Steve Jobs and Scott Forstall
The ouster of Scott Forstall, senior vice president of iPhone Software at Apple, and the former heir apparent to the top job, indicates that problems at Apple run deeper than generally understood.
Forstall was often compared to Steve Jobs, both for his brilliance and his abrasiveness.
On the surface Forstall’s ouster is related to his refusal to sign his name on an apology for problems with Apple Maps and his abrasive personality. The reality is that Forstall’s ouster is only a symptom. Forstall was hired by Steve Jobs at NeXT. When NeXT was purchased by Apple in 1997, Forstall came to Apple. He is regarded as one of the original architects of the Mac OS X operating system. Forstall became one of the youngest vice presidents at Apple and rose to the highest levels of the ranks.
Failure At Big Data Projects
Forstall came under criticism for both Siri and the Maps app. It is not well understood in the media that these two applications are big data applications. Both of these applications require gathering, managing, integrating and presenting of huge amounts of data. This is very different from the rest of Apple's endeavors. It is a simple fact that this is an area in which Apple as an organization to date has not excelled.
Steve Jobs’ strategy at Apple was to limit the company to a few things and to excel at them. Under Cook, the focus is not sharp on excelling at a few things and Apple is getting diffused among a larger number of initiatives.
Me-Too Products
Under Jobs, a sharp focus was on producing highly differentiated innovative products. Lately, Apple has become a ‘me-too’ company with the iPhone 5 and iPad Mini.
Competition Is Doing Better
The management shakeup at Apple comes at a time when both Google (GOOG) and Microsoft (MSFT) have introduced new competing products. Apple’s arch-rival Samsung just reported better than expected earnings compared to Apple’s worse than expected earnings.
Slow To Act
Steve Jobs was quick to wield the ax on executives who did not perform. If the reason for Scott Forstall’s dismissal is Siri and Maps, the speed of ax wielding under Cook is a lot slower than under Jobs. As competition is increasing, speed is an important factor in maintaining Apple’s success.
Investment Implications
There are serious investment implications not because an executive was fired, but because Apple is failing to innovate at the pace it used to. Further Forstall’s dismissal shows that problems at Apple run deeper in terms of managing big data projects.
In an unrelated move, Apple also ousted John Browett, who was hired with lots of fanfare as Apple’s retail chief only nine months ago. This firing shows trouble at the much vaunted Apple stores.
About Me: I am an engineer and nuclear physicist by background. I founded two Inc. 500 companies, and have been involved in over 50 entrepreneurial ventures. I am the chief investment officer at The Arora Report, which publishes four newsletters to help investors profit from change. Write me: Nigam@TheAroraReport.com. Follow me here and get email notification when I publish a new article. Full disclosure: Subscribers to The Arora Report are long Apple from $131 and have taken partial profits at $360, $525, $629, $568 and $610.
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