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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