Update: Steve Jobs passed away on October 5, 2011 at the age of 56. We offer condolences to his family, friends, and colleagues. He was one of a kind – he revolutionized consumer electronics over the past decade. Rest in peace, Steve.
The announcement late yesterday that Steve Jobs would step down as CEO of Apple seemed to come as a shock to many. It shouldn’t have. Steve was diagnosed with a rare form of pancreatic cancer in 2004, and while he beat that cancer (he wouldn’t be here 7 years later if he hadn’t), he hasn’t been truly healthy since. There was a liver transplant in 2009 and another medical leave this January. I’m not going to eulogize Steve Jobs today as so many have – the man is still alive. I am going to briefly eulogize his second tenure as CEO of Apple with a view of where Apple goes from here.
First, let me say that in the past decade Apple has completely revolutionized the consumer electronics market. The iPod, iTunes, the iPhone/iPod Touch, the iPad, iMacs, MacBooks, and MacBook Airs have all been either giant evolutionary leaps, or in the case of the iPhone and iPad, revolutionary, market-defining products. Many may not think of it this way, but Apple has had a monumental impact on enterprise IT in the past decade. The consumerization explosion is almost entirely the result of Apple products. Would it have happened without Apple? Maybe, but it would have been at least 5 years later. If you want to know how revolutionary the iPhone was, consider the fact that it took competitors about 3 years to come up with something comparable – and that was with an exemplar to copy.
So what becomes of Apple with the departure of what many consider the company’s heart and soul – it’s spiritual leader? Well, Info-Tech Research Fellow and Strategic News Service (SNS) CEO Mark Anderson sent a special letter to SNS members suggesting they sell Apple stock now. I’m not a financial analyst (I don’t make buy/sell recommendations and likely never will) and I have the utmost respect for Mark Anderson, but I don’t agree with that advice. While Steve Jobs has undoubtedly been the face of – and brains behind – Apple’s success, he has also been quite brilliant in his succession planning. He has had 7 years to think about this and build his bench, and boy is it a strong bench. Tim Cook, while quiet and reserved, is the brains behind Apple’s brilliant operational execution. He’s struck deals with supply chain partners that are legendary. Jony Ive is without a doubt the best industrial designer in the world – nobody even comes close. Scott Forstall is the brilliance behind iOS. Phil Schiller is a product marketing genius – the best in the business. The bottom line is that Steve Jobs built a bench of executives that are all the best in their respective fields. Apple probably has a definitive 3 year product pipeline, and likely a notional 5 year product roadmap. It has $76 billion in cash reserves, and is currently trading at roughly 2x 2012 projected earnings. I would argue that it would be unwise to dump Apple stock. And I’m not alone – this Forbes article by Eric Savitz echoes my thoughts.
The bottom line is that Apple will continue to flourish and introduce disruptive products with the brilliance that Steve Jobs has embedded in the company. While Steve’s health has forced him to resign as CEO, his ideals and spirit will live in Apple for many years to come. He has left an indelible mark on the company he founded in his parents’ garage in the mid-1970s, and I have no doubt that he bursts with pride every time he thinks about how Apple has changed the world.
Thank you, Steve Jobs – all the best to you and your family.