Terry Corbell, The Biz Coach
By Terry Corbell
Business Consultant

Business Lessons from What’s Wrong with Apple


Despite its success in earnings, Apple will fall from the ranks of top technology companies by 2020 according to one of tech’s top investors.

Fred Wilson of Union Square Ventures in New York told the TC Disrupt conference on May 5, 2014 in New York City that Apple is “too rooted to hardware” and not enough to the cloud.

Of course, Apple has been hugely successful selling iPhone smartphones and iPad tablets. But Mr. Wilson’s prediction is worth heeding. For a company to succeed long term, vision is of paramount importance.

In addition, Android has surpass iOS as the premier platform for smartphones. And iOS has continued to have security issues.

The same day of the investor’s prediction, published reports indicated the iOS  7.1.1 update had a bug — preventing email attachments from being protected by encryption. Apple promised a fix.

But Apple’s record for security was tarnished again.

You might recall in 2013, Apple began to face concerns about its possible end-of-product life cycle.

First, its heralded founder, Steve Jobs, passed away in October 2011. About six months later there was negative PR about its offshoring of jobs.

Then, consumer complaints skyrocketed over its technology followed by bugs from security deficiencies. As a result, Apple’s share price plummeted nearly 50 percent from a high of $700.

Apple’s response to the expose over its offshoring appeared to be effective to me.

In claiming it has created or supported 514,000 U.S. jobs — Apple, one of the top global brands – countered the negative news about its offshoring of 230,000 jobs in China in March 2012.

You might recall the ABC News report, which revealed Apple was paying nearly a quarter of a million Chinese workers – only $3,000 to $6,000 a year each – to assemble hardware. The cafeteria lunch prices are so high, it further hindered the workers from making ends meet.

Apple’s response: It said it directly employs 47,000 workers in 50 states. With a multiplier effect, 257,000 more jobs are in jobs from manufacturing components to healthcare.

Unsafe working conditions

ABC News correspondent Bill Weir investigated alleged unfair and unsafe working conditions inside Apple’s Chinese manufacturer, Foxconn. To Apple’s credit, it allowed the journalist to see the labor situation on Foxconn’s production line and allowed him to interview workers.

There were complaints that starting pay for a worker was too low to pay an employment tax – according to ABC News, here’s Foxconn’s response:

  • “We have over 75 percent of the employees in the category of earning at least 2,200 RMB ($349/month) basic compensation standard. That means they are earning 13.75 RMB ($2.18) per hour. If they work overtime on the weekend, they will earn 27 RMB ($4.28) per hour. In order to reach 3500 to be taxable, they will have to work 47 OT hours to reach 3,500.”
  • “If the overtime hours are in weekdays, they have to work around 63 hours per month to reach that level of salary to be taxable.”
  • “Your statement is only true when applying to the entry-level workers while over 75 percent are already over the probation and earning more than 2,200 RMB basic salary.”

But it’s increasingly clear that Apple misses the genius of Mr. Jobs. Apparently, only he could provide strong management and possibly vision for a new business model. Additionally, I wrote that Mr. Jobs’ biography indicated he had sagacious advice for President Obama on the economy, but the president failed to listen.

Foundation for success

Apple was built on a plethora of new products that were considered the best, including a superior operating system on products ranging from computers to tablets. The profit margins were huge as it developed a cult-like following among elite customers.

Its competition consisted of Dell, Microsoft, Honeywell and IBM. Most of these failed to deliver innovation and trouble-free user experiences.

But in recent years, mistakes were made – big mistakes. It outsourced and offshored way too much, which led to deficiencies – a big schism between product design and its manufacturing. Its iPads overheated and installed inefficient antennas on its iPhones.

Again, Apple was long noted for being free from security issues. Just a month after its PR defense to the offshoring expose, I wrote: “Has Security Bloom Fallen off the Rose for Macs?

Competitors began producing and marketing better user experiences much more cheaply. That’s confirmed by Android’s success in the marketplace.

Given the issues in security, PR and a major investor’s 2020 prediction about the company’s lack of vision, Apple’s products and mission face the prospect of deteriorating to an undesired level – an end to its product life cycle.

From the Coach’s Corner, here are business turnaround tips:

“The crisis of today is the joke of tomorrow.”

-H.G. Wells

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Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.

Seattle business consultant Terry Corbell provides high-performance management services and strategies.