Cook Mixes a New Apple Brew
Oct 31, 2012 1:32 PM PT
While investors no doubt faced uncertainty on Wednesday as the New York stock markets opened after shutting down for two days due to Hurricane Sandy, the uncertainty over Apple's stock was for another reason altogether.
News surfaced on Monday that Apple iOS software chief Scott Forstall was forced out after he reportedly refused to sign a letter apologizing for problems with the iOS 6 Maps app. Shares of Apple were down 2.7 percent on Wednesday morning.
This is the first big management shakeup at Apple since CEO Tim Cook took the reins. In addition to Forstall, John Browett, who was head of the Apple Store operations, will depart next year; four other top executives reportedly will get new duties.
Forstall will be replaced in 2013 by Craig Federighi, who will oversee both the iOS and OS X groups under a single umbrella. In the meantime, Forstall will remain with the company as an advisor to Cook.
While Forstall appeared to be close to Steve Jobs, the same can't be said of his relationship with Cook -- but there likely was more behind his leaving than personality conflict.
"Cook is obviously feeling more comfortable putting his stamp on the company," said Greg Sterling, principal analyst at SterlingMarket Research. "The ouster of Forstall has been in the works for some time, it appears, and his departure necessitates a reorganization -- but anything that appears to be messing with a winning formula will rattle Wall Street."
Apple did not respond to our request for further details.
Management shakeups at companies happen every day, so why is this turnover causing so much consternation? For one thing, it's significant that Forstall seems to be the guy who was responsible for some of the shortcomings with the mapping software that marred the debut of the iPhone 5. He had extolled its features just months earlier, but in the wake of severe criticism following the handset's launch, he reportedly refused to sign a public letter to Apple customers apologizing for the flaws.
Whether this would have happened on Jobs' watch seems to be the question of the day.
"Apple and Steve Jobs were interchangeable. When Steve left, Apple ran on fumes for several quarters. Now Apple is starting to wobble under the weight of a changing marketplace," said industry analyst Jeff Kagan.
"Would it have been affected so greatly if Steve Jobs were still in charge? No -- these problems are not new. They were just handled much better by Jobs," Kagan told MacNewsWorld.
Apple Without Jobs
Of course, the company can't simply roll out Jobs 2.0, and to many it is simply a matter of not having the guy in the turtleneck to soothe fears and offer reassurances that everything is alright. The timing of the shake-up is even more nerve-wracking because Apple's chief competitors have upped their games.
Just this week, Google introduced the Nexus 10, a lower-priced full-sized tablet, along with a new Nexus 4 smartphone and an updated version of its Android OS. And Microsoft created genuine buzz last week with its new Windows 8 and potentially game-changing Surface tablet. That was followed by the Monday launch of its Windows Phone 8 operating system.
This puts Apple -- and notably Cook -- in a difficult position, but it's not entirely unexpected.
"Tim Cook has one hell of a job just trying to wrap his arms around the company, its products, the competition, the customer and investor attitudes, and the future," Kagan added. "While this is something Steve Jobs did exceptionally well, he may be one of the only human beings on Earth who could."
The question here is what Apple -- under Cook or anyone else -- should do next?
"Apple's best strategy has been to be Apple, but as the market matures and other players -- namely Google -- emerge as real competition from a market share perspective, changes are always sure to follow," said Chris Silva, industry analyst at the Altimeter Group.
Device launches in the past were welcomed by an adoring world, but that has given way to more measured receptions for recent launches, like the iPhone 5 and iPad mini, Silva told MacNewsWorld. "Apple is experiencing the normal, internal changes any large company will have when faced with a changing market reflected in changes in top talent."
Still, even slight fumbles can be seen as major debacles.
"It is getting very difficult for Apple to maneuver like they did at one time," said Kagan. "We'll just have to wait and see whether this reorg is good or bad for Apple long term. Apple won't be as tarnish free as they always seemed to be with Steve Jobs at the throttle."