

Jobs made Apple great by ignoring profit - 6ren
http://blogs.reuters.com/great-debate/2011/08/29/jobs-made-apple-great-by-ignoring-profit/

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guynamedloren
"Apple is in the process of disrupting itself right now .... Most companies
cannot bring themselves to make decisions that result in the market for their
existing core products being completely destroyed".

First of all, I'm pretty sure the notebook market is not being _completely
destroyed_ by tablets. Yeah, tablets are blowing up, and yeah, notebook sales
are probably taking a hit, but lets be real. This claim is grossly exaggerated
to the point that it is just not true. The notebook market has not been
destroyed.

And _disrupting itself_? Really? Identifying a new product that has the
potential to be hugely successful and profitable while _possibly_ taking a
small slice out the sales of an existing product means Apple is _disrupting
itself_? Another word to describe this is 'innovation'. And anyway, I'm not
even sure iPads are hurting Apple's notebook sales. I haven't done my
research, but I've heard that it may in fact be the other way around - that
the Macbook Air is hurting iPad sales.

Seems like the author just picked up the latest buzzword, and he's a bit fuzzy
on what it really means. Apple is undoubtedly innovative and fantastic at what
they do, but please stop fluffing up _disruptive_.

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vacri
Notebooks aren't taking a hit, desktops are.

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bwarp
I call bullshit. Desktops taking a hit from tablets - are you crazy?

Desktops are taking a hit from desktops!

There are still acres of desktop real estate which is going to be replaced
with more desktops.

Looking at this at a high level, there is actually pretty much sod all
difference for the average user in the last 5-6 years technology-wise on a
"desktop PC". They are just not buying them because nothing is compelling them
to upgrade as they are fine as they are.

If there was a technological leap then we might see something but for most
users, a 5-6 year old desktop would run the latest and greatest version of
Windows fine.

Tablets are going to be a short lived "experiment" which will dry up in time,
much as they always have been (Apple are far from being the first tablet
vendor). Microsoft may have the answer to that in a hybrid device but we'll
see.

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marcusf
I counter-call bullshit on your last part. Every time I get on a flight these
days half the plan sports an iPad. On the tube, iPads and Kindles are abound.
Sales trajectories aren't pointing anywhere but up. I think they left the
realm of "short lived 'experiment'" quite a while ago.

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Jare
This headline/article is missing the word 'short-term' in a few places.

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beggi
I don't think Jobs ignored profits at all. His aim was to create a company
that makes products that people love and more money to Apple enabled more of
their creativity. I do think one of the things that make Apple very different
is that they are not afraid of cannibalizing their own business for an even
bigger market, and also they're better than most at recognizing what that
market is.

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jmtame
“I don’t understand,” Jobs said at the product review meeting. “You’re going
to ship a million [printers] and not make money on these? This is nuts.”

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ceejayoz
Ignoring profits and ignoring losses are very significantly different things.

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mrich
Easy counter-argument: If Apple is placing the customer first, why not sell
the product at half the price (thus only 5% profit margin), wouldn't that make
more customers even more happier?

Branching out to different fields )i.e. iPod) than your current bread-and-
butter is not ignoring profits, it is being smart and realizing there are
opportunities in other markets.

~~~
shingen
Interestingly, Apple is placing the customer first by charging what they do.

Why? Because you couldn't do what Apple does with a 5% profit margin. They can
ignore Wall Street, creditors (which they don't have), sharks, hostile
investors (Carl Icahn etc), and so on all because they generate a healthy
profit.

Who thinks it would be a good situation for Apple to be begging at Bill Gates'
(ala 1997; whomever it might be) knees in the future if something goes wrong
with an iPhone launch? I'm betting their customers don't think it would be
good.

If Apple's customers love their products, it's in the interest of those
customers to keep funding Apple's ability to keep doing what it does. What
Apple does costs a lot of money. One slip at their scale could easily cost $10
billion. A 5% margin would not cover that.

If their next data center costs $5 billion in cash to build due to ever
increasing scale and complexity, and they had had 5% margins all this time, it
might be a stretch to pull it off (maybe with debt). If the global
complexities of navigating a world wide mobile product increase to ever bigger
scale, that 5% margin wouldn't cut it. I couldn't imagine trying to manage the
iPhone at 100 million in sales, on a 5% margin. They're not selling jelly
beans.

How about if Foxconn keeps having to raise wages by 15% to 25% per year for
the next ten years. Again, 5% margins would not cut it. Or if that did happen,
and Apple then finds it more cost effective to build completely automated
robotic assembly systems, but it costs $20 billion to R&D and construct
that... and so on and so forth.

~~~
mrich
Would you ask your bank to raise the interest on your mortgage so they can
become more independent and offer you another mortgage later?

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shingen
I wouldn't want to have to ask them to do so, I'd seek out a bank that
operates soundly. It's the difference between Wells Fargo (forced at gun point
to take the TARP money), and insolvent vile blackholes like Citi and Bank of
America.

I would rather my bank charge a profitable, common / historically normal
interest rate, than go to the Federal Government (aka tax payers) seeking a
bailout at a later date or collapsing into insolvency.

For example, by keeping interest rates at 0% for so long, and driving 30 year
mortgage rates down below 4%, the Federal Government is going to burden US tax
payers for decades to come with hyper expensive (to the tax payer), money
losing mortgages. No sane business would lend money at 4% for 30 years on
something like a house after the disaster we've just been through and what's
still occurring.

Fannie & Freddie are going to keep costing tax payers tens of billions for
many years to come as the Feds intentionally under price the market on
mortgages. I don't think that's in any way sane or fair to tax payers.

~~~
mrich
Well, last I checked Samsung, HTC, Motorola, HP, Dell, Asus didn't receive
bailouts. We are talking about tech companies here - arguing that Apple does
not care about profit is naive at best, as shown by my original argument.

They could easily stay independent by other means. They care about their
profit more, so that's why they don't lower their margins. As a public
company, they don't have much leeway here - what do you think would happen
when they come out saying at the next shareholder meeting "our customers are
most important to us - half price on everything from now on!"

~~~
shingen
Who's arguing that Apple does not care about profits?

I've argued the exact opposite across numerous posts. They care about profits
and it's in the best interests of their customers that they do. Which is
exactly what I said in the parent.

I'd argue that the best interest of the Apple customer is maximum value, not
cheapest price. And that's exactly why their customers continue to buy like
crazy at a high price point. IE what's best for the customer and what's best
for Apple are not mutually exclusive, but rather they're fully integrated.
Apple's customers would not be served by an Apple with 5% margins.

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davmar
wrong.

from his 2007 iphone keynote intro: 26m game consoles sold, 94m digital
cameras, 135m MP3 players, 209m PCs, 957m phones... 1% market share is 10
million phones. "Exactly what we're trying to do, 1% market share in 2008, 10
million units and we'll go from there."

[http://www.blogcdn.com/www.engadget.com/media/2007/01/dsc_02...](http://www.blogcdn.com/www.engadget.com/media/2007/01/dsc_0245.jpg)

they were thinking about profit. rest assured.

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blvr
_> Most companies cannot bring themselves to make decisions that result in the
market for their existing core products being completely destroyed. When they
consider it from a financial perspective, it just doesn’t make sense to create
new products at the risk of jeopardizing your profitable, existing products._

All Apple's profitable, existing products are eventually made unprofitable by
shoddier but equally capable clones. Think Windows, Android, the myriad of MP3
players you can pick up for tens of dollars. The only way they maintain
profitability is by bein innovative and creating new markets that they can
dominate for a short while (and by generating brand loyalty for their older
products because of their new products). So there isn't a profitability vs.
innovation dilema for Apple. For them being innovative __is __being
profitable.

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novusordo
While I don't agree with the headline the points made in the actual article
are great. When a business makes a lot of money from a single source new ideas
can seem too risky or even harmfull to existing profits.

Jobs ability to look beyond the current paradigm above all that was unique.

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zaidf
The thing about people like Jobs is that their definition of "ignoring" still
means that they put more thought and effort into thinking about profit than
your typical founder who is _obsessed_ about profits. They simply operate at a
different scale.

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Intermernet
A company with that many patent suits underway cares not for profit? Pull the
other one, it's got iBells on it.

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keeptrying
He didnt ignore profit, he focussed on value.

Value that most no one else could see.

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bickfordb
This is an absurd argument. Apple's profit margins have always been
significantly higher than any other competing electronics or computer
manufacturer.

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dthunt
Apple is the company that sells $3000 laptops that are comparable to most
$1200-1500 laptops, but are slightly prettier and less serviceable and $70
keyboards with broken debouncers.

If you're going to write an article about 'ignoring profit' cite some specific
products and how they were priced cheaply, or get off the frickin' pot.

~~~
enko
> $3000 laptops that are comparable to most $1200-1500 laptops, but are
> slightly prettier and less serviceable

So all those people who buy them are just stupid then, are they? What
nonsense. This is little better than trolling.

~~~
Gigablah
Perhaps a better comparison would be the Apple Store's $400 price tag for 8GB
RAM modules when you can get it for around $100 normally. I don't think the
"customer service" is worth $300.

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tcarnell
eh? they build phones in China - the other side of the world with a massive
language and culture barrier with the sole purpose of saving money - how are
they NOT thinking about profit !!!

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super_mario
Too bad Apple today is an appliance company, making entertainment devices for
technophobes concerned solely with low support costs and above all profit.

At one point they made computers that were even appealing to software
developers and the UNIX crowd. Those days are over.

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shingen
That makes for a great headline, but it's wrong. He absolutely did not ignore
profit: he understood its proper place better than most.

Jobs loved profit. He understood that the best products, marketed properly,
can produce extraordinary profits. He wanted his products to generate a lot of
profit so he could keep plowing that necessary profit back into producing ever
better insanely great creations. He most certainly did not eschew profits, he
understood not to put the profit before the product. There's a very big and
critical difference between eschewing profits and knowing their place.

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Jarred
Can you cite where you learned this from (Steve Jobs' view on profits)?

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batista
People can form opinions themselves you know, we are not all content to be
"secondary sources".

He doesn't have to have "learned" it in some specific source, besides
observing Steve Jobs actions and words.

So, I find this "citation needed" meme, when the thing discussed is some
personal opinion or a value judgement or an estimation or some sort, to be
ridiculous.

~~~
mattgreenrocks
> I find this "citation needed" meme, when the thing discussed is some
> personal opinion or a value judgement or an estimation or some sort, to be
> ridiculous.

It's important to note that these sorts of people are often not interested in
a discussion; they merely want to be proved _right_ on the Internet by hiding
behind the perceived invincibility of empirical facts.

You are right: it is toxic, pedantic, and not something that most people would
have the gall to say in real life. Thus, not worthy of being addressed. (edit:
though the grandparent post was nowhere near as bad as others I've seen.)

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rsanchez1
Well, once you make a product that practically prints money, profit is one
thing you can ignore. It will just happen.

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ramblerman
What a naively written article. Jobs was indeed a visionary with a passion for
technology. But he was an extremely shrewd businessman.

igadgets are all manufactured (by hand) in china, in a factory that consists
of 300,000 workers! They might easily work 12 hour days, 6 days a week. And
suicide is rampant.

This keeps costs as low as possible, and allows apple to focus it's big profit
on further innovation.

Fair game in my opinion, I'm not one to judge the morals on this issue, But
call a spade a spade.

~~~
swombat
_igadgets are all manufactured (by hand) in china, in a factory that consists
of 300,000 workers! They might easily work 12 hour days, 6 days a week. And
suicide is rampant._

Are Sony gadgets manufactured any differently?

Also, considering Apple is probably the only major consumer electronics
company to actually be transparent about working conditions (unlike the others
who also do the same thing but don't care), it's not only unfair, but
seriously biased "hateboy" fare to keep picking on them about that, especially
out of context for no apparent reason.

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ramblerman
no sony, microsoft and many others employ the services of foxcon.

I own a few apple products, I wouldn't consider myself a "hateboy". I just
think Steve Jobs should be called a businessman, and not some idealist who
didn't care about profit.

~~~
swombat
Oh, I totally agree with that point, but the Foxconn thing really seemed like
a cheap shot.

