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back to article Schiller: 'Almost everyone' at Apple works on iPhones - not Macs or anything

Apple's head of marketing has told a court that the iPhone was a "bet-the-company product" which could have brought Cupertino crashing to the ground. Appearing at a damages retrial against Samsung, Phil Schiller said the fruity firm had gambled everything on the iPhone. But after Steve Jobs rolled the dice, "almost everyone" at …

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Anonymous Coward

I can see that there's truth to that. That's the difference between Apple and Microsoft, Apple put all their effort into a product and fully back their product. At Microsoft one team backs the product and the other teams try to stop it.

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Anonymous Coward

First a person who can imagine a vision, then a vision, then a person who can make that vision a reality.

He who takes the risk and wins.....

He who dithers......

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FAIL

And yet...

The figures out this week show a market share *drop* for the last quarter from 13% to 12% which covers the freaking 3 quarters the new iPhones were launched!

Anecdotal evidence from teenagers (unprompted) chat this week tells me the wind has definitely turned amongst them for anything Apple. It is definitely uncool - this Christmas all the desirable tech they want is Android powered, whether its Samsung, HTC, Sony or even the new Tesco tablet.

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Microsoft often has more than one team working on the same product, and the leadership will decide at some late stage which one to go to market with. Bill Gates believes competition breeds excellence (ironic in a company that did so much to maintain their monopoly) so he encouraged this internal competition between teams. Unfortunately the downside is that it is just as likely a team will compete not by doing better than the other team, but by trying to hinder the other team's efforts.

Once you have that mindset in place, just about every team is a potential enemy. You want to look better than them because you want more resources, more people, a bigger go-to-market budget, etc. and if that takes blocking their progress, so be it.

Apple has very few products, and never develops two products with the same purpose to see which one "wins". It is a totally different mindset.

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Re: And yet... (@Bob Vistakin)

The new iPhone launched 11 days before the end of Q3, and even then only in its first ten countries. There are a lot of reasons to think Apple's stubbornness is costing it huge amounts of marketshare but the Q3 year-on-year sales report isn't one of them.

My feeling is that Apple succeeds when it is technologically ahead. It slowly withers when it tries to rely on being cool. With the Mac they eventually found a way to make it sustainable but they've never managed to turn product lines around and reclaim dominance in a market they've previously lost. So I'm not optimistic for iOS, especially if the 5C is all we're getting as a price reduction.

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Re: And yet...

"Anecdotal evidence from teenagers..."

Even if that is true (and I'm skeptical...and I hate Mac), that is only because the jelly of the month calendar has better pictures this year than last. Everything pushes and pulls so quickly with mobiles that in my opinion no 1 manufacturer is king to people no matter what the market share shows. Sure, someone always has to sell more than others, but in the mobile world all interests are mobile.

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Re: And yet...

I'm impressed that they have publicly announced that they gave up bothering to develop their laptop etc lines beyond a few marginal outlying staff.

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Re: And yet... @bob

And since when has the average teenager been able to afford apple products anyway?

Apple may have been an aspirational choice for them - but very often they end up with BB or low-mid android.

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Re: And yet...

LOL, exactly. I'll have to show that quote to all the Mac-heads here at work that complain they can't get a Mac (our budget is too tight for that).

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Holmes

Re: And yet...

"Anecdotal evidence from teenagers..."

You missed the point, which is not whether they could or couldn't afford one, but the fact they no longer aspire to do so.

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Re: And yet...

Teenagers asking for the Tesco tablet? I should bloody well cocoa.

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Mushroom

Re: And yet... @bob

> And since when has the average teenager been able to afford apple products anyway?

The idea that Android phones are "just the cheap option" is something that butthurt Apple fanboys tell themselves in order to sleep at night.

Android phones aren't any cheaper and Apple phones have the same kinds of subsidies where that kind of thing is relevant.

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Anonymous Coward

Re: And yet...

You hang out with some strange teenagers...

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Anonymous Coward

Re: And yet...

BWAHAHAHAH!

Just offered my 2.

Nexus 7, new model.

Tesco Hudl.

Ipad mini retina.

No dithering.

Ipad.

Phone wise.

Iphone 5s, or Nexus 5, or Samsung S4.

Iphone 5S, 1, Iphone 5C (cos you can get it in a colour) although when a coloured case was offered the 5S was opted 4.

The only reason anyone in this house grabs anything Android is to play ingress.

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Re: And yet... @bob

Erm really?

Android isn't cheaper than Apple?

Lets assume new to avoid ebay luck.

Cheapest reasonable Android phone (Y300/Motog G) £70-£80

Pretty good one N5 (£329)

"HIgh End" S4/HTC1 £500

Cheapest Apple Iphone

4S 8GB - (£349)

Middle - 5C 16GB (£469)

High End 5S 16GB (£549)

Not sure how many people send their teens to school with a high end phone.

So lets look at middle, apple is £100 more.

Bottom end, at the end where you're more likely to get a teen a phone.

Much much more.

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Or Apple were severely under-capitalised and couldn't afford to spaff away a few billion in the way Microsoft have, repeatedly.

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To be fair to Microsoft, they have been implementing their visions. It's just that no-one has liked them.

Just think about:

• The ribbon in Office products — that's fairly visionary for Microsoft.

• The UI once-titled called 'Metro' — that's very visionary for Microsoft.

They took the risk and now they are losing. Maybe dithering and staying with XP v3 would've been better?

Personally, I'd like to see Microsoft introduce a 5-year schedule and release products so good and desirable that upgrading would be the obvious choice. Get users into the habit of replacing their PCs and software all at the same time.

Introduce nothing really radically different, because people, as a rule, don't like change, they want it to same more or less the same.

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Re: And yet...

Yep, teenage nephews and nieces of mine consider Apple to "last season" or "Crapple"

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Anonymous Coward

"'Almost everyone' at Apple works on iPhones - not Macs or anything"

Not surprising - It's hard to do real work on a Mac. I guess they use Office 365 on their iPhones...

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Anonymous Coward

Re: And yet...

Windows Phone already pushed Apple into 4th place in Italy and is approaching the same in a number of other countries...

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Anonymous Coward

yeah right.

So if the iPhone hadn't been a big success Apple would now be defunct and sold out to the highest bidder for penny shares.

What a load of rubbish.

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Re: yeah right.

Probably not rubbish. Apple has historically been a niche manufacturer and stepping outside your niche is incredibly expensive. With their very limited product catalog adding another device is a really, really big deal.

Most companies that experience incredibly large growth spurts do so on the back of a single risky product. If it succeeds then yay. If it doesn't then you're out your huge investment and have pretty much blocked yourself from a second attempt in that product category for at least a generation of Humans. Many companies don't survive those failed attempts. Highly diversified companies won't have the same level of risk, but the payoff is smaller.

The great risk/great rewards cliches are, generally, true.

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Re: yeah right.

That's very nearly what happened to Apple in the mid nineties - hell they even needed a 150 million dollar bailout from Microsoft.

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Re: yeah right.

I agree with the idea that a 'bet on the company fails it will fail big time'. Just look at several of the once big players. Blackberry, HTC, even Nokia all have flown high only to fumble. Sadly Nokia had the only feature/function I ever found useful then the fools dropped it in favour of shed loads of useless rubbish 'features'. It did not do them a power of good so their product line is now MS.

The fact that MS have now started to become even more expert at turning out crap operating systems does not help one little bit.

Oh well, wher did I put the quills for pen making?

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Re: yeah right.

Jeeze, Apple didn't 'need' $150 million from Microsoft. They still had $1,000 million in the bank. The problem was they were in a long and drawn out legal fight with Microsoft and Jobs decided that it wasn't worth it so as a face saving deal and a way to cement the relationship, Apple sold $150 million of shares to MS - they were non-voting stock so MS couldn't do anything with them. The deal enabled both sides to pull back from a futile battle and kept Office on the Mac. Jobs saved Apple by killing off the multitude of slightly different product lines and getting them to focus, plus Apple based Mac OS X on NextStep which gave them a real operating system.

Jobs saved Apple. Not MS. I agree Apple would probably have run out of steam and been bought up by some other company if Jobs hadn't come in (Apple essentially paid Next to take them over) but it was never because they needed MS' money to survive. They needed Jobs. The real question now is whether Jobs would continue with the war against Samsung at this point or would he decide that it wasn't worth it as he did with MS because it was well known he fought MS for a long time because they were 'stealing my stuff!' (go watch Pirates of Silicon Valley) and it appears Apple is at a similar situation now. The difference is that the company doesn't focus on market share but profit and you have to understand that in a market growing as fast as smartphones, losing market share isn't a surprise when you basically owned the market but they sell a whole lot more iPhones now than they did even a few years back. Sure, they could make a really cheap nasty phone (as the 5C was rumoured to be but didn't turn out as such) and gain market share but at what cost to their bottom line? Samsung sells a lot of crap phones with the Galaxy name and those are what drives market share.

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Re: yeah right.

I guess the iPod Touch is the 'budget iPhone' - it does most of the things the iPhone does, but since you're not paying full-whack then you are limited to only using it to its full in WiFi hotspots (for teenagers that means at home, round at their mate's house, on school and college campuses, coffee shops and burger joints... i.e: most places for the urban teenager)

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@Shane (Re: yeah right.)

Apple didn't need Microsoft's $150 million (although at the losses the company was incurring at the time, that $1bn cash would have lasted a mere 18 months), but that wasn't the important part of the settlement.

In addition to buying in to Apple, MS commited to supporting Microsoft Office on MacOS for four years. This was a big, big deal. At this time, Apple was losing the last of its big corporate sales to MS because there was significant doubt over the future of Office on Mac. K-12 (i.e., primary schools) was another very lucrative market for Apple, but if Office disappeared from Macs, schools would draft in more Windows PCs to the back room, and there, once established, they'd spread to classroom too. Apple needed Office, and a promise of future support for Office, but while the legal warring was going on, MS stayed tight-lipped on the matter, sowing increased doubt in potential Mac customers' minds.

The promise of Office was instrumental in Apple's survival, because we knew that the NeXT software wouldn't pay off for another two years minimum (actually it turned out to be three.. or four if like me you consider OS X 10.0 to be a customer preview release). Support for Office, and the original iMac were the lifeline that carried Apple out of the hole they'd dug in the mid 1990s. You might downplay it now, but the MS announcement was certainly the event that stopped me and my co-workers worrying about our future employment at Apple.

And although it's after my time there, I can certainly believe that iPhone was a bet-the-company product: the writing was on the wall for OSX from about 2003 or so: application developers weren't getting on board with the new APIs - all of the Mac's big hitters at the time (Photoshop, the unlamented Quark XPress, MS Office) were based on the "Carbon" API that Apple were trying to deprecate, and Apple's marketshare wasn't going in a direction that would convince the likes of Adobe to re-tool Creative Suite on an Apple-only framework (especially Adobe: in the 1990s, Photoshop and Illustrator were re-developed to use Apple's MacApp framework, just before Apple knifed it).

So, with a dwindling computer marketshare, Apple needed to jump into a different market to survive - hence iPod, and then iPhone. Although I've no inside knowledge on this, I still believe that iPhone was originally to be an iPod device, and the decision to turn it into a phone was made during its development, when "white-label" GSM silicon became available from Taiwan.

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You have to wonder what all these people are doing. I don't see any progress that couldn't have been accompished by a team of 30 people.

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Well someone has to milk the unicorns too..

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Joke

Have you ever tried reading an EULA?

I am thinking 90% of Apple might have been tasked to simple draft that.

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Anonymous Coward

"I don't see any progress that couldn't have been accompished by a team of 30 people."

There was a Roman commander who categorised people on two axes; He categorised them as clever or stupid on the first axis and lazy or active on the second. He sought to employ people within the clever and active quadrant. But, perhaps surprisingly, he preferred even more those who were clever and lazy, because, he felt, they made the best managers because they would seek to maximise the productivity achievable for the minimum unit of effort. Those who were stupid and lazy were bad, but not bottom of the list. His advice to commanders taking over a new company; identify the stupid and active men and get rid of them as fast as you can.

I hope you're lazy.

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Half of them are paid to troll tech websites as fanbois. The other half are paid to wait in line outside Apple stores for new releases.

Engineering is probably contracted out to India or China.

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"I don't see any progress that couldn't have been accompished by a team of 30 people."

That single sentence sums up why most people fail at scaling a business. It's also the same concept that makes going into space so hard. The larger something becomes, the more resources it requires to do the same thing it was doing before.

Five people added to a 50 person organization will experience a large increase in productivity. Those same five people added to a 200 person organization might see a measurable increase in productivity. Those some five people added to a 1,000 person organization will see no overall increase in productivity. Small tasks will be lifted from a few people, but that only allows them to focus on their primary task, they had already worked those small tasks into their workload, so removing them creates no overall gain.

There are management formulas for employee productivity to scale but they're all bunk, best case scenarios. Actual productivity increases are always less than best case. That's where machines and computers come in. But that's a bigger issue.

In short, a team of 30 people, no matter how talented or resource enabled will be equal to five (maybe) in a large organization. Complications scale faster than HR can compensate for directly. What you're proposing is how middle managers get shown the door and projects miss deadlines and budgets.

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Anonymous Coward

Andy - Apple must have really screwed you over at some point.

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"I don't see any progress that couldn't have been accompished by a team of 30 people."

Considering apparently nobody else came up with it, it might well be that they needed thousands of people to make many trials, and 30 of them came up with the right solution?

More probably, you are severely underestimating the amount or work to create the iPhone. That I remember, it took years for the competition to come up with a phone that was about as good as the iPhone. (I'm thinking Galaxy Nexus, which came out four years after the first iPhone.)

People are always at their most clever in hindsight.

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Anonymous Coward

Re: There was a Roman commander who categorised people on two axes

Perhaps you are alluding to Baron Kurt von Hammerstein-Equord:

"I divide my officers into four groups. There are clever, diligent, stupid, and lazy officers. Usually two characteristics are combined. Some are clever and diligent -- their place is the General Staff. The next lot are stupid and lazy -- they make up 90 percent of every army and are suited to routine duties. Anyone who is both clever and lazy is qualified for the highest leadership duties, because he possesses the intellectual clarity and the composure necessary for difficult decisions. One must beware of anyone who is stupid and diligent -- he must not be entrusted with any responsibility because he will always cause only mischief."

- http://en.wikipedia.org/wiki/Kurt_von_Hammerstein-Equord

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Anonymous Coward

@majorursa

>I don't see any progress that couldn't have been accompished by a team of 30 people.

Really?

OS Team: 5

Software Team: 5

Industrial Design Team: 5

Manufacturing Liaison Team: 5

Component Procurement Team: 5

Marketing Team: 5

Legal Team: 5

= 35

Are you really suggesting that those look like realistic figures? In case you hadn't noticed, the iPhone owes a large part of its success to being first to market... For sure, you can have a team of thirty people accomplish a helluva lot given enough time, but you do not have time to waste in a competitive market.

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Anonymous Coward

35?

He didn't say the entire company, he said "progress that couldn't have been accompished by a team of 30 people."

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Anonymous Coward

@Andy Prough

prough!

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Hello, is this Bullshit?

The iPhone came out in 2007 so it's likely that it was in the works for some time before that so let's see if we can pinpoint exactly when they went "all in".

The first Apple Store appeared in 2001 and the first international Apple Store opened in 2003 and the expansion continued throughout the decade and by 2007 they had just opened their 200th store.

Mac Mini released 2005 with G4 processor.

Apple announced the transition from PPC to Intel chips in 2005 for all computer lines including the newly released Mac Mini and had finished the transition in late 2006.

iTunes Music Store reaches 1,000,000,000 songs sold in 2006.

Apple TV was released in January 2007 and is now in its third generation.

Apple's biggest year of revenue growth was the pre-iPhone year 2005 when it was 68% and net sales went from $8B to nearly $14B with net sales climbing every year since 2003.

The post iPhone introduction years have seen transformations across the iPod line, the introduction of the iPad, continual expansion of the iTunes store, introduction of the Genius Bar at Apple Stores which now number over 350 worldwide, regular updates to the computer lines including the Mac Pro in a can and Phil Schiller, with the perfectly appropriate name, wants us to believe the rest of the company came to a screeching halt as Apple worked on the iPhone. My that's a big steamy pile there Phil.

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a53
FAIL

Re: Hello, is this Bullshit?

And he's going to lie in a court case where, if found out, would cost his company humungous amounts ? Another ***** who thinks he knows better than everyone else. Why not just state you don't like Apple and get on with your life ?

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Re: Hello, is this Bullshit?

Shiller said something like there was discussion related to 'Bet your company product' he intended to create a false impression, but probably had lawyer approval. If he created the impression that Jobs or higher management was in that frame of mind so much the better. Creating partial truths that lie is the part of Public Relations that can never be caught in an outright lie because it never crosses the boundary of defamation vs denigration.

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Re: Hello, is this Bullshit?

A single failed product that requires a large pre-sales readiness investment can tank almost any specialty manufacturer. Apple is most definitely a specialty manufacturer.

The general rule of thumb is a 2.5x multiplier on investment to forecast actual losses for a failed product. The base investment only covers actual cash out. It does not take into account the costs of staff hires for the project, supplier commitments (you have to pay, at least big parts of, for (x) boxes, manuals, headphones, etc... even if they're never actually made). Warehouse space, shipping contracts, parts from dozens or hundreds of different suppliers all those things represent huge losses not just in direct penalties, but you've got to pay people to do the negotiation. On top of all that, and literally hundreds or thousands of other issues you're on the hook for spares and warranty support for at least two years so the losses aren't a one time thing. They stick around. Losing money is really, really expensive.

People who have never been involved in the global launch of a new product think it is just some press releases and adverts. It takes months and sometimes years to get everything lined up and ready. The marketing materials are the end result of thousands of people working towards a common goal.

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@a53

In 2007 Apple had just under 18,987 employees and 200 Apple Stores. How many folks does it take to staff 200 stores? According to asymco the average number of employees per store was 37 so that means 7400 people, nearly 39%, were working in the stores, not on the iPhone project. That leaves 61% of employees available to work on the iPhone. Now you might convince me that 'almost everyone' else was working on the iPhone but who would that leave for working on other projects like the dual platform OS X 10.5 aka Leopard, Time Machine, and Spaces? You might convince me that all the iTunes employees working on version 7 of both OS X and Windows platforms could be classed as working on iPhone but would that even come to 50% of all Apple employees? I'm assuming that 'almost everyone' would be at least 50% of employees. Of course I'm also assuming they contract other companies to handle the building maintenance, toilets, document disposal, etc. so those folks don't count directly toward Apple's head count.

Oh, and I like Apple just fine. Granted I sold most of my stock early between $600 and $650 before the $700 peak but no worries, I got back in partially at $450 recently.

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Re: @a53

Doh, cut and past or estimate. I should just pick one. Pretend the above reads "just under 19,000".

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Trollface

Airfix, Prit, Bostick, Cow, Super...

...So many adhesives to choose from...they must have one specialist

on the pay roll at least.

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Anonymous Coward

Bollocks...

it was just the next evolutionary step.

And we assume contractors take more risk with Apple.

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