—i.e., buy a new machine—to get the software to work. Ouch. Obsolete in less than a year?

iCloud Sync. It doesn’t work, and is too expensive, especially for anyone who travels outside a given country. I’ve written on this before but the bottom line is: Convenient, yes. Flawless, not by a long shot. Expensive, very.

Oh, and by the way. The Apple world works so long as you stay in the Apple walled garden. Try to mix the components, such as adding an Android phone or Tablet to the party, and chaos ensues. Better forget it.

Siri. Where do we begin? The promising voice-activation technology has been plagued by bugs. It is hard to tell if it is improving. Here is a site tracking Siri’s errors.

And speaking of tracking errors: the meltdown over the buggy new iOS6 mapping application has irritated many more Apple fans, on a weekend when initial iPhone 5 sales are forecast to range between 6 million and 10 million. New York Times columnist Joe Nocera blamed the mapping fiasco on the passing of the Steve Jobs era, and said Apple “is just not the same without the man himself looking over everybody’s shoulder.”

In the aftermath of the iPhone 5 launch, Eric Mack on CNET concluded Apple with its iPhone 5 has “jumped the shark.” (The term refers to a moment on the old Happy Days television show, where Fonzie—a male lead character—gets on water skis to literally jump over a shark—a bizarre plot device that seemed to underscore mostly how the writers had run out of clever ideas. Siri and iCloud are “over-hyped features (that) have failed to really catch fire,” says Mack. “Siri often gets it wrong and people talking to their iPhones hasn’t become the cultural meme it might have been.”

The announcement of Lightning and the iPhone5 launch may be the first signal that Apple’s walled garden is getting more and more difficult to maintain. If the company needs proprietary connection cables to keep customers in (as well as competitors out), it may be the first sign of the end of a strategy of restoring the company beyond the glory of its earliest decade.

I’m not certain we can say Apple has jumped the shark. But what we can say is that if directors don’t start asking questions, the probability is growing that we have already seen the peak of its power, just as the brightest star often appears before dusk.

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