Pioneering firm is hoping to avoid a midlife crisis, while staying relevant
Founded on 1 April 1976, Apple celebrates its 40th birthday last Friday and from a garage in Los Altos to a new spaceship-shaped HQ in Cupertino, it has come a long way.
It enters its fifth decade with a market cap of $621.8bn and, in CEO Tim Cook’s words, “the mother of all balance sheets” with almost $216bn of cash reserves.
But from battles with the government over privacy to questions as to what its next big thing is, there are challenges ahead – and not just those facing many other 40-year-olds … like spending too much money on a midlife crisis car that it probably doesn’t need.
1) Software stasis: the need for improvements
Any company whose former CEO regularly boasted that “it just works” can expect criticism when its technology, well, doesn’t just work. This month has seen user fury over the iOS 9.3 software, non-working links and crashing iPhones, which came hot on the heels of Safari browser crashes in January.
This isn’t just about bugs: Apple’s iTunes desktop software remains a magnet for criticism of its clunky interface, while the iOS software’s familiarity has started to breed contempt in some quarters.
Fears that Apple is losing its software edge are becoming an annual tradition. Across its business – from iCloud to the App Store to Game Center to notifications to Apple Music – there are questions about its attention to detail. Or, indeed, its attention to things just working.
Apple’s challenge – which applies just as much to Google, Facebook and any other big tech company you care to mention – is to balance stability and usability with the rapid pace at which new technologies are being introduced.
2) New frontiers from wearables and cars to VR
Will Apple ever have an iPhone-sized hardware hit again? It’s a strange question: often resting on the assumption that another device can be as pervasive and personal as the smartphone.
It’s more likely that Apple’s business will grow based on a family of products – lesser-sized hits, but still hits – that complement the iPhone. iPad sales (and tablet sales more generally) have tailed off; there’s still little evidence that the Apple Watch is appealing to anyone beyond early adopters; and it’s early days for the post-”hobby” Apple TV device.
What next? Apple executives continue to perform the corporate equivalent of a nudge and a wink whenever asked about making a car – “it’s going to be Christmas Eve for a while,” Cook said in February – but entering that particular category is an immense (and thus fascinating) challenge: from design to technology to the most basic future-proofing decisions, such as whether it’s driven by a human or by whatever Siri becomes by the time it goes on sale.
Apple’s strength in its modern (iPod and everything since) incarnation has been as much about what it doesn’t make and release as what it does. There will be plenty more opportunities to not make products in the years ahead, from flatscreen TVs to virtual reality headsets.
3) Picking its privacy fights carefully
Many thousands of words have been written about Apple’s recent tussle with the FBI over unlocking the iPhone of one of the San Bernardino shooters. The dropping of the case has by no means settled the wider issues around encryption, privacy and public safety.
Cook and Apple were bold in their decision to take the dispute public in the way that they did. Whether you agree with the company’s strongly-worded views on the FBI’s demands or not, it was an important debate to have in public. Not least because it alerts us to the fact that governments may strive to keep future cases like this secret.
Apple’s stance is now set, though, which puts it in the forefront (and firing line) of the wider debates around technology and privacy that are looming. The company will be picking its battles carefully – and certainly using the topic to take regular jabs at Google from keynote stages – while accepting the scrutiny that comes with its privacy-protecting promises.
How will that protection extend to Apple customers in, say, China and Russia? And just as important as pushing back against governments is the ongoing arms race against criminals: ensuring that the technology in iOS and Apple’s other platforms remains an effective barrier to anyone with cyber-mischief in mind.
4) Growing in to its role as a media gatekeeper
Apple has historically seen itself as marrying technology with the liberal arts. In 2016 that means getting to grips with a role as a powerful filter, or gatekeeper, for liberal arts, entertainment and information.
It’s already been a bumpy road at points, as controversies over App Store censorship of nudity in satirical game Papers, Please; a game parodying North Korean propaganda; games about the war in Syria and smartphone supply chains; and an app tracking deaths caused by US drone strikes showed. Not to mention digital comics firm Comixology refusing to distribute on iOS an issue of Saga comic featuring gay sex scenes, after (wrongly, as it turned out) assuming that Apple would ban it.
In some of these cases, Apple has changed – or at least clarified – its policies. Its belief that books, music and films are more deserving to tackle some of those issues than games remains a curious cultural blind spot for the company. But there will be other rows ahead. Music streaming companies such as Spotify are grumbling about the 30% cut Apple takes of their in-app subscriptions on iOS while blocking them from pointing users to their websites to subscribe directly; Amazon locked horns with Apple over in-app Kindle ebook sales in the past; and video streaming services may do so over subscriptions in the future.
Then there’s news. The Apple News app has the potential to become one of the main filters – alongside Facebook and whatever Google comes up with for Android – for reading news. Not to mention a key source of advertising revenues for its publishers.
These are interesting times for a company that can be thin-skinned when it comes to criticism: the concerns here aren’t just that Apple might take action to reduce the distribution of critical stories or sceptical publications; but also of the potential chilling effect for publishers who expect it to do that – the Comixology effect.
5) Corporate responsibility: workers, women, climate and more
Finally, to the policies that might spark some of that critical news coverage. Due to its wealth and influence, Apple has been scrutinised for some time around issues including worker rights, environmental action and equality.
At times it has been praised for taking strong public stands on issues such as gay marriage and climate change – Tim Cook once angrily told a campaigner against action to tackle climate change to “get out of this stock”. At other times, however, it has been attacked for falling short of expectations – if not always legal obligations – on working conditions in the Chinese factories that make its products.
Sometimes, the small questions around these issues can hint at wider challenges too. Why did Siri seem to have a problem with gay marriage in Russia? Why was period-tracking left out of the initial release of Apple’s Health app? But the company can also drive conversation and action with its big moves: the $1.5bn green bond announced in February 2016 and its willingness to open up about its efforts to reduce its impact on the environment.
These issues aren’t restricted to Apple by any means: journalists and gadget buyers alike may be even more willing to ask hard questions in the years ahead. How are the materials inside our smartphones sourced? How are the workers assembling them treated? How green are those factories? How white and male are the executives making the decisions about these and other strategies?
Under Cook’s leadership, Apple has shown itself willing to open up on these issues already, and take bold stances. Continuing that may be a competitive advantage, but more importantly, it’s a necessity.
guardian.co.uk © Guardian News & Media Limited 2010
Apple’s CEO Tim Cook is piloting the company beyond its 40th birthday. Photograph: Richard Drew/AP