Really? Apple?

     There was an article in the Wall Street Journal on Friday, June 28th: Apple Shares Fall as Design Chief Jony Ive Plans Exit.  From the article:

Mr. Ive, who has been at the helm of the design team since 1996, helped design the iPhone, which has driven Apple’s sales and profit for most of a decade. Mr. Ive also oversaw the development of key products such as the iPod, iPad and MacBook. 

His departure marks the end of an era at the iPhone maker as it shifts to an emphasis on services from product development.

     Really?!? Apple is shifting from a focus on products, innovative and game changing new products, to services. All I can say is wow…
     In March 31, 2012, I wrote a blog Morita and Jobsin which I talked about the legendary founders and innovative driving forces behind the innovations for which Sony and Apple were known. When Morita passed away, the innovative spirit at Sony died with him. I feared that the same could happen to Apple. It seems to be a very natural occurrence when a founder who drove and demanded innovation passes on. Corporate “wonks” take the helm. While they might be good finance, operations, or marketing, they lack the entrepreneurial soul of the founders. There is a high risk of a company known for innovative and market changing new products to become a company of line extensions that is then vulnerable to losing their edge with consumers.
     The Apple Watch work began under Steve Jobs. So, it cannot really be counted as a post-Jobs innovation. AirPods may be the only true innovation. The buzz about the latest version of the iPhone seems to have waned since they have made the price for phones with 256 GB of memory about $1,000. They were thinking everyone would continue to buy them and were bucking the trend of supply and demand. They were wrong. First the newer phones were not innovative enough, not so different in features and performance, than predecessors to justify the higher prices. Also, the market for smart phones has become saturated. Both lead to lower volumes of sales.
     The growth and success of Apple has been based on innovative market busting products and they simply have not had them since the passing of Jobs. Will forsaking product innovation for service innovation be any better for them? Only time will tell.
     IBM used to make physical products. The M stood for “machines.” They were the dominant desk and laptop company in the US if not the world. They deemed they could not cut it anymore in that market and sold their laptop business to a Chinese company: Lenovo.
     The movement from products to services is not necessarily a bad thing. Apple is making money for sure. IBM is making money. But, there is something about making things that are on the cutting edge and that everyone wants. Akio Morita and Steve Jobs understood this very well. Lastly, it is a personal thing with me. We need to be a nation that makes things that people want and helps them live better. It seems like the innovative part of the American Spirit that was so strong in the last century is slipping through our fingers like sand.
     I grew up admiring Ford, Edison, Bell, Firestone, Jobs, and even retailers like Walton and Bezos. I believe if you are not a good and competitive manufacturer of a product in your own factories, you will lose that expertise plain and simple.   Eventually you will also lose the innovative edge to whoever you outsourced the manufacturing to.  One follows the other.  To keep that innovative edge, you need a leader with scope and vision of an entrepreneur and not a corporate apparatchik.
     Almost on cue, there was another article in the Wall Street Journal on July 12: Red Wing, Iconic U.S. Shoe Maker, Labors Mightily to Bring Production Home. Red Wing Shoes is a privately held maker of industrial shoes: the safety shoes factory and warehouse workers are required or encouraged to wear. From the article:

Rebuilding U.S. manufacturing presents complex challenges for industries like footwear, electronics and bicycles, where most of the supply chain has moved abroad. Even a company like Red Wing—with a long history of U.S. production, private ownership and control over a key raw material and distribution—makes more than two-thirds of its shoes abroad. 

“The reality was that we had not developed a lot of new products for U.S. manufacturing,” said Mark Urdahl, a former General Mills executive who joined Red Wing 14 years ago and became chief executive in 2015. “You start to lose the skill set—through retirement and attrition—of people who have the ability to develop footwear here.”

     They simply exported the manufacturing and lost that expertise. The ability to develop new products naturally flowed to where the manufacturing went.
     Are shoes something we want to and have to protect? We are not a country of having governmental manufacturing strategies like China. So, in our case, it is up to the leadership in each industry to want to fight, innovate, and make the best things in the world here. I am not sure we are training those kinds of leaders these days. Jobs, Morita, Ford, and others were not financial guys. They were innovators and makers. That is probably the mojo Apple needs to find again before they sell their phone hardware business to Huawei or Oppo just as IBM sold their ThinkPad business to Lenovo in 2005.  That would be a sad day.