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SAN FRANCISCO, CA - MARCH 07: Apple CEO Tim Cook speaks during an Apple product launch event. The successor to Steve Jobs is enduring his first major leadership challenge.
Superstorm Sandy ravaged the East Coast this week, but another storm blew through the West Coast, and it was centered in Cupertino, California, at Apple headquarters.
Two Apple high ranking Apple executives, Scott Forstall and John Browett, were shown the door. In both cases, it wasn't really a surprise. But it was clear evidence that, a year removed from Steve Jobs' death and with the company's stock price sliding by more than 100 points in less than two months, CEO Tim Cook is experiencing his first major leadership challenge.
Q: Why were Forstall and Browett asked to leave?
A: Browett is an easier departure to explain. He ran Apple's retail operations and had instituted some bizarre strategies since his arrival at Apple little more than six months ago. As Tim Worstall points out at Forbes, his background in British retail didn't fit with Apple's brand goals for its stores. Furthermore, he created a near revolt among the Apple Store's blue-shirted staffers. A lot of Apple observers were actively questioning why he was hired in the first place.
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Apple Store in Beijing.
It looks as if the next big Apple product will be...big! After moving away from the computer business into the much more portable consumer device and cellphone game with iPods, iPhones, and iPads, the next frontier for Apple is reportedly TV. And not just any TV, but a TV that will, naturally, completely re-invent the whole idea of TV according to Apple's design values.
Felix Salmon has been pondering the "What's Next" question for Apple and comes to an essentially mathematical conclusion:
Today, however, Apple’s market capitalization is $362 billion. If the company invents a new product which is just as successful as the iPod, and which makes Apple just as much money, and which is completely unanticipated by the market, how much should the stock rise? The present value of $25 billion in future profits is still substantial — but even if you put it at $20 billion, that just gooses the share price by 5% or so. If you look at Apple today, the company’s cash in the bank — its liquid assets — is a significantly larger number than the total revenue it’s made from every iPod ever sold.
If you grow to 50 times your previous size, your new products don’t become 50 times more successful. Or even 10 times more successful. Apple, like all companies, has certain economies of scale, and it has millions of people devoted to its ecosystem. But the market isn’t going to give it credit for having a pipeline filled with unknown products that are going to be bigger than the iPod. The iPad will evolve; the Apple TV will get Siri voice control; the computers will get faster and thinner. All of these things will be profitable for Apple — the company’s not going away any time soon.