At 30, Apple has colourful past and uncertain future

Updated: Mar 27 2006, 05:30am hrs
There's a poem posted on a wall at Apple Computer Inc.'s headquarters that starts like this: "Here's to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes."

The poem, once part of an Apple commercial, is an ode to people who, to use Apple's term, "think different." But it could be just as much about Apple and its founders, who started the company on April Fool's Day, 1976 - kicking off the personal computer revolution.

Three decades later, founders Steve Jobs and Steve Wozniak are billionaires. Apple's sprawling campus here, with its bright white buildings and a certain air of superiority, is a far cry from the local Homebrew Computer Club where the two nerdy hippies showed off their first PC to their friends. Apple nonetheless remains the round peg in the square hole of the computing industry, and to the surprise of many who once predicted its demiseis in better shape than ever.

"Today they're arguably the strongest company around in terms of their technology ... their customer base and their brand name," said Shaw Wu, an analyst with American Technology Research, which advises institutional investors. "They're a little bit like the new Dell for the next five years" in terms of potential growth and competitive position, he said.

That said, Apple at 30 faces some unique problems that aren't easy to solve. Despite its roots, the company that can legitimately claim it invented the personal computer still only has a measly 4% of market for PCs. For every computer Apple sells, market leader Dell Inc sells almost nine. Acceptability of Apple computers may improve given its recent shift to Intel Corp processors, the same ones that power most PCs, but nobody is expecting Apple to take much share away from Dell, Hewlett-Packard Co and other market leaders.

Of course, Apple's most important business today isn't computers, it's music. The explosive growth of its iPods in last year's fourth quarter it sold 100 per minute has won the company 80% of the market for digital music players. Meanwhile, Apple's stranglehold on the digital music business is facing growing scrutiny from regulators, most notably in France.

Ironically, though, Apple's biggest problem in the future may be Steve Jobs himself. The iconic CEO's control and influence over the company he co-founded is legendary. Jobs is part of every major product design at Apple, and his vision and his touch is on everything Apple does publicly. "Steve is the one thing no other company can duplicate," said Gartner Inc analyst Van Baker. "He's the special sauce at Apple."

Yet despite Jobs' importance to the company that's still headquartered in the town where he grew up, Apple has said very little publicly about plans for a successor when he quits or dies.

Increasingly, such a plan may be needed. Jobs turned 51 in February. Two years ago, he survived what was first thought to be a fatal form of pancreatic cancer. And after recently agreeing to sell his Pixar Animation Studios to Walt Disney Co, Jobs now is Disney's biggest shareholder and a director of that company positions expected to take at least some of his attention away from Apple.

"There's definitely kind of a tragedy in the brewing here," said Roger Kay, analyst and president of Endpoint Technologies Associates, a consulting firm. At other tech companies, the succession picture is clear. Everybody knows Steve Ballmer is expected to take over from Bill Gates at Microsoft Corp, that Kevin Rollins could succeed Michael Dell at Dell, and that Paul Otellini was destined to replace Craig Barrett as CEO of Intel Corp.

But who can even name another top executive at Apple besides Jobs "The kind of guy Steve Jobs is will not tolerate an ego like his anywhere around him ... so the people who have succeeded at Apple have essentially been emasculated," Kay said. "What makes this all so Shakespearean is that (Jobs') very strengths and talents, that made Apple what it is, prevent this problem from becoming solved."

Through a spokesman, Jobs and other executives characteristically declined to comment for this story. When asked about the company's succession plan, company spokesman Steve Dowling said Apple has one, but that it's confidential. About the only clue Apple has given publicly about who might replace its co-founder came when Jobs hand-picked Tim Cook, the company's COO to run things during the month or so he was recovering from cancer surgery. Cook is a longtime Apple employee who also spent time at Compaq Computer Corp and IBM.

Regardless of who might eventually take Jobs' job, Apple could never be the same without him, said Rakesh Khurana, a Harvard Business School professor who has studied CEO succession. "Even if you have a (person) with the same sorts of qualities of Steve Jobs, the company is never going to be as animated or as authentic as it was when you had the founder running it," he said.

NY TIMES