When Steve Jobs recently announced that he was going to take a leave of absence due to health issues, I was surprised by Wall Street's reaction. After the news hit, Apple's stock took a sharp dive. Investors assumed that without Jobs at the helm, the company would tank. Sure, his absence invites legitimate questions about Apple's long-term prospects, but the products Apple will bring out this year were designed one to two years ago. The real issue is how successfully COO Tim Cook and his team can bring these products to market. When it comes to Apple's vision, I think the window for new products is not two years but ten—a cycle that's actually very well thought out—with key milestones and goals that are fine-tuned on an 18-month basis.
Back in 1997, the company was over $1 billion in the red and deeply in debt. On the second day that Steve Jobs was back at Apple, I asked him about his vision for turning the company around. Jobs gave two distinct answers. First, he said he would make sure Apple was taking care of its core customers. He felt that the prior management had forgotten about users in the graphics, engineering, desktop publishing, and education markets—the folks that had helped Apple grow over the years. Jobs planned to create more-powerful Macs and new products that would meet their evolving needs. But Jobs also said he thought that existing PCs were boring, and that he planned to make industrial design a key issue for Apple products going forward.
At the time, the idea of using industrial design to save Apple seemed far-fetched. But as you know, within 18 months he had introduced the candy-colored line of all-in-one Macs and has consistently made desktops and laptop great to look at—conversation pieces simply because of their design. He also set out to create a much richer OS, and started down a path to switch the core processors over to Intel's chips for their greater processing capabilities.
Then in January of 2001, Steve Jobs used Macworld to give a more public view of his long-term vision. In his keynote address, he laid out a vision for the digital home. The heart of his vision: the idea that the Mac would become the center of a person's digital lifestyle. We live in an age of digital cameras, camcorders, and MP3 players, he pointed out, and in the future the Mac would play a key role in helping people manage and control their digital stuff. At that Macworld he also launched the first version of iTunes. Little did we know that by October 2001, Apple would launch the iPod. And, at Macworld 2003, that the company would launch iLife.
Serious Apple watchers soon began to see an ecosystem of hardware, software, and services come together. The iPhone didn't come out until 2006, but sources tell me that research began back in 2002. The iPhone was just another Apple "device" that fit into the ecosystem, letting the company launch new products and services. As you can see, Apple's vision for new products is not one that focuses on just the short term. Indeed, the minds at One Infinite Way appear to have a grander plan that may help the Mac become even more established at the center of a person's digital lifestyle. And in that sense, it will be exciting to see what is up Apple's sleeves in the next few years, whether Jobs comes back or not.
Even though Apple has this broad vision, every once in a while the company stumbles across new services and apps not in the initial plan. A great example is desktop publishing. When Jobs and team originally built the Mac in the early 1980s, the goal was to create the greatest new computing platform. At its launch in 1984, the main app consisted of a simple drawing program—plus promises from top executives at Microsoft, Lotus, and Software Publishing Corp. But it was an app from Aldus Corp. called PageMaker that made the Mac the center of the desktop publishing world and pushed it into the mainstream business limelight. One could argue that Jobs's decision to endorse PostScript and the desktop laser printer made this possible, but it's doubtful that he envisioned desktop publishing when creating it.
A more recent example of this is the evolution of the iPhone and the iPod touch into powerful, handheld gaming systems. Early on, Apple hoped developers would create games for these devices, but I'm not so sure they envisioned either one becoming the gaming powerhouses that they've become over the last year. Downloads of mobile games grew 17 percent last year, thanks to the increased graphics capabilities on smartphones, according to a new report from research firm comScore. The report says that 8.5 million people (2.8 percent of mobile subscribers) have downloaded games to their cell phone. The report goes on to say that Apple iPhone owners accounted for 14 percent of all mobile game downloads, and overall 32 percent of iPhone users have downloaded a game—compared with a market average of 3.7 percent.
Dedicated mobile platforms such as the Nintendo DS and Sony PSP still dominate the market, but the iPhone and iPod touch could soon encroach on their territory. For one thing, it's a lot easier to become a game developer for the iPhone than the DS or PSP, and more important, games on the iPhone are significantly cheaper. Apple already has 4,000 of them in the iTunes app store; all are under $10, with the majority under $5. Compare that to cartridges for the DS and PSP in the $20-to-$35 range, and you can see why the iPhone and touch are getting such gaming attention.
I have no special information about Apple's future products, but it wouldn't surprise me to see innovation in this area, since these devices are becoming great platforms for games. But no matter what new devices appear, I'm sure they will be part of Apple's total hardware, software, and services plan, and that they'll be connected in ways that make the Mac the center of the digital home.
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