Boomerang: Apple's "It Just Works" Promise to Customers

iPhone Maps app icon: what's wrong with this picture?

Mapplegate, the PR fiasco surrounding Apple's new iPhone mapping software, doesn't appear to be going away anytime soon. You can read all about the details elsewhere but I wanted to make a couple general observations.

First, flashback to 2008 and Apple's launch of their cloud email/calendar syncing product called MobileMe. From MacRumors and Fortune:

Mr. Jobs called the MobileMe team into a town hall meeting in one of Apple’s auditoriums after the service launched with problems and garnered unflattering reviews from noted tech commentators like Walt Mossberg of The Wall Street Journal. 

Mr. Jobs reportedly asked the assembled engineers and other MobileMe team members, “Can anyone tell me what MobileMe is supposed to do?” When one of those employees then volunteered a satisfactory answer, Mr. Jobs followed up with, “So why the fuck doesn’t it do that?”

He (Jobs) then spent some 30 minutes berating the team, telling them that they had “tarnished Apple’s reputation,” and that they, “should hate each other for having let each other down.” 

He added, “[Walt] Mossberg, our friend, is no longer writing good things about us.” 

Jobs appointed a new executive on the spot to run the MobileMe team. 

The MobileMe story may suggest that the iron fist with which Jobs ran Apple may now be missing, but it also helps explain why Apple's new map software problems are getting so much media attention.

Ever since Jobs returned to Apple the mantra he emphasized over and over again about new products was "It Just Works". What you're seeing here is what happens when, contrary to what you promise customers, something not only doesn't work but actually fails in very unpleasant ways. From NY Times tech guru David Pogue:

99 percent of it (iOS6 Maps), Apple says, is accurate. Unfortunately, when the overall data set is that huge, even half a percent of faulty data means a lot of flaws. And the trouble is, you never know when you’re going to encounter one. One wild goose chase, and you’ll find it hard to trust the software again. 

So Apple has written a beautiful, well-designed app — and fed it questionable data. It’s as though you just got a $1,500 professional coffee maker and then poured moldy beans into it.

The actual map with safe instructions

Whenever Apple stumbles, be it Maps, MobileMe, antenna-gate, Foxconn sweat shops, and my personal favorite (because I experienced it) - the irrecoverable Time Capsule hard drive failure - people pounce. People love to call out hypocrisy and shoot down 'hollier than though' types at the first sign of indiscretion. They did the same thing with Google and its 'Don't Be Evil' motto everytime Google engaged in an anywhere remotely questionable practice. It also doesn't help Apple right now that it's the world's largest company in terms of market capitalization and price to perfection, meaning it can't afford to execute sloppily.

The blow to Apple's promise to customers that everything just works certainly doesn't help the company. But whether or not Apple's maps fiasco figures prominently into this blog's prediction that Apple is nearing its high water mark remains to be seen. For more on the future of Apple, Holman Jenkins of the WSJ also has a good read.

Ben Bernanke Cannot Print a New Steve Jobs

Gold bulls rejoice, for open-ended QE is here!

Yesterday's Fed announcement wasn't the long rumored 'QE3', as a '3' implies a beginning and an end like the two prior rounds of quantitative easing.

The Fed has instead committed to not stop printing new money until the economy improves.

What then will the Fed do if the economy never improves, meaning unemployment never gets back below 5%? Will the Fed go on printing forever? We shall have to wait and see.

In the meantime anyone who believes that printing money ad infinitum will fix what ails the U.S. economy, or the global economy for that matter, is living in macroeconomic Willy Wonkaland.

Monetary policy in the form of printing new money and changing interest rates does very little if anything to improve the foundational competitiveness of an economy. The most dynamic economies are the ones which are the most productive and most innovative, and monetary policy has very little if any impact on these two areas.

The kind of GDP growth driven by purchases of products like Apple's iPhone reflects real economic growth. The kind of GDP growth derived from nominal GDP targeting (aka inflation) is fake.

In short, Ben Bernanke cannot create new real jobs. Real jobs are created by the Steve Jobs of the world.

However, it's much easier for central planners to punch a few buttons on a keyboard and print more money than to make the long-term adjustments necessary for fundamental economic improvement.

2012 Predication #2: iTV Will Prove Apple's Waterloo

Should Apple's all but confirmed iTV make landfall in 2012 I expect that it will serve as a fitting high-water mark for the high-flying tech company.

In this sense perhaps the Battle of Waterloo, which marked the once-and-for-all final defeat of Napoleon, is the wrong metaphor. Instead the Battle of Borodino, a contest which Napoleon won and allowed him to enter Moscow but also ultimately led to his later retreat from Russia in 1812, may prove a better analogy.

All great runs ultimately meet the same fate

I'm sure the iTV will be a huge hit and will make a great addition in Apple's ecosystem. I'm so frustrated with the TV market that it was the subject of a rant a few months back. Let me be clear: TVs are begging for the Apple treatment.

And there is no doubt that Apple will be a successful, highly profitable company for years to come. Apple is more than Steve Jobs, and there is enough magic and momentum to sustain success for the next 3-5 years, at least. But having said all that some recent trends for Apple aren't looking so hot.

Apple is squarely in the competition's cross-hairs and very few -- if any -- companies have historically been able to sustain the level of success achieved by Apple this past decade. And the reasons are well known: people leave, get rich and lazy, retire, distracted, all of the above.

But perhaps the biggest problem will be Apple's own DNA, which is based on cult of personality, not long lasting institutions. Steve Jobs lionized and embodied the Great Man school. In contrast Bill Gates' favorite business book was Sloan's My Years with General Motors, a rather dull treatise on the art of running a large corporation through a series of committees. As so often happens following the departure of a dominant, charismatic leader there is growing talk of an Apple palace coup. Jockeying and politics won't make success any easier in Cupertino.

There is nothing Apple does that can't be replicated, and part of the evidence of that comes from Apple increasingly turning to the courts to fight its battles. Steve Jobs' seethed vitriol from his deathbed over Android's success. Because Apple controls its products end-to-end it has to flawlessly execute by itself every time. But there are literally hundreds of younger, hungrier companies competing with Apple. In some ways the relative demise of Apple is simply a numbers game.

The iTV will likely be insanely great in the way it integrates and simplifies our digital lives, and it is a product I'm very much looking forward to. But I predict that it will also mark the plateau of the greatest run in tech history.