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back to article Former CEO John Sculley: Apple must adapt or die

John Sculley, the former PepsiCo president who served as CEO of Apple during most of the 1980s and early 1990s, says that while Apple is "an extraordinary company," it has not done enough to adapt its products to suit emerging markets. In a video interview with Bloomberg on Monday, Scully – who is perhaps best known for a 1985 …

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> a series of market missteps.

Did that include going for the mass market with clones and licensing?

Hmm.

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This is the same guy

who damn near wiped apple out right?

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Devil

Re: This is the same guy

It's a pity he didn't. The whole tech world would have been a lot better off if he had.

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Re: This is the same guy

>The whole tech world would have been a lot better off if he had [killed Apple]

So you don't think Windows benefited from having a competitor in various Mac OSs? Before you answer, remember MS was the company who stopped development on Internet Explorer when it thought it had quashed competing browsers.

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@Dave 126

That is as it may be, but also remember that Apple wasn't a serious market contender at the time when it would have mattered, namely the late 90s/ early 00s, which is what allowed Microsoft to entrench Internet Explorer as they did. Apple at the time was a tiny percentage of the IT market, primarily geared to the graphic design industry but little else. It was Mozilla and Google's combined efforts, along with a lot of pressure from a lot of pissed-off web devs, which broke that monopoly, not Apple.

The fact remains that Apple has done far more harm than good in recent years. They've created and popularised the walled garden, which every other market player now wants to emulate; established the paradigm that a computer you buy isn't really yours; systematically eroded openness and customisability in computing architecture; unleashed a ridiculous and litigious firestorm that has stifled innovation the world over and benefited nobody but a bunch of greedy patent lawyers. All of which more than counters for any putative benefits their presence as a competitive entity might have created.

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Re: @Dave 126

"They've created and popularised the walled garden, which every other market player now wants to emulate; established the paradigm that a computer you buy isn't really yours; systematically eroded openness and customisability in computing architecture; unleashed a ridiculous and litigious firestorm that has stifled innovation the world over and benefited nobody but a bunch of greedy patent lawyers."

Best argument I've read on el Reg for a very long time. Well done, sir. Apple may do many things well, but those you mention are a detriment to our industry. And we're here because we love this industry, right? Not because we hate it and want it to die, strangled by the likes of Apple.

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WTF?

Re: This is the same guy

Yes, we could all still be using floppy disks...

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Anonymous Coward

Re: @Steven Roper

> They've created and popularised the walled garden, which every other market player now wants to emulate; established the paradigm that a computer you buy isn't really yours; systematically eroded openness and customisability in computing architecture

IMo Apple is the last man standing in the old vertically integrated computing business model of the 1960s through 1980s. What you wrote above is almost exactly what IBM used to do in the bad old days, but now even IBM has eventually seen the light. However since the widely-cloned Apple II - and with the exception of the attempts at commoditisation that nearly killed Apple - the company has always operated that way.

The dilemma is that the ancient model is - other than the problems of cost and lockin - not at all bad for the customer if done right.

In the Microsoft-dominated world of today we have cheap equipment and moderately priced software but then all round the world IT departments spend a lot of time and money creating their own walled gardens to protect their customers from the undesirable side-effects of openness and interoperability.

Although Apple is not for me they have always done a fantastic job of making computing accessible to non-technical types and what I particularly envy is the absence of a forced-upgrade treadmill.

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Re: @Steven Roper

"Although Apple is not for me they have always done a fantastic job of making computing accessible to non-technical types"

Apple's dumbing down of computing isn't necessarily a good thing.

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Re: @Steven Roper

"making computing accessible" != "dumbing down"

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Re: @Steven Roper

"making computing accessible" != "dumbing down"

Absolutly agree - but it's a shame that it comes at such a high price. Accessible to me includes those that don't have £1,000's to spend on a machine.

Licensing the Apple OS would go a long way to making computing accessible.

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Re: @Steven Roper

No one ever considers the extraordinary resale value of Macs.

I sold an 8 year old Mac on eBay for $550, half the cost of a new MacMini.

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Re: This is the same guy

badass. over there.

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Anonymous Coward

Re: @Steven Roper

Don't you mean "vulnerable" not "accessible" ;)

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Re: This is the same guy

True - though I can't help wondering that the same comment made for MS would have been voted up a lot more (by the same argument, I like having an alternative that isn't Apple; and more generally, it's nice having more than two choices).

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Re: @Steven Roper

While I tend to agree about the end result of making stuff accessible, I think we need to be very much aware of _how_ they do it: eliminate choice and variety.

When done well, this strategy can be very effective, but fundamentally the price we pay is not really much different from the price we worry about when e.g. Microsoft or Oracle eliminate (market) alternatives.

I think you're right, though, that the walled garden is what every vendor has wanted since the invention of the computer, as in sole-sourced platforms, leased software, continuing revenue streams. And while IT departments do indeed create their own walled enclosures, they do it in the knowledge that they control it, and I don't know of any vendor that they totally trust!

I have to say, though, that I'm puzzled by the "forced-upgrade" remark. In my experience, Macs and PCs behave similarly in terms of patches, and let's not forget quite how screwed you may feel these days if you invested a lot of money in PowerPC software...

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Anonymous Coward

Re: @Steven Roper (forced upgrade)

Good question Malcolm... my take is that because the profit of a pure software vendor comes from software sales, SW vendors have to sell us the same stuff over and over again (OK in PC-vs-Mac Apple have the privilege of being a small player so they have the option of growing their business by getting new customers rather than milking their existing customer base). That means that every 3 years Microsoft (for example) comes out with a new OS (and it seems like every 6 years a jarringly different UI). It's designed to make previous versions look obsolete, much like American cars of the 1950s and 1960s. Thus novelty gets priority over stability. (and in my career as a dev, I've known the feeling of fighting for time to improve the software quality in the face of marketing demands for new features).

The Old-school model (and here I'll take a non-Apple example, the HP 3000 series) has a reputation that stands or falls on the quality of the system as a whole. Every 3 years the HP salesmen would come offering us *more power* with minumum user-visible change - though in the HP 3000 world there was similar pain with an architectural transition.

I'd say like the long-gone HP of Bill and Dave, Apple aims to make products for the long run where the customer can quite happily use a machine with the OS it came with, for 8 years, and without any maintenance or reinstallation whatsoever.

Whereas in the PC world there is still too much of "new shiny - don't think about the bugs - new shiny". Of course Apple have now provided a handy counterexample in the form of the Maps debacle...

Since Apple *have* obtained such a huge market share in mobile, I wonder if they will start inventing ways of milking their existing customer base...)

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Anonymous Coward

Re: This is the same guy

Oh yes, that would have been great. Microsoft with an even higher market share, they would have behaved properly and not taken advantage of that situation would they? (duh).

Contrary to what Google will tell you the computer and phone business is still largely a Microsoft and Apple competition. Google just add obvious or pointless gimmicks to their phones, the rest is as old as the hills, icon grids and GUIs.

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Re: @Dave 126

The "walled garden" concept is not new, it's all part of this trusted computing idea that has been championed by Microsoft and Intel for years.

Games consoles are the ultimate in walled garden yet people buy those and don't complain.

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Re: @Steven Roper (forced upgrade)

Ah, I get what you're saying. I think it depends very much on the set of users; I have large numbers that are on XP and/or Office 2003, and see no reason to change, even though the end-of-the-road is fast approaching for XP.

"You've got to upgrade!"

"Why?"

"Microsoft is ending all support for XP, including security patches".

"Good. I never liked those updates they kept sending."

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So now the idiot

who almost run them into the ground before Jobs came back thinks they will listen to him? Perhaps when Elop is fired from Nokia, they can hire him as the new Apple CEO to take them into future markets. What a bunch of bull!

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Re: So now the idiot

Listening to John Sculley talk about Apple's strategy is like listening to Richard Nixon talk about ethics.

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Anonymous Coward

Re: So now the idiot

>Listening to John Sculley talk about Apple's strategy is like listening to Richard Nixon talk about ethics.

I beg to differ- I would enjoy listening to Tricky Dicky chat about ethics.

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Coat

Re: So now the idiot

"Perhaps when Elop is fired from Nokia, they can hire him as the new Apple CEO to take them into future markets. "

An iPhone with Windows Phone 8... Well, it is a start. :-P

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Re: So now the idiot

Yeah. I was thinking this. He got rid of the guy who saved the company in the end. So his opinion is worthless..

But hey, it doesn't seem to matter how useless you are once you get to CEO level, because it seems to go roughly like this: "Hey, you lost X billions of dollars? Never mind, have a few million this year anyway"

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@ Piro

Don't let rose tinted glasses confuse you. Sure Saint Steve saved Apple on his return, however part of Scully's problems were down to the fact he was trying to run a fractured company with nervous paranoid workers, all of which was down to the way Steve Jobs ran things in the first place.

(now without poor grammer and spelling mistakes of the last two attempts ... I hope)

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Re: So now the idiot

Worthless? Hardly.

He knows a vast amount more about Apple than any of us do, INCLUDING what didn't work, what Jobs did right and less-right (obvs Saint Steve never did anything _wrong_, just less right).

Worth remembering, fanbois, that Sculley championed the Newton, which Jobs killed, and then trumpeted the glory of the iPhone. It is obviously heresy to suggest that Saint Steve might have realized that extremely portable digital organizer-type things do, in fact, have a market.

Also worth remembering is that Sculley, not Jobs, was the one that established Apple as a premium brand (by adding 25% to the price of the first Mac).

Sure, I wouldn't think he's the guy to run Apple, but his knowledge -- even if just his knowledge of what doesn't work -- is worth millions more than the Piro's!

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Why does everyone assume there are only two smartphone price points?

He compares $500 and $100. Those are very different. Apple cannot create a $100 iPhone. There are $100 Android phones, but no one carrying a GS3 or other high end Android phone would consider it to be a smartphone.

What's wrong with a $300 price point? Still less than half the price of an iPhone 5, and $150 less than an unsubsidized two year old iPhone 4, but something that could still be an iPhone. Apple doesn't need to compete for market share in the $100 device segment. That segment is without value for anyone except maybe Google (they can still deliver ads to these guys) The owners of these bottom end phones aren't going to spend enough money on apps to become "sticky" to the Android ecosystem if/when they're able to afford a more expensive phone in the future. Most will still be a customer only for low end phones a decade from now. No one is going to make money off them, and Apple loses nothing except meaningless market share by ignoring them.

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Re: Why does everyone assume there are only two smartphone price points?

>What's wrong with a $300 price point?

That it might eat into the sales of their iPhone 4 (with its higher margins) is a possible reason, plus the less immediate cost in terms of their image. If the $300 device is too clunky, ugly or feature-limited, it might put buyers off considering another iPhone in the future. True, Samsung have phones from £10 to £400 (though use 'Galaxy as a sub-brand for the pricer ones), but Apple benefit from keeping their message simple- as demonstrated by my dad pointing at any touch-screened phone and asking "Is that an iPhone?"

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Anonymous Coward

Re: Why does everyone assume there are only two smartphone price points?

That cheaper end mass market share is absolutely relevant to those who will survive and prosper in it.

Those would be the ones *without* gigantic unnecessary overhead and historical baggage.

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Re: Why does everyone assume there are only two smartphone price points?

> Apple cannot create a $100 iPhone.

Oh, I'm sure they can, but would anyone buy it? It would be like a $5000 BMW, or a $200 Armani suit. Fashion accessories are only worth buying when everyone else can see that they're expensive.

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Re: Why does everyone assume there are only two smartphone price points?

Simply because on the network subsidised model there's not such a difference between the bundled cost.

Take a UK contract, your base price for any acceptable featurephone handset is probably fifteen quid a month with a reasonable allowance for voice and data. So that's what my son's Galaxy Ace is costing. For twenty three quid a month (same network, slightly better allowances) I have a Galaxy S2 (bought when that was top of the line). For most people, finding seven or eight quid a month extra for a top of the line handset isn't impossible. Over a two year contract that's about £200 difference, but it never feels like that.

That's why there's so few mid market handsets, because you'd only ever buy one if you weren't the person using it!

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@Ledswinger

Except very few countries follow the subsidised phone market - we do well out of it in the UK

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Re: Why does everyone assume there are only two smartphone price points?

I'd consider them smartphones (as a Nexus owner). Obviously not as good - but I don't get this idea of labelling them differently just because of that. A £400 laptop isn't as good as my £1500 laptop, but that doesn't mean I don't consider it a laptop. It is, by definition.

"Smartphone" has always been a terribly ill-defined name, and I don't understand why people and the media are so keen to restrict its definition to only some devices; it's pretty much just a marketing term, so if something is marketed as a smartphone, it's a smartphone. The original iphone couldn't even run apps...

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Re: Why does everyone assume there are only two smartphone price points?

But if your Dad does that with _any_ phone, it's clear that this hasn't happened because of Apple only having a few simple models, otherwise he'd only be doing it for those simple models. Rather he's been misled to believe that anything is an iphone, even when he has no clue what they actually look like.

The obvious blame is the vast amounts of media coverage that the platform got, when it's never been number one. Had Samsung (who actually deserve it, being number one) got that coverage, he'd be asking if it was a Galaxy. (Well, there's also this odd effect where for some reason, people always refer to Apple by brandnames - "posted on my iphone" etc - whilst everyone else almost always uses a generic term - "phone" etc.)

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Re: Why does everyone assume there are only two smartphone price points?

>. Fashion accessories are only worth buying when everyone else can see that they're expensive

But these are only going to be sold in India and China. Do you want to sell a couple of $1000 phones to a few expats and millionaires kids, or do you want to sell 100million $250 phones to the new middle class?

The nice thing about cell phones is that you can ensure that they aren't imported back to the home market to devalue the brand

There is such a thing as being too high-end, people buy BMW and Armani because they can't afford Bentley and Saville row

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I see no problem with premium iTurds.

And that is why I don't buy them. A Benz on the other hand actually has more useful value, not just image value, over a Hyndai. However, there is no problem with tech brand names. The same morons who give Louis Viton and Gucci (spelling?) all their money will give Apple their money.

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Anonymous Coward

Re: I see no problem with premium iTurds.

Have a look for some data re Apple's reliability and resale value (Merc's reputed virtues) and see if your comment needs any revision...

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Re: I see no problem with premium iTurds.

And for both of you, if you think Hyundai hasn't made anything new or bigger or shinier since the 1980s, I can assure you M-B knows otherwise (as do Honda, Toyota, VW and the rest).

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Anonymous Coward

Re: I see no problem with premium iTurds.

Yup. We're looking at a new car right now - Hyundai is right at the top of the list.

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Re: I see no problem with premium iTurds.

No one cares about resale values of tech products - and those that keep their value only do so as there isn't newer stuff coming out to push prices of the older generations down. Amigas have great resale value, but I'm not sure that's much an argument.

As for reliabilty, this is the company that everyone says it's good, because you can take it back to the shop to get it repaired.

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Seems fair

To be fair the guy certainly knows how to turn a company around. Granted his experience is mostly in wrong turns but hey why split hairs. Perhaps Carly Fiorina will be next to chime in to help "save" Apple from poor leadership.

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Apple never reduced the price of the iPod to compete with rivals, but instead released the iPhone. Sculley hasn't considered the possibility of Apple entering a new (and thus growing) product category... what that might be I have no idea, and if anyone does have a good idea then they obviously will keep it close to their chest.

It might be that such a product category won't exist (we're pretty sorted for AV gadgets), or that another company has enough R&D cash and commitment to get there first.

No commentard has yet made a very strong case for Apple being able to get enough margin from selling a TV set plus gubbins (or at least why it couldn't be an external box) but that doesn't mean Apple don't know something we don't- or are at least putting in a lot of money into trying to find a compelling reason.

We pundits get it wrong (as can CEOs) as shown by Wired's late ninetoes article "Ten things Apple must do to survive"... Apple didn't follow their advice. Engadget wrote an open letter to a pre-Pre Palm and received a letter back to the effect of 'Thanks, good points, we have it hand' and certainly Palm made a good effort of it with the Pre.

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ooops

"ninetoes article" is a typo, and has nothing to do with mowing the lawn in sandals.

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Re: ooops

Ah, for a minute I thought Wired had once hired a Morrowind character to write articles.

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Stop

@Dave

They did however introduce a range of smaller, cheaper iPods. They've already done that with the iPad, no reason to think they can't do something similar with the iPhone.

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Re: @Dave

>They did however introduce a range of smaller, cheaper iPods.

Very true, but rather than cannibalise sales from the iPod 'Classic', smaller players can complement it. The iPod may already have have docks etc, and use the Classic for the car or lounge, the Nano for the gym or journey to work. In any case, the technology changed- Flash players are now cheap and have far bigger capacities than the earlier HDD-based iPods. Only Apple, Archos and Cowon make HDD-based players these days, with the Archos not pocket sized.

>They've already done that with the iPad, no reason to think they can't do something similar with the iPhone.

Judging by the cost of the iPad Mini, they have margin enough on it. Again, big iPad for the sofa, iPad Mini for the car glovebox or handbag, or for those who won't stretch to £500 for a toy.

Both the iPod 'Classic' and big iPad are too heavy or big for all situations... thus leaving a convenient gap for a baby brother or two. The same isn't true of a phone, which has got to be portable and suitable for all but the most niche of activities (outdoor expeditions, for example, where weatherproofing and battery life are of prime importance)

I have considered the need for a smartphone if one always has a smallish tablet to hand; a dumbphone + tablet combo has a lot to recommend it (long phone battery life, low cost of phone replacement if lost, internet functions easier on a tablet by virtue of its size) but I can't imagine Apple making an dumbphone- an iPhone that doesn't do apps would reduce the clarity of their message.

Rather than spend money on a creating, testing, tooling up for and then communicating the benefits of a new iPhone design, its more efficient for Apple to just continue selling the previous version alongside the latest and priciest.

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"Owing to his poor performance at Apple, Condé Nast Portfolio and Business Insider have both included Sculley on their lists of the worst American CEOs of all time."

Perhaps anything he says should be taken with a pinch of salt or even a heavy dollop of jealousy?

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