Reckoning for Tim Cook’s Apple


Word on the internet today is that the Justice Department will sue Apple for antitrust violations as soon as this Thursday, and it seems like the moment of reckoning for Tim Cook’s Apple is upon us. When Steve Jobs passed away in October of 2011 I figured that he had put Apple in such a good position that regardless of how good his successor (Tim Cook) was the company could cruise for at least another 5 to 10 years without problem. I think I was pretty accurate in my assumption and now 13 years after the passing of Steve Jobs it feels like problems are catching up to the company that has dominated the tech industry for the past 20+ years.

Tim Cook’s track record

All in all I think Tim Cook did okay as a successor to Steve Jobs. He lacks the product vision that Steve Jobs had, but it would have been impossible to find a successor that had all of qualities that Steve Jobs had. Tim however had a lot of other great characteristics that made him the right choice for that moment in time. He came from an operations background and was responsible for setting up Apple’s supply chain.

As the iPhone continued to grow he was able to maximize that moment and has probably squeezed out every possible dollar from the most popular consumer electronics product of all time. The iPhone is such a popular product that it is able to carry satellite products such as the Apple Watch and AirPods and they sell so well that if you split them into a separate company it would have a rather healthy business year over year. One can make the argument that Apple has an unfair advantage since they control the iPhone, but I think you should not overlook how hard it actually is. Other companies (Samsung & Google) have copied the model, but none have come close to moving the same amount units.

Tim Cook has also shown an ability to adapt and course correct. The Apple Watch initially launched aimed as a fashion product before transitioning completely into a fitness device. The MacBook Pro, the best laptop money can buy, nearly had its reputation destroyed when Apple removed most of the ports and replaced the keyboard with one that was prone to failure. But again Apple corrected, walked things back and today the Apple’s laptops are again sitting were they belong as the crown jewel of the computer industry.

An inability to read the room

Where Tim Cook has really failed is the moments when he has tried to lay out visions for the future in new or updated products. As already mentioned the initial launch of the Apple Watch was a mess. They could not decide what the product was meant to be and tried to do a multitude of things. The biggest head scratcher was that they somehow convinced themselves they should release the watch in special gold editions that cost $10,000 to $17,000 dollars. Talk about not reading the room, you are a consumer electronics company not Rolex. A watch that would be out of date in a year at that price. I will never understand how that was approved, but as mentioned Tim knows how to course correct and the iPhone is so strong that they were able to salvage the Apple Watch as a product.

This inability to read the room however has repeated itself. When Apple launched a new version of the Apple TV, Tim Cook stood on stage and proclaimed the future of the TV was apps. Apps were not the future of TV, while Apple had hoped an App Store on the Apple TV would energize the product the way the App Store did for the iPhone that never happened. Today the App Store on the Apple TV is a dead marketplace where you only go when setting up the device to download the streaming services you are subscribed to. And as such the Apple TV is a stagnant product, updated sporadically, and with no real vision for where it wants to go.

And then you have the Vision Pro, released earlier this year in the United States. It’s the first new product category from Apple since the Apple Watch and in my opinion it was dead on arrival. Once again they failed to read the room and the resulting product is an absolute mess. It’s been reported that originally Apple wanted to make a pair of glasses that you would wear that would augment your vision. Unable to get there with the currently available technology they pivoted and made what is essentially a VR headset. The problem with VR headsets in my opinion is they just aren’t very compelling products. They make amazing demos, and it’s easy to get enticed and wowed when you first try it, but eventually the novelty wears off and you realize the things you can do with a computer screen strapped to your face you can already do, and do better, with the laptop or computer you already own. The only use case for VR headsets that seems to really stick is games, something which Apple has never really been strong in. The other big mistake with the Apple Vision Pro is that it is priced so far on the high end that it’s hard to envision a second generation coming down to a price where it might be able to actually take off and gain traction. The starting price of $3,500 is just crazy for something that does not really do anything that the tech products already in your life do and do well enough. To make matters worse the Vision Pro is not going to be able to lean on the iPhone as it tries to make a pivot in its second generation in an effort to catch on.

The Vision Pro was released on February 2nd and now as I write this at the end of March there is very little talk of it on the internet. Interest in it, seems to have collapsed in less than two months time. I really struggle to see what future the company can grind out for this product, especially considering how stretched out and how many different platforms they are managing and trying to bring forward.

The sharks start circling

All of this brings us to this moment, Apple’s shaky future as the regulation sharks from the European Union and now the Justice Department are circling around the company. This moment highlights Took Cook’s other great mistake. During a lawsuit between Epic Games and Apple documents became public that showed how leadership with in the company was split on how to manage the App Store as it grew in popularity and the revenue took off. Certain executives felt they should lower the split between Apple and developers at intervals as the store grew in popularity. Unfortunately money can blind you and the money certainly seems to have blinded Tim Cook. Tim Cook saw the revenue of the App Store as a way to continue growing Apple’s stock, using it to show growth in the company even as sales were peaking and slowing down across product categories. While great for the stock value this strategy has lead to relations with developers eroding over time. Here Tim Cook was not able to course correct. With hindsight you can easily say that Apple should have given a little.

They could have made exceptions for especially large developers, picking an arbitrary number of users that a developer needed to have that would enable them to receive exemptions from the certain App Store policies. I’m sure there is number fairly high that would have left things as they are for 90% of App Store developers and made concessions to the 10% who happen the ones doing all the governmental lobbying. Instead they held firm and went after every dollar they could get their hands on and now the sharks are circling.

In Europe the DMA (Digital Markets Act) is already upon us and it is forcing Apple to open up the iPhone to third party app stores. This has the potential to amount to nothing or be the beginning of something that ultimately ruins the iPhone experience. The reality is the average consumer loves the iPhone/App Store model. It’s why they buy the phone and none of them are sitting around asking for alternate App Stores. Apple is complying with the DMA and trying to do it in the least painful way possible. However it seems like the EU is going to keep pushing. Initially Apple was trying to place themselves in a position where they would notarize apps from third party stores, in the name of security and privacy. However it seems like the EU might prevent them from doing that, a scenario that is absolutely horrific. Here you could see a company like the Zuckerberg spying apparatus (known as Meta) move all their apps into their own App Store and no longer be bound by the privacy restrictions Apple puts into place. Free to use private APIs to spy on users completely and with impunity.

Plus now the Justice Department might be gearing up to do the follow the EU and do something similar in the United States. If Apple is forced to allow third party app stores in both the United States and the EU then it is even more likely that some of Apple’s competitors will make a push at creating a successful third party alternative. However it plays out one thing is certain it will not be the average consumer who wins.

How this eventually plays out will be what ultimately ends up defining Tim Cook’s legacy as CEO of Apple and unfortunately I believe there is a real possibility that his legacy will be ruined because he failed to get on top of the possibility of government regulation and just kept his foot on the pedal until it was too late.

Time will tell.