It was three years ago today that Steve Jobs died. Apple (NASDAQ:AAPL) will always be known as his greatest professional accomplishment, building an enduring company that will withstand the test of time. In Apple, he embedded his very own DNA of creativity and innovation, which is one important function of Apple University (Apple's internal training and development program).
It's been a turbulent few years for the company and its investors. A lot has changed, but a lot has stayed the same.
In the years since
In the first year following Jobs' death, shares gained 76% as iPhone and iPad unit sales soared to record levels, well beyond anything the company reported while he was alive. It's possible that consumers rushed out to buy Apple devices en masse, paying tribute in their own way.
The second year wasn't quite so kind to investors, with shares losing 25% of their value. Investor confidence was shaken as Apple's market share in both the smartphone and tablet markets began to decline. The company had also grown so large that earnings growth was harder to come by. Perhaps most importantly, critics began questioning Apple's ability to innovate and introduce revolutionary products in the post-Jobs era. The wearables conversation had already begun, and investors wanted an answer from Tim Cook, which wouldn't come until a month ago.
It's been quite a rollercoaster, but long-term shareholders have been rewarded for their temperament as shares have now recovered during the third year to all-time highs.
Speaking of wearables
Shortly after unveiling Apple Watch, Tim Cook said that development of the device started after Jobs' death in 2011. At the same time, Cook has also mentioned that Apple has spent approximately three years developing Apple Watch, implying that development began very shortly after Jobs' death. For what it's worth, Cook believes that Jobs would have been pleased with not just the product itself, but also how the company itself has evolved and where it's going.
Jobs had a penchant for recognizing secular trends in technology well in advance (in some cases decades in advance). He undoubtedly had ideas about where wearable computing could go. With that in mind, it seems highly likely that he even tossed around some "dopey" ideas with Apple execs, even if development officially commenced after his death.
The new A-Team
While Jobs was known to exert control over many parts of Apple's business, Cook is more willing to delegate responsibilities where appropriate. As critical as Jobs was to bringing Apple back from the brink, Apple's ability to succeed going forward will depend on a diverse management team with incredible credentials.
Jobs had a history of pitting his top lieutenants against each other (such as Tony Fadell and Scott Forstall during the development of the iPhone operating system), but Cook reorganized executive management in 2012 in the name of collaboration, ousting Forstall in the process.
Craig Federighi (SVP of software engineering) and Angela Ahrendts (SVP of retail and online stores) are among the more important additions to Apple's executive management team following Jobs' death. In his recent interview with Charlie Rose, Cook detailed his stance on building a collaborative team:
I think each person, if you're a CEO, the most important thing is to have, to me, is to pick people around you that aren't like you, that complement you. Because you want to build a puzzle, you don't want to stack chiclets up and have everyone be the same. And so I believe in diversity with a capital D. And that's diversity in thought and diversity any way you want to measure it.
And so the people surrounding me are not like me. They have skills that I don't have. I may have some that they don't have. What we do as a team collectively, we're able to do some incredible things. And it's because we collaborate, and I see one of my key things in life is to make sure that we collaborate as an incredible level. Because we run the company functionally.
Apple has changed a lot internally under Cook. Cook has noted on several occasions that Jobs did not want the company to become paralyzed wondering what Jobs would have done, like what happened to Disney decades prior. He wanted Cook to use his own judgment on what's best for Apple.
Tim Cook thinks different -- about shareholders
For investors, one of the more significant differences between Cook and Jobs is their views on capital return. Jobs was infamously averse to returning capital to shareholders, while Cook promptly implemented a capital return program shortly after becoming CEO.
The program has now exploded in magnitude, and Apple returned an incredible 75% of its free cash flow in fiscal 2013 to shareholders, comprised of $10.6 billion in dividend payments and $22.9 billion in share repurchases. Cook's stance has dramatically benefited shareholders in a way that Jobs seemed unwilling to consider.
Of course, Jobs spearheaded the greatest corporate turnaround in the history of business, leading to 11,000% gains in capital appreciation following his return to Apple, so he did plenty for shareholders in his own way.
There's still no Apple TV set
After telling his biographer Walter Isaacson that he had "finally cracked" TV, Jobs triggered a multiyear wave of speculation that Apple's entry into the unattractive TV set business was imminent. Three years later, Apple has yet to introduce such a product, and seems content with its set-top box strategy. Still, Cook reaffirms that Apple "continue[s] to have great interest in" the space.
A year before his death, Jobs had outlined the biggest challenge Apple faces with the TV market: the go-to-market strategy. He noted that it wasn't a problem with technology or vision, in which case "cracking" the interface and experience may not be sufficient.
One of the challenges was that the industry's subsidized model reduces consumer propensity to pay for set-top boxes. This concern is fading, as consumers are now showing a willingness to open their wallets for these devices. Apple has now sold over 20 million cumulative units; rival Roku has sold 8 million. The set-top box market is evolving, but that's just one aspect of the large and entrenched TV industry.
Presumably, Apple still hasn't solved the overall go-to-market problem, which is why the company has yet to unveil a TV set. Besides, the TV business is characterized by razor-thin margins and considerable inventory risk, so investors are just as well off with Apple sitting this one out.
One more thing...
When Steve Jobs died, the world mourned the loss of one of its greatest innovators and most iconic business leaders. It was also reported at the time that Jobs left Apple with a product pipeline that could last 4 years (although that evidently did not include Apple Watch).
If true, that means the remnants of Jobs' pipeline will last one more year. Naturally, critics will again question if Apple can endure without Jobs' personal guidance. But there's one thing that they can't question: Steve Jobs made a hell of a dent in the universe.
Here's to you, Steve.
Evan Niu, CFA owns shares of Apple and Walt Disney. The Motley Fool recommends Apple and Walt Disney. The Motley Fool owns shares of Apple and Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.