Tim Cook Is a Failure at Operations

3 minute read
| Devil's Advocate

The Myth of Tim Cook’s Operational Prowess

Operations are supposed to be what Tim Cook does best. Under Steve Jobs he was the Chief Operating Officer at Apple. And while he may have done a great job then, he is a failure at it as CEO.

There are two reasons you have to conclude he is awful at operations. First, he has failed to keep the trains (i.e., products) running on time. Secondly and most importantly, he has placed all his operational eggs (i.e., main sources of production revenue) in one hostile, communist Chinese basket.

Apple China flag

Apple in China

Late Trains

With regard to keeping products running on time, under Tim Cook, the MacBook Air (one of its most popular machines) was not updated in over 3 years, the Mac mini was not updated in over 4 years, and at over 5 years with still no update to the Mac Pro. The MacBook and iMac haven’t been updated in more than 1.5 years. The iPad mini hasn’t been updated in almost 2 years.

HomePods, beyond being 3 years late relative to Amazon, missed an important holiday season ceding more ground to other smart speakers. AirPods availability came late and is still constrained. AirPower was announced in 2017 and is still vapor.

Apple has basically abandoned and/or lobotomized much of its software in not providing meaningful feature upgrades in years; iTunes is a joke, iWork has had minimal updates (e.g., still cannot do basic word processing functions like table of authorities, line numbering, custom paragraph numbers, etc.), Aperture is dead, Back-to-Mac is dead, Airport Utility was lobotomized, and that’s just the tip of the iceberg.

To put that in context, with Steve Jobs in 2007 they spent $0.78B on R&D and they updated almost all software (some very substantially), updated iPods, Macs, oh yea, and they released the iPhone. In 2018, Apple had the above track record while spending over 18X on R&D, i.e., $14.24B. This is simply an awful track record for a company with as many resources as Apple. At this point, I believe Apple’s new unofficial motto is “doing less and less with more and more“.

One Hostile Chinese Basket

Perhaps the most damning failure of operations at Apple are putting essentially all of its operations into a single basket, namely China. Apple is one patent injunction away from not being able to manufacture any iPhones. Let that sink in. One well placed patent infringement lawsuit where an injunction is held over some common iOS software element, or iPhone hardware subcomponent, and it’s game over. Curtains. An injunction would stop Apple from making, using, or selling iPhones in China.

While China itself only represents roughly 20% of Apple’s revenue, and therefore a sales ban in China is something Apple could easily survive, it could also be stopped from making iPhones for export. That would be a company-ending event should it ever transpire.

And we’re talking about China. It’s a communist regime that is only slightly less hostile to Apple and foreign companies than it is to the human rights of its own citizenry. Which means maybe an injunction against the iPhone would be found on the merits, or it might be found because of political expediency, or just because of outright hostility towards the West. Relying solely on such a regime for all its iPhone production is simply reckless.

And this is not theoretical. Qualcomm has effectively gotten a patent injunction in Germany on iPhone 7/8 models by putting up a bond, and is pushing for broader bans in both Germany and China.

Cook Needs a Plan B, US iPhone Manufacturing

Although Steve Jobs himself brought Tim Cook to Apple to help move operations abroad, that does not excuse Tim Cook’s bad judgement on having China remain the sole source of iPhone assembly.

To be mildly kind to Mr. Cook and Apple, it has a Cork Ireland plant, which basically is a supply coordination and service hub more than a manufacturing center. And then there is the tiny plant in Austin Texas producing what must be a break neck production schedule of at least 3 trashcan Mac Pros per month.

In the 8 or so years since Cook has been CEO, he should have formulated—and implemented—a real Plan B, C and D for iPhone production. He should have a US manufacturing plant making iPhones, even if it’s only 5% of the supply. He should put one in eastern Europe. One in South America. He should have diversified production. He should have advanced automation to make this less of a cost issue, much like Foxconn itself has done. Apple has all the money, it can afford to try anything Foxconn can. There is no excuse for not trying to advance manufacturing at home.

And, there is no excuse for the precarious state that Tim Cook has situated Apple in, i.e., relying on the ‘kindness’ and subject to the capricious whims of a hostile communist state.

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MacFrogger
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MacFrogger

Wow – this could be a first! A TMO article gets the Macalope treatment!

https://www.macworld.com/article/3333917/techology-business/failure-is-not-an-option-tim-cooks-operational-skills.html

I agree with many of the criticisms made by John, but like the Macalope I don’t believe all of them are Tim Cook’s fault. In ANY big organization (like the Apple of today vs the Apple of the past), there is some level of dysfunction, poor coordination, etc. Look at the US govt for the best example, or any large bureaucracy. The Macalope’s conclusion, that Apple still does execute much better than any other large org of similar size, is probably true.

ctopher
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ctopher

Since when does TMO resort to click-bait?

gGrant
Member
gGrant

More sage comment from Mr Kheit. We need this in the Mac echo chamber. Sculley grew Apple to 10x the size it was when he joined. Cook has done similarly, but may befall the same fate if he can’t change with conditions. China might have been a good idea at the time, but things change. China has changed. The world economy has changed. Manufacturing needs to diversify and the signs are too little too late. John is completely correct. Apple has stumbled with the fundamentals of a tech company. Yearly updates were a luxury Apple could afford because it had… Read more »

wab95
Member
wab95

John: You’ve opened a great discussion, making a number of excellent points, most with which I agree regarding ‘late trains’ of products not ‘running on time’, the potential vulnerability of Apple’s iPhone manufacturing operations in China, and the value of having a more widely distributed manufacturing theatre beyond China. On that point, however, and before proceeding further, it’s worth noting that while Foxconn have factories in China, Foxconn itself is a Taiwanese multinational corporation, and not Chinese. And while you have not stated otherwise, it would be easy to assume that, because there are Foxconn factories in China, that Foxconn… Read more »

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Joel Sutton

Beautiful and thoughtful response. You expressed this a million times better than I could have. Thanks. Kheit clearly does not understand the politics of China or the realities of Apple’s growth and forwards direction.

gGrant
Member
gGrant

Excellent thoughts.
Quick reply to the China part of your comments. ALL Chinese corporations are joint Chinese government / Taiwanese companies. Don’t be fooled by the politics. Foxconn will only exist in China for as long as the government allows it and the price will be co-operation. Try not to get caught up in the US propaganda and the trade war.

wab95
Member
wab95

Many thanks, gGrant. I’ve spent enough time in the region to fully appreciate your point. I just wanted to underscore the China/Taiwan dynamic.

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Bartholomew J. Woodcocke

As someone who’s been living in Taiwan for years – in Nankan, right down the road from Foxconn and major semiconductor factories – I too was a bit taken aback at the aggressive ignorance of equating “Taiwan” with “China”. Your rebuttal was eloquent, but has obviously fallen on deaf ears.

If Tim Cook’s tenure is a failure, I’d sure like to have had a chance to see the alternate reality of what success looks like lol.

Fortunately there are tech writers who are experts in macroeconomics to help us see the light. /eye roll

Member
Joel Sutton

John Kheit, I assume this is satire? You have some good points about how slow Apple is to develop or update. But please point to a US city that has the ability to produce 200 million iPhones a year. Apple’s partners have more than 200,000 people on iPhone / iPad assembly lines in Shenzhen, China alone, which also happens to be one of the busiest ports in the world. Those same employees work 50 hours a week and for a roughly 60% a US worker would expect. Please explain how Apple could 1) establish a mega factory in a US… Read more »

geoduck
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geoduck

The core of the piece is that Apple has all its eggs in one basket. Maybe it isn’t China that does it. Maybe the US imposes a 50-100% tariff on all products from China, including Apple’s. It has already been threatened. There’s a lot of grumbling with the iPhoneXS starting at $1000. What will happens to Apple’s sales if it goes to $2000. If the new MacMini starts at $1500? It would be far better to split up production, some in China, some in the US, some in Brazil, Germany, India, and elsewhere. Then Apple would be far more resilient… Read more »

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_Amergin

I think the guy who put Jony Ive in charge of software is not the guy to run Apple. Business is business but a company like Apple needs a bit of magic as well, otherwise it’s just another Microsoft. I went back to an old iPod Touch the other day and was blown away by how simple it was to use, how easy the UI was on the eye, how light and comfortable it was to handle, and it had a 3.5mm jack to plug my headphones into. Apple has been accelerating off down a dark freeway with no-one questioning… Read more »

geoduck
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geoduck

After some thought, may I suggest one slight modification to your thesis. Everything has a best-buy date. The P-51 was a fantastic fighter, in its prime, but it had to be retired. Michael Jordan was an incredible player, in his prime, but at some point he had to retire. Tim Conway was a great comedian and improv actor, but he doesn’t appear any more. He’s past his prime. Shall we agree that Tim Cook WAS a brilliant operations and supply chain expert. Jobs asked him to join Apple because he was so good. When Jobs had to retire he chose… Read more »

Ozymandias
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Ozymandias

I had to jump in to this discussion now that I have a new account and wanted to chime in on this. What you pointed out are good as he was good at his old job in Operations, Jeff Williams is now the guy running that department. The problem is Tim can’t go back to that and needs to leave. I don’t think it’s the peak issue but rather he’s ‘out of touch’ with a lot of things. It’s the decision making that has baffled me for some time and I suspect his ‘nice guy’ persona is not working when… Read more »

Paul Goodwin
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Paul Goodwin

Unfortunately all of the updates we all want are the things that make the least amount of money. The way we keep our Apple products, it’s no wonder they’ve stretched out their update schedule. My mid-2010 iMac is still going strong. As for China, Apple is there (like everyone else) for the low labor rates for assembly, supplies of components, and a potential windfall market for their products and services – if they ever can figutpre out how to make it work. The Chinese have spent decades hoarding electronic components and building their component supply and assembly capability. No other… Read more »

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ToneWilliamsUSA

Personally, I would rather that Team Cook would return to Apple’s core values under Steve Jobs — creating it the very best user experience possible at a reasonable (albeit premium) price. Apple fails on all levels today. It no longer strives for excellence. Rather the drive is for form over function and greatest shareholder returns. It’s products are increasingly boring, both hardware and software. I miss my passion for (almost) all things Apple and truly hope that it can earn my loyalty and interest (and wallet) again. But, if not…

Scott B in DC
Member
Scott B in DC

If I had a nickel for every time someone said Apple was doomed or that any member of management was not worth the bits it takes to write about them, I would have enough money to become a majority shareholder! Let’s get past the FUD: Apple has a diverse supply chain. There are multiple manufacturers of parts. Currently, there is only one assembly contractor but that is about to change with a deal they just made with an Indian company. Oh, snap… I guess reality doesn’t fit with your FUD! The products: Given that Apple is making money on the… Read more »

JustCause
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JustCause

I saw the title and knew who the author was without looking.

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Rick Allen

John, Your point about all eggs in one basket is right on. I agree with your other points yet I feel you have missed one. There is no consistent product vision and pricing structure. Apple’s product line was very consistent from the original Jobs 4 quadrant concept on. My hardest part with Apple products right now is the question from friends or relatives “What do I buy?” That question usually ends up in at least a 30-40 minute conversation these days rather than a couple of quick questions and then a decision. Leadership and Vision are two different things. I… Read more »

geoduck
Member
geoduck

Now wait, I think you’re being…
I mean that’s not the whole…
That is to say that seems overly…

Okay, you make some good points.