Apple’s Steve Jobs Resigns: Time to buy a PC

August 25, 2011

Apple co-founder and CEO Steve Jobs. Source: Apple Inc.

Steve Jobs, the founder of Apple, resigned as the CEO on Wednesday.

Under his leadership as its “hands on” CEO for the past fourteen years, Apple became one of the most successful U.S. companies. Its success can be measured by the fact that it was recently rated as the world’s most valued company, surpassing, however briefly, Exxon Mobil.

“I have always said if there ever came a day when I could no longer meet my duties and expectations as Apple’s CEO, I would be the first to let you know,” Steve Jobs wrote in a letter to the company’s board and its customers. “Unfortunately, that day has come.”

Earlier this month, Exxon Mobil’s stock fell and Apple’s increased thereby giving the company a market value of $337.2 billion, compared to Exxon’s of $330.8 billion.

Mr. Jobs’ strength was his willingness to assume risks and to gamble on new products that customers had yet to realize that they needed. He transformed how we compute, eliminating the floppy disk drive, how we listen to music, through the iPod which transformed how we also purchase music, and how we make phone calls through the iPhone. Mr. Jobs essentially built a company and developed products which its loyal customers highly value despite the cost but that a majority of Americans are unable to afford.

Powered by the success of the iPad, iPod and its Mac computers, Apple surpassed Microsoft, Intel and IBM earlier this past decade. However, despite claims by “MacHeads” that everything Apple is far superior to a PC, the overall cost of an iMac or a MacBook makes it difficult for Apple to market to the average consumer with the possible exception of a refurbished or low end iPod Touch or Nano.

Due to its nominal cost compared to an Apple, Microsoft still garners a larger market share of tech users. Microsoft, through its still widely used Windows XP, Vista and Windows 7 still controls 92 percent of the market compared to Apple’s OSX share of 3.5 to 4.0 percent.

A comparison of most basic laptop computers offered by Dell and Apple reveals that while Steve Jobs led Apple to produce highly vaulted products he did so in many cases by gouging his loyal customer base. Dell’s Inspiron Mini 10 Netbook sells for around $400 dollars without any upgrades compared to Apple’s 11 inch MacBook Air, listed as $999 without any upgrades.

Apple’s iPod made a huge splash when it was launched with much fanfare and it does garner a significant share of the market in smartphone users, around 15.7 percent.

Again, while the iPhone might be considerably cheaper now than when it was introduced in June of 2007, purchasers must sign up for cost prohibitive contracts through AT&T and now Verizon.

Apple’s stock rise is perhaps its best indicator of its strength. Since 2000, an investment of $1,000 in Apple would yield $13,294 by April of 2011. By comparison, that $1,000 investment in Microsoft would realize $2,072.

“If you invested $1,000 in each company’s stock on Jan. 3, 2000, what would you have ended up with in April 2011? Accounting for stock splits and, in Microsoft’s case, dividends, but excluding taxes and broker’s fees, you would have $2,072 from Microsoft stock and $13,294 from Apple stock,” writes Computerworld’s Sharon Machlis.

What does Apple’s exponential growth say about the company and its founder, Steve Jobs?

American and global consumers appreciate design and usability. Mr. Jobs tapped into consumer tastes for sleek cell phones that became the “must haves” for the past four years.

However, putting aside the iPhone, which one can purchase relatively cheaply through retailers or on eBay, the high costs of other Apple products, iMac, iPad or MacBook, will always keep Apple from overtaking Microsoft in overall market share.

In many ways, Apple is and always has been a niche company.

Importantly, Apple’s exponential growth is largely due to outsourcing which has kept its overhead low but not low enough apparently to pass considerable savings on to consumers.

While multinationals, and especially Apple have pushed U.S. lawmakers for lucrative tax breaks, Apple has avoided hiring Americans to produce the now ubiquitous iPod’s, iPad’s and other much-lauded Mac products. While Apple does not openly disclose the number of people employed overseas who manufacture the iPod, for example, it is estimated to be hundred of thousands.

As U.S. corporations push for tax breaks, the danger is that U.S. lawmakers could be giving companies these breaks but ultimately they will not hire a significant number of Americans.

“It’s an important piece of information that the American people should have,” suggests Ron Hira, at the Rochester Institute of Technology. “Should you listen to the kind of advice these companies have about how to grow the economy when their record and their model indicates they’ve cut jobs?…Or should we talk to people who actually do create jobs in the United States?”

By law, Apple and other multinationals are not required to disclose their employment data.

The Washington Post’s Jia Lynn Yang writes, “Some of the country’s best-known multi­national corporations closely guard a number they don’t want anyone to know: the breakdown between their jobs here and abroad. So secretive are these companies that they hand the figure over to government statisticians on the condition that officials will release only an aggregate number. The latest data show that multinationals cut 2.9 million jobs in the United States and added 2.4 million overseas between 2000 and 2009.”

While outsourcing became the new norm many years ago, Apple with Steve Jobs at the helm, personified a company that was extolled for innovation but aside from its corporate headquarters and jobs at its many Apple stores it has not created a significant number of manufacturing jobs in the U.S.

With the U.S. unemployment rate above 9 percent there are those who argue that by bringing some manufacturing jobs back to American shores, Apple and other multinationals would benefit from a public relations bonanza.

On MacDailyNews, an Apple forum for all things Apple related, user Barry C. writes:

If Apple would publicly begin to manufacture in the U.S.A. again, Jobs could start another revolution. One that invests in U.S. high tech manufacturing. It’s never truly realized by consumers how all this great hardware is manufactured 100% in China.

With Apple’s high, yet worthy, profit margins, there is absolutely no reason they could not begin to manufacture here. Even a small trial factory, perhaps the next iPod nano or just Mac accessories like cables.

They would save in many ways that would offset the salary discontinuity between China and the US; time to market, shipping and fuel costs, shipping delays, increased product cycle, and ultimately, even more brand loyalty.

I think a public campaign with a new Apple manufacturing center based in the U.S. is a no-brainer!

However, Apple, along with Microsoft and others are unlikely to pursue this strategy.

Econ 101 dictates that you cut corners and save costs when possible and charge the consumers what some consider to be prohibitive costs for the most basic models of laptops and other Mac products.

With Steve Jobs at the helm, Apple personifies American capitalism. Make as much money as quickly as you can for your board and stockholders, while producing products that people find they desperately want but don’t necessarily need.

Read more about:

Tags: , , , , , , , , , , , , , , , , , , ,

Post comment as twitter logo facebook logo
Sort: Newest | Oldest