Steve Jobs Wants It Both Ways

According to The Wall Street Journal, Apple (Nasdaq: AAPL  ) CEO Steve Jobs was the fourth-highest paid CEO of the decade, a decade in which Jobs created tremendous shareholder value for the company. Alan Deutschman is a best-selling business author whose books include The Second Coming of Steve Jobs. I recently asked Deutschman for his perspective on Steve Jobs.

Mac Greer: Let's begin with what Steve Jobs has called an "Antennagate." The recent press conference to address those antenna issues with the iPhone 4. Jobs said that Apple "wasn't perfect." He said Apple would provide free cases or full refunds, but he also called out the press for blowing things out of proportion and he talked about how the antenna issue wasn't unique to Apple. So I am curious, Alan, what did you make of Steve Jobs' handling of the iPhone 4 issues?

Alan Deutschman: For me, the issue is that Steve Jobs wants to have it both ways.  When he is doing the introduction of a new product or even just the latest iteration of a new product, he wants it to be an event of global significance, and the media treats it that way. It is front page news and national press.

Jobs has conditioned us to think that when he is introducing a new product or an innovation that it is always going to be revolutionary, transforming --- an event of cosmic proportions.  And we have gone along with that, with our incredible anticipation and enthusiasm.

But he can't have it both ways. He can't on the one hand say, here's the greatest thing since sliced bread and then the next day say, hey, it's just a cell phone and it drops calls. If we are going to believe that each of these new products and new versions is going to raise humanity up to a new level and transform our lives once again and be yet another revolution and it should be treated that way, then we have a right to have very high expectations and to have uncompromising high standards as consumers and fan boys for what Apple is doing.

I think the flip side of the media adulation and the public frenzy among Apple's product introductions is, if they are flawed, we have been led to expect so much of them. Yes, we love our iPhones, but they are cell phones and cell phones drop calls. They all do. Everything Steve Jobs was saying in his non-apology apology and antennaegate was true. It is just a smartphone. It is not the cure for cancer, it is not going to peacefully end the war in Afghanistan, but he is complicit in raising our expectations and promising something extraordinary and in a way has kind of set us up for a certain disappointment when these things have the inevitable flaws of any new product, particularly any digital product.

Stop the presses!
Greer:
I want to ask you a little more about the way he controls his public image. Like a lot of CEOs, he wants to control the narrative. You encountered this firsthand when you wrote The Second Coming of Steve Jobs, which was published back in 2000.  It is fair to say that he wasn't particularly excited about the book, correct?

Deutschman: That's right. Not only did Steve Jobs refuse to cooperate with the book, but he blocked a number of sources from cooperating and then about a month before the book's scheduled publication, he telephoned the chief executive officer of Random House and tried unsuccessfully to have the book killed. Jobs also bought the rights to the photographs that my publisher was trying to license to use on the dust jacket cover, preventing us from using that photograph, even though it was a very appealing photograph of him, and forcing us to scrap the dust jacket and design and print a new one at considerable expense. Jobs really went out of his way to try to prevent and then frustrate the publication of my book, which was an independent book by a journalist doing a lot of reporting, who was going to have an independent voice.

Strengths and weaknesses
Greer:
And Alan, as someone who has written about Steve Jobs, what do you think is his greatest strength and what is his greatest weakness?

Deutschman: I think that Jobs has tremendous tenacity and resilience. In recent years, Jobs has been flying incredibly high and has had one extraordinary success after another, culminating earlier this year with the market value of Apple stock eclipsing that of Microsoft (Nasdaq: MSFT  ) . But over the course of his career, he has had many failures, he has had many setbacks.

After initially making his fortune with Apple, he almost lost all of it doing his later start-ups of NeXT and Pixar. Jobs, he has been at this since the 1970s and whatever the setbacks, he keeps coming back and keeps innovating. I think that is often overlooked as his extraordinary strength is this tenacity and resilience because even the most creative, innovating thinkers have their failures and have great setbacks, especially if you are trying to do real innovation. He is still around and nothing stops the guy, not even nearly dying. He keeps going ahead.

Greer: And if that tenacity is his strength, what do you see as his weakness as a business leader? What is his Achilles' heel, the thing that may make Apple vulnerable?

Deutschman: Arrogance is a weakness. His obsession with control, which we have seen in the, most recently in the so-called jailbreak issue about whether consumers can basically hack their iPhones to use their own software that hasn't been approved by Steve Jobs. The man is an incredible control freak. That has had a big upside -- putting his passion into making great products and harnessing the creativity of other brilliant people and having this passion for perfection -- but it also has a downside. And I think where Apple is vulnerable now is Jobs is once again trying to control every aspect of his products. With the iPhone, it has led to incredible early success where they have been able to design the hardware, the software, approve the Apps, completely orchestrate the entire experience for users and do a wonderful job with it. But it leaves Apple vulnerable to open approaches of, for example, Google (Nasdaq: GOOG  ) with its Android operating system for mobile devices. You kind of wonder whether, as in the personal computer industry years ago, whether Jobs' desire to control everything is leaving him vulnerable to other people who are giving up control, who are putting out their technologies for other people to adapt and modify and potentially creating a much bigger market for less expensive products.

Greer: So Google becomes the new Microsoft to Apple?

Deutschman: Exactly. I think the difference this time around is there are enough affluent consumers who want what is new and want what is best and are willing to pay for it, to give Apple the kind of wonderful profit margins it has been enjoying in that window of opportunity. Even though in time, those technologies and ideas are going to be diffused more broadly, I think Apple has figured out how to be the BMW of the digital world and to really thrive and profit mightily in that area. It doesn't have to be the Tata Motors of the digital world, which is the Indian company that is doing the $2,500 car. They [Apple] have figured out that it can really be wonderful from the standpoint of both innovation and profitability to be the BMW of the digital world.

Will history repeat itself? Will Google and its Droids overtake Apple?  Post your comments below.

Google is a Motley Fool Rule Breakers selections. Apple is a Motley Fool Stock Advisor recommendations. Microsoft is a Motley Fool Inside Value pick. Motley Fool Options has recommended a diagonal call position on Microsoft. 

Mac doesn't own any of the stocks discussed. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.


Read/Post Comments (4) | Recommend This Article (15)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 29, 2010, at 9:21 AM, Uruzone wrote:

    Mr. Jobs did not start "Nextel" (paragraph 11). He started Next Computer, Inc. AKA "NeXT".

  • Report this Comment On July 29, 2010, at 10:31 AM, TMFMac wrote:

    Uruzone,

    That was a transcription error that has now been fixed. thanks for reading,

    Mac

  • Report this Comment On July 30, 2010, at 2:24 AM, erann wrote:

    1) So, only iPhone 4 dropps calls? Ever googled:

    blackberry dropped calls

    droid dropped calls

    nokia dropped calls

    Deutschman, try those for starters and come back to discuss seriously and professionally.

    2) Deutschman seems to rise Jobs in position of all mighty God. C'moon, do you really believe that Jobs is the only person working, thinking and deciding at Apple? Jobs is a good guy, but a God....

  • Report this Comment On July 30, 2010, at 2:10 PM, TonyV125 wrote:

    True... The iPhone 4 is definitely not the only phone that drops calls, but that's not the message Deutschman is trying to convey. Just as the title of the story says, "Jobs wants it both ways". The first comments from Deutschman explain it. The 3rd paragraph sums it up pretty well...

    "He can't on the one hand say, here's the greatest thing since sliced bread and then the next day say, hey, it's just a cell phone and it drops calls. If we are going to believe that each of these new products and new versions is going to raise humanity up to a new level and transform our lives once again and be yet another revolution and it should be treated that way, then we have a right to have very high expectations and to have uncompromising high standards as consumers and fan boys for what Apple is doing."

    Blackberry, Nokia, & the various Droid manufacturers, don't push it nearly as far Apple does with patting themselves on the back and massaging their own egos. And the users of those other phones don't seem to take it as far, either.

    It's human nature, if you're going to be so bold as to refer to your products with terms like "magical", you're setting yourself up to be proven wrong, by those who refuse to be treated like naive children.

    My wife and I both own iPhone 3G's, and we love them. I was looking forward to upgrading this year to the iPhone 4. I was also eagerly anticipating the iPad and definitely planning on replacing my desktop with an iMac. The actions by Steve Jobs and Apple since the announcement of the iPad have insulted me as a consumer. My new desktop is an HP PC (and I'm an artist, no less), I've decided to hold off on any tablets for a while, and I'm considering switching to a Droid phone.

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