Earlier this week, Apple’s design chief Jony Ive quit Apple to start his own business. Ive, who has been at the helm of the design team since 1996, had helped design the iPhone, iPod, iPad and Macbook. In particular, the iPhone has driven Apple’s sales and profit for almost a decade. As sales have largely plateaued for the iPhone, the company is now seeking new avenues for growth, largely from the sale of app software, entertainment content, financial tools and other services.
Ive thrived under Steve Jobs, who often visited the design studio to inspire and offer feedback on new product design to Jony Ive. Tim Cook, on the other hand, whose expertise is in operations, seldom visited the design studio. The absence of a visionary CEO like Steve Jobs has been telling. While sales of the iWatch has been modestly successful, Apple hasn’t had another massive hardware hit since the iPad in 2010. In Jobs’ absence, Ive reduced his presence at the office, which in turn has contributed to a series of recent departures from his team – four of its designers departed over the past year.
And now, Apple is going to go head to head with a host of other companies offering services and will be seeking monthly fees from consumers to boost its growth in the coming years. It simply ain’t the old Apple anymore.
Future Wealth’s View
The road is littered with companies that had CEOs whose departure has cut the legs off the company they built. Let’s look at a few of them:
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Sony’s Akio Morita – Founded the Walkman and then the Playstation and built the company into a consumer electronics powerhouse. Have you heard from Sony lately on any new product?
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IBM’s Louis Gerstner – Pivoted the company from mainframes to a services business – the first of its kind. No one even talks about IBM anymore.
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Cisco Systems’ John Chambers – Ushered in the networking era. Cisco now struggles to stay relevant.
- Microsoft’s Bill Gates – Built a multi-billion dollar business on software that now resides in every computer. Steve Ballamer took the company over from Gates and missed the entire smartphone operating system market and awarded investors with a decade of poor shareholder returns.
- GE’s Jack Welch – Created the first conglomerate that cut across diverse businesses and achieved shareholder returns never seen since his departure. Jeff Immelt, his successor, reversed the share price and is licking his wounds even as the CEO job at GE has now turned into a revolving door.
With Tim Cook soon to join the select few in the list above, one wonders what awaits companies like Amazon, Netflix and Berkshire Hathaway when their leaders pass the baton. Apple stock, however, is unlikely to suffer much near term as it is a core holding in every large cap mutual fund and ETF. But, if you are getting a sense of nostalgia for returns that Jobs and visionary leaders like him generated, you are not alone.