Apple Searches for an Identity

‘Our customers want to know who is Apple, and what is it that we stand for,’ Steve Jobs once said. Do we know today?

Apple doesn’t typically bungle its marketing, yet its recent ad about working from home was uncharacteristically bad. The spot showed a team working furiously from their living rooms, communicating exclusively via Apple software. They used FaceTime for video conferencing, iMessages for chat, and Apple’s calendar app for scheduling. The production value was great, but the message somewhat delusional.

Anyone who’s worked from home knows the world Apple imagined is a fantasy. We use Zoom and Hangouts for video, not FaceTime. We use Slack and Teams for chat, not iMessage. Using Apple’s communications software for work excludes people who don’t own Apple devices, so we stick to what functions on any platform. Apple knows this, yet it still ran an ad wishing it weren’t true. 

More than a bad marketing decision, the ad points to a greater identity crisis taking place within the company. Marketing inside Apple has always been about defining what it is at its core. “It’s a very noisy world, and we’re not going to get a chance to get people to remember much about us,” Steve Jobs said before releasing Apple’s Think Different campaign in 1997. “Our customers want to know who is Apple and what is it that we stand for.”

The answer to “Who is Apple” was simple back then—Apple built devices, and built them well—but today it’s in flux. Apple still builds devices, but it’s expanding aggressively into software and services, and doing so in order to keep growing. Apple’s software and services’ interests are often in natural conflict with its devices’ interests, yet instead of picking one path and betting on it, Apple is clumsily trying to make everything work. The ad reflects the awkwardness. 

To realize the ad’s vision, Apple would have to let FaceTime and Messages work everywhere. But it’s keeping them exclusive in order to sell more devices, sacrificing long-term strategy for short-term gain. The lack of coherence doomed Apple’s marketing department on the “WFH” ad from the start.

“All I see with this is Apple pointing out how poorly their apps integrate,” one tech CEO, who does not compete with Apple, told Big Technology. “Crazy to show iMessage and FaceTime as a way for companies to meet.” 

Apple has a decision to make. It can choose to milk its assets — the iPhone and Mac — and make as much money from them as possible, at the expense of its future. Or, it can build that future, free its software, and accept a possible short-term hit.

“They need to make their software work seamlessly, like it does on their hardware, on someone else's hardware,” Tom Forte, a research analyst at D.A. Davidson, told Big Technology, using CarPlay as an example. “Otherwise they can be disintermediated.”

Microsoft faced a similar choice in its Steve Ballmer years. It had to decide whether to milk its core asset, Windows, or focus on building its future. To get to that future, it would have to make Office available everywhere and support cloud computing, both of which threatened its operating system business. (I cover this in depth in Always Day One.)Microsoft stuck with the asset-milking under Ballmer. But when Satya Nadella took over, it went cloud-first and cross-platform, and quickly revitalized its business. 

Apple, like Microsoft, must figure out its philosophy. As long as it stays in asset-milking mode, it’s going to endure more strife. Just look at what happened with Hey, an email service that fought Apple’s attempt to take 30% of its $99 annual fee through iOS. Apple eventually capitulated, and left the incident looking greedy and even a bit lost. It didn’t exhibit the behavior people expect from a $1.6 trillion company confident about its future. 

Apple could build more assets, and it certainly has the capacity. But Hey co-creator David Heinemeier Hansson didn’t seem too optimistic about the prospect. “It's a lot easier to build a tollbooth than it is to build a compelling merry-go-round,” he told Big Technology. “Cheaper in maintenance too.”

Proctoring peril 

Earlier this month, approximately 1,400 surgery residents prepared to take their written board exams. Traditionally, they’d take the exams in person. But with Covid-19 afoot, the American Board of Surgery, which administers the test, decided to hold it online. Now, many of the residents are wondering whether their personal data has been compromised. 

The episode began when the board hired a subcontracted vendor to serve as a proctor. To monitor the students, the proctoring company had them install software it could use to watch their screens. And after installing the software, the residents started reporting suspicious activity. 

Some residents told the board they were added on Facebook by proctors, others reported strange credit card charges, and more still saw strange login activity on their Google and Netflix accounts. On test day, the exam itself failed. The software broke down, and the board ended up canceling the second day of the test. It’s unclear what happens from here. 

“Their sense of security in the world is shot, which is a horrible price to pay,” board president and CEO Dr. Jo Buyske told Big Technology. “It certainly has harmed our relationship with them; they’re holding us responsible, understandably so.”

When we started moving much of our physical lives online, there were always lingering security concerns. Now we’re starting to see those concerns weren’t unfounded. Last week, Twitter experienced the most embarrassing hack in its history, an inside job facilitated by an employee working remote. This week, the American Board of Surgery provides another cautionary tale. We’re moving remote out of necessity. But we’re also seeing what happens when “digital transformations” meant to take years go forward in a span of months or weeks. 

Antitrust expectations

Next week, the main characters in this newsletter—Mark Zuckerberg, Tim Cook, Sundar Pichai, and Jeff Bezos—will testify virtually before the House Judiciary Committee as part of its antitrust inquiry into their market power. Congressional hearings aren't built for meaningful discussion. And with four CEOs on the call, it will be a circus.

For the tech giants, the timing couldn’t be better. The country is focused on Covid-19, an economic crisis, and the election. Major antitrust action against these massive companies, always unlikely, is now even less plausible. This week, Big Technology emailed about a dozen representatives on the antitrust subcommittee, asking whether the hearing was a priority for their offices. None returned anything on record. 

So expect next week’s hearings to be a pillow fight: Members of Congress will aim for YouTube moments. The tech giant CEOs will come in prepared and avoid getting pinned down. China will come up a lot. (Okay, that could be interesting.) The media will write roundups of the CEOs’ video call backgrounds. And the serious discussion this country needs about the tech giants’ power will wait for another day.

See you next Thursday.

Yours,
Alex