In my estimation, whether Ive intends it or not — and I think he likely does, for what it’s worth — this is the beginning of the end of his time at Apple. To give up “management” in exchange for “thinking freely” is, when it comes to business, akin to shifting from product-focused R&D to exploratory R&D. Steve Jobs was very clear on the consequences of that approach:
One of the things I’ve always found is that you’ve got to start with the customer experience and work backwards to the technology. You can’t start with the technology and try to figure out where you’re going to try to sell it. And I’ve made this mistake probably more than anybody else in this room. And I got the scar tissue to prove it.
I found this quote/clip in this excellent Gruber piece, Working Backwards to the Technology; the analogy I’m trying to draw is that just as the best way to ensure that great technologies make it to market is to start with the product and work backwards, inventing along the way, the best way to lead an organization’s design direction is to lead the organization, and that means managing. And that is what Ive is giving up.
The other reason to suspect it’s time, beyond the orchestration and the very real surrender of responsibility, is, well, the fact it’s the right time. The Watch is here, and there almost certainly won’t be any significant new products from Apple for at least a few years (I take this as a bearish signal on the car, which I was already skeptical about — but you could take it the opposite way too!). As many have noted Ive has previously expressed interest in raising his children in the United Kingdom, which sure seems to be a convenient match for the fact he plans to “travel more,” and in the meantime he can pursue, well, the sort of affects-daily-life design I noted was his passion: stores, the new headquarters, office furniture (no designer is a designer until they’ve designed a chair). Not a bad life, for him anyways, and Ive has certainly earned it.
WHAT ABOUT APPLE?
The bigger question, of course — the $764 billion question — is what about Apple? First Jobs, now, if my sense of the situation is correct, Jony Ive, Jobs’ “spiritual partner” and, after Jobs’ passed away, his spiritual successor. Who is left? Tim Cook? Phil Schiller? Jeff Williams?
It’s a trick question, because the answer is not a who, it’s a what: what remains is Apple. After the unveiling of iOS 7 — the true coming-out party for Jony Ive’s expanded imprint on Apple — I wrote in Tim Cook is a Great CEO (This was a controversial opinion then!) about the firing of Scott Forstall:
Apple didn’t need another Steve Jobs. The price of individual brilliance is collective friction, and only a founder has the cultural capital to make the elevation of the individual possible. After all, he/she created the culture to begin with!
It’s not unlike a revolutionary movement: typically there is the transcendent leader, surrounded by the true believers. Eventually the leader departs, but the revolutions that endure have an ideology that continues to unite. To be sure, over time said ideology ossifies into rules enforced by a bureaucracy, until a new revolution uproots the old one, but this can take many years, even decades.
Most revolutions, though, don’t make it that far. Usually, when the leader departs, his closest lieutenants scheme and fight for the throne, and the entire movement implodes. ThFrs was always my fear for Apple: Steve Jobs was the glue that united a strong, stubborn, and talented company that continually operated under high pressure. What would happen when the glue was gone?
Tim Cook has answered that question: the glue is Apple, and the ideology is design. It is a shared belief system that “No” is more important than “Yes,” that focus is essential to making great products, and that no one individual is essential. Not Steve Jobs, and certainly not Scott Forstall.
And, if I’m right, not Jony Ive. Time — even if it’s not this time — will tell.
Frankly, I’m concerned. Especially since it was announced during a long weekend to avoid spooking the markets. This means nothing new in the pipeline for the next few years. I just hope Jony will miss Cupertino enough to come back often.
The European crisis was simple, at its core. Germany had the fourth-largest economy in the world. It derived over 50 percent of its income from exports, half of which went to the European free trade zone. In addition, using its substantial influence, the euro maximized the interest of the European economy as a whole. Given the size of the German economy, it is only a slight overstatement to assert that its economic needs defined Europe’s economy. The euro helped stabilize and sustain German growth, as did the regulations created by Brussels. This limited entrepreneurial behavior in countries where low wages ought to have been the impetus for growth. Instead, these countries became opportunities for German investment.
All of this was bearable before 2008, because since EU members signed the Treaty of Maastricht in 1992, which led to a common currency, they had seen a period of extraordinary prosperity. A rising tide floats all ships. But in 2008, a routine financial crisis (from the standpoint of a century) tore apart the fabric of the peninsula. During any economic crisis, the most important question is who shall bear the burden, the creditors or debtors? Broadly speaking, Europe split along these lines. Germany was the peninsula’s major creditor. Southern Europe was its major debtor. Leaving aside the moral posturing over who committed what injustice against whom, the Germans insisted on austerity. International institutions, including the International Monetary Fund, aligned with Germany.
The interests of the European Peninsula diverged into four parts: those of Germanic Europe (Germany, Austria and, to some extent, the Czech Republic); Mediterranean Europe; the eastern frontier of the European Union; and the rest of northern Europe.
Germany has an overwhelming interest in the European Union and its free trade zone. It is an inherently weak nation, as are all countries that are dependent on exports. Germany’s well-being depends on its ability to sell its products. If blocked by an economic downturn among its customers or political impediments to exports, Germany faces a declining economy that can create domestic social crises. Germany must do everything it can to discipline the European Union without motivating its members to leave. (The issue is not leaving the euro, but placing limits on German exports.) Thus Germanic Europe is walking a fine line. It is an economic engine of Europe, but also extremely insecure. Given the fragmentation in the European Union, it must reach out to others, particularly Russia, for alternatives. Russia is not an alternative in itself, but in a bad situation it could be part of a solution if Germany could craft one. This is, of course, a worst-case scenario, but the worst case is often the reality in Europe in the long run.
Southern Europe is seeking a path that will allow it to escape catastrophic austerity in a Europe that seems unable to generate significant economic growth. If that does not save Southern European nations, they must decide, in simplest terms, whether they are better off defaulting on debt than paying it. While Germany is currently inclined not to force them to this point, it is emerging on its own. This is the fundamental reality of Europe: Germany wants to save the free trade zone, but without absorbing Europe’s bad debts. Southern Europe needs to shift its burden and will eventually reconsider the viability of free trade, though it has not yet done so. Just as there are limits on agricultural trade, why not create the same environment that the Germans enjoyed in the 1950s, when they were able to protect themselves from American industrial exports, thereby growing their industry with minimal competition?
Central and Eastern European countries are in a complex position with the European Union, since they are generally members that are not in the eurozone. But for most of them, the question of Russia’s power and intentions is more important than the Greek crisis. For the east, there is an awareness that Europe never did progress to a common foreign and defense policy and that the European Union cannot defend them against Russia. They are also aware that NATO cannot defend them, except with American involvement, which is coming in very measured and slow increases.
Then there is the fourth part of Europe, particularly France, which is supposed to be Germany’s equal in the European Union but has fallen behind in recent decades, as it did in the 19th century. France is as much part of Southern Europe as Greece, along with high unemployment in the south. And along with the Southern Europeans, who are facing problems in the Mediterranean and North Africa alongside their economic woes, France is not drawn east, nor is it comfortable with German policies, but it is being drawn in multiple directions on economic and strategic issues.
The Net Assessment of Europe is that the Continent’s basic geographical split remains in place, and Russia still holds the weaker position. However, its relative strength has increased with the rise of divergent interests within the European Union, and its primary concern regarding the Continent is not Europe but the United States. Therefore, the crisis in the European Union will define the broader situation in Russia, and that fundamental crisis appears insoluble within the current framework of discussion. The discussion will move from debt and repayment to the creation of a sustainable European Union in which Germany may not get to export all it wants but must accept limits on its prosperity relative to its partners. Since politics makes that unlikely, the fragmentation of the peninsula will increase, and with it, Russia’s relative power will rise, drawing in the United States.
Samsung’s bet on a new, well-designed flagship phone isn’t paying off as well as the company had hoped.
The company told the Korea-based Yonhap News Agency that it has shipped 10 million units of the new Samsung Galaxy S6, which launched about a month ago. That number is down from the amount of units sold for a similar time period for Samsung’s last flagship phone, the Galaxy S5. Samsung sold 11 million Galaxy S5 phones during the first month of availability.
It’s important to note that these are shipments, not sales, for the Galaxy S6. It’s unclear how many people actually bought the Galaxy S6.
In the end, you get what you deserve. Die SameSung!
Germany’s net foreign assets of €1 trillion are actually far less than the cumulative total of German current-account surpluses over the past 15 years — because foreign debtors will never repay the full sum that they owe Germany, and the amounts owed have already been lowered through debt restructurings and valuation changes.
It’s time that Germany recognizes that building up ever higher net foreign assets is a loser’s game. However, as long as QE in Europe persists in depressing the euro to levels that exacerbate German economic imbalances, the game will continue — to the overall detriment of the international economy.
When it comes to the economics, the question is whether Greece would get the pain over more quickly by having control over its own affairs. Roger Bootle and Jessica Hinds at Capital Economics think that might be the case, and say Iceland’s experience after the country’s severe banking crisis in 2008 is worth looking at.
No question, Iceland had a very tough time. There were massive capital outflows from its over-extended banking sector, and its currency, the krona, depreciated by 40%. The economy contracted sharply, the IMF was called in and capital controls were introduced.
But, as Bootle and Hinds note, Iceland has bounced back. It has grown in every year since 2011 and national output is just about back to pre-crisis levels. The inflation caused by the depreciation of the krona has been tame and growth prospects are rosy.
The fall in the krona was important, since it made exports cheaper and provided a boost to tourism, where the number of visitors has risen by 60% to 800,000 a year between 2008 and 2014.
“The fall in the krona boosted net trade by enough to kick-start Iceland’s economic recovery without the need for the aggressive wage and price adjustments that have occurred in the eurozone periphery. Iceland was also able to tighten fiscal policy less aggressively than the periphery. Iceland’s fall in GDP of about 12% was around half as short as that seen in Greece since 2008.”
Bootle and Hinds say that Greece, too, would see tourism benefit from a cheaper currency, while the vast amount of unused capacity in the economy would limit the extent of the increase in inflation caused by the devaluation that would follow euro exit.
Capital controls would harm the economy, as they have in Iceland, but might be needed even if Greece stays inside the single currency. The weaker currency that would result from leaving the euro is not a get out of jail free card, far from it. But after five years of hard labour, staying in looks like a life sentence without remission.
There’s a return to healthy growth in the eurozone. Surprised? It’s called the QE bounce.
First the head of the central bank says he will inject £1.1tn into the 19-member economic bloc under a programme of quantitative easing (QE). Next, bank lending gets easier. More importantly, businesses breathe a sigh of relief, realising that after four years of austerity someone has put serious money behind the eurozone’s recovery.
Without downplaying the effect of low oil prices on consumer spending, it is the invisible hand of European Central Bank boss Mario Draghi – working the credit levers to make lending cheaper – that has done the trick.
So now Italy is back in the growth league with a 0.3% rise in GDP in the first quarter, the same as the UK, while France accelerated 0.6%.
It took German-led Europe 7 years of pain and an Italian ECB chief to start QE. Pragmatic Americans have done it from day one. Shame on Frankfurt…