The year 2009 will go on record as one of Apple’s best years ever, as I explained in the “10 things Apple did right in 2009” list. This second, did-wrong list looks at the mistakes, and there were plenty. But one did-wrong is pervasive throughout nearly all of them. Apple failed to innovate the way it did during the last recession. Apple CEO Steve Jobs and his senior executives took many of the actions affecting 2009 during 2001 and early 2002. With that introduction, I present the list of 10 things Apple did wrong in 2009 — in no order of importance. They’re all important. Apple:
1. Made no CES commitment. Apple has given up Macworld, so why not make a big splash at Consumer Electronics Show, which is January 7-10 next year? During the summer, there were rumors (and they may not have been true) that Jobs had been asked to keynote in 2010. Apple is a Consumer Electronics Association member but not currently listed as a CES 2010 exhibitor.
For years, Apple has been a shadow CES participant because of Macworld and rumors what the company might reveal during the expo. Some rumors, like iPhone, literally stole the CES thunder. For years, CES and Macworld have taken place days apart or even overlapped. This year, with Apple gone, IDG will hold Macworld in early February. There may be some Apple tablet rumors, but no event venue to drive expectations. CES will be Google’s show, judging by the staggering buzz about the Nexus One smartphone. For a company that gains so much from buzz, including its soaring stock price, Apple’s CES no show is baffling.
That said, after I wrote the two above paragraphs and before I posted, rumors started circulating about a late-January 2010 Apple event. Timing would be more preemptive to Macworld, leaving Google and other smartphone and mobile/device manufacturers to storm the CES buzz.
2. Made no spectacular investments. Apple ended the decade strong in part because of decisions made during the 2000-01 recession. In 2001, Apple opened retail stores, launched Mac OS X, released iPod and debuted iTunes. Microsoft CEO Steve Ballmer is right. He said during his Consumer Electronics Show 2009 keynote that companies making strategic investments during economic hard times tend to emerge stronger than competitors later on. Apple’s 2001 product launches and Apple Store openings were daring for their timing. Other than product pricing, there was nothing daring about 2009. Apple advanced incrementally rather than aggressively (See #s 3, 4, 6, 8 and 10). Mac defenders will use Jobs’ medical leave as excuse. Oh? That changes what good for Apple’s future?
3. Iterated rather than innovated iPhone 3GS. Sure, Apple amped the hardware — faster processor, more memory and double the 3G throughput — but the third-generation iPhone doesn’t extend the platform. The device’s fixed battery forces compromises, with truncated multitasking being the most severe. All other modern mobile operating systems, including Android, Maemo, Symbian, Web OS and Windows Mobile, freely allow background applications to run. Apple limits them, throwing developers the push notification bone when they’re hungry for meat.
If not for the App Store and what developers and not Apple are doing to advance the platform, iPhone would be a second-rate smartphone with a pretty UI (think Palm Pre). Already, new Android handsets, like Droid and Nexus One, are starting to make iPhone look outdated. Mac fans will go absolutely atomic when reading this paragraph. Suck it up. The truth hurts.
4. Botched the iPhone 3GS launch. Iteration still generated plenty of demand for iPhone during second half 2009. But sales could have been much greater. Apple acknowledged during its third calendar quarter earnings conference call, it couldn’t produce enough iPhones to meet demand. According to Gartner, Apple sold 7 million iPhones during the quarter, compared to the 7.4 million the company said it shipped. That means Apple ended the quarter with only 400,000 units in inventory — and by executives’ admission from a slight build up late Q3 — rather than the more typical 2.2 million units. Lost sales aren’t easily quantified, but there was plenty enough concern how much to keep Wall Street analysts repeatedly asking during the conference call.
5. Lied about Steve Jobs’ illness. This one makes both lists, because Apple’s execution was both good and bad. Using “lied” surely will inflame hardcore Mac fans, but misled simply doesn’t apply here. The lying started in December 2008, with the announcement that Apple would pull out of Macworld from 2010, which really masked something bigger: Jobs wouldn’t give the 2009 keynote.
Apple wasn’t under any regulatory obligation to disclose Job’s illness, or, when it did somewhat, to reveal everything. But there is another kind of obligation that Apple may pay for whenever times get bad — and they can’t stay good forever: Shareholders. Apple is a public company, which success comes in part from the trust shareholders place in future performance. Full disclosure risked a run on the stock, but could have generated trust and even concern and goodwill towards Jobs. Trust is a commodity which value is simply immeasurable.
The comment flamers to this post will insist that Jobs’ has a right to privacy. As a private person he has this right but not as CEO of a public company. Jobs doesn’t work for his board of directors. He works for Apple shareholders. Apple secretiveness and corporate denial may yet be a future problem for the company, when performance lags and some shareholders look at Apple’s response with mistrust.
6. Poorly placed iPod nano camera. Apple usually gets design better than right, but when bad it’s terribly so. Nothing feels right about the iPod nano video camera other than the marketing, which is superb. Video quality is so-so, which Apple tries to make up for by applying flaw-covering visual effects and marketing them as features. But the camera’s placement, near the lower-left hand corner (when viewed from the back) is bizarre. Other mobile devices and handsets tend to have the camera at the top rather than at the bottom of the device, which also is better placement for looking at objects to shoot on the display.
7. Shipped iPhone to China without Wifi. The phones cost too much, also. A feature-deficient iPhone is the wrong approach for China. Apple isn’t the only handset manufacturer facing this problem. The reason: Growing grey market sales. The grey market is really two: Sales of unlocked iPhones imported from other countries; fake iPhones, many of which adding new features not found in the original. When the fakes’ features are better than original, the original’s manufacturer has a problem. Apple should diminish grey market sales, rather than encouraging them by offering something less to the Chinese market.
8. Sat on a mountain of cash. Apple ended fiscal 2009 (on September 26) with billion in cash, up from .5 billion in FY 2008 and billion in FY 2007. Cash is a huge asset during a recession. Apple has the means to buy good companies and technologies for cheap. Apple’s major list of 2009 has one item: The early December acquisition of Lala. The year 2009 should have been Apple’s buying spree, particularly in context of #2, where Apple failed to make the strategic internal, organic investments that defined company operations during the 2000-01 recession.
9. Rejected Google Voice. This one could easily be on the did-good list, seeing as how Apple and Google are on a collision course in the mobile operating systems, device, services and applications market. These two partners are rapidly becoming competitors. That said, Google Voice rejection brought lots of unnecessary negative attention to the App Store approval process. Apple still isn’t free of it. The U.S. Federal Communications Commission has opened an investigation into the rejection.
10. Couldn’t stop/fix Mac display problems. Apple has struggled with customer complaints about ELD display problem all year long. It’s unclear the cause, although graphics chips are good candidate. On Tuesday, Apple released a firmware update designed to resolve various display problems, such as flickering. Yesterday, Betanews founder Nate Mook told me: “My 24-inch LED flicks to black a couple times a day.” There’s an 11-page Apple support thread about the blackout problem.
In typical fashion, Apple has a taken a secretive approach to the ongoing display problems. On December 13, Apple apologized for 27-inch iMac delays, without saying why there was delay. Was there too much demand for supplies, or did Apple hold back new shipments while it fixed graphics problems? I approached Apple PR but couldn’t get a clear answer.
Apple’s marketing reputation is about quality — and as a benefit for paying higher prices than most Windows PCs. Ongoing display problems undermine Apple’s reputation and raise questions that higher volumes come with less quality control. That’s not the message Apple should want to convey to customers. I agree with Nate Mook who observed: “As Apple gets bigger, these type of problems intensify.”