Can Apple thrive without Steve Jobs?
The sudden announcement Monday that Apple's chief executive will take a medical leave for the third time in less than a decade raises anxieties about the leadership of the company he helped found more than three decades ago.
Steve Jobs1976: Starts Apple Computer (now Apple Inc.) with Steve Wozniak in family garage
1984: Unveils first Macintosh
1985: Forced out of Apple, starts NeXT Computer, specializing in computer workstations
1986: Cofounds Pixar from former Lucasfilm graphics unit, reportedly bought for $10 million
1996: Returns to Apple when company buys NeXT
2001: Launches iPod
2003: Introduces iTunes online music store
2004: Undergoes successful surgery for pancreatic cancer
2006: Sells Pixar to Disney in a $7.4 billion deal that gives him a seat on Disney board
2007: Releases iPhone
2009: Has liver transplant during six-month leave of absence
2010: Unveils iPad; Apple jumps ahead of Microsoft as largest U.S. computer firm in market value
Sources: Apple; Forbes; Reuters; McClatchy Newspapers
For many people, Apple would not be Apple without Steve Jobs.
The sudden announcement Monday that the company's chief executive will take a medical leave for the third time in less than a decade raises anxieties about the leadership of the company he helped found more than three decades ago. The news also puts the spotlight again on several senior executives who have been helping Jobs run the firm.
Jobs, who has battled cancer for years, told employees in an e-mail that he is taking another medical leave and that Apple's chief operating officer, Tim Cook, will take over day-to-day leadership of the company, a role he has played previously. Jobs said he will remain as CEO.
Wall Street was closed for the Martin Luther King Day holiday, but the news — one day before the company was to announce its first-quarter financial results — sent Nasdaq-100 Index stock futures tumbling, along with shares traded in Germany.
According to recent reports, Jobs, 55, has appeared increasingly frail, according to people who have seen him. The problems are linked to his previous battle with cancer and a subsequent liver transplant, according to Bloomberg News, which cited a person with knowledge of the situation. Jobs has been unable to retain weight and is susceptible to colds and flu, this person said. He recently has limited office visits to once or twice a week.
Jobs' last major public appearance was at an Apple event in San Francisco in early September. There were no hints of his waning health at the time.
In 2004, Jobs disclosed that he had been diagnosed with this rare form of pancreatic cancer and had been treated with surgery — and told he was cured.
Five years later, he had his liver removed and received a transplant, indicating the cancer had metastasized. The liver is the most common place for pancreatic cancers to spread, because blood flows from one organ to the other.
Doctors reiterated that Jobs' rare type of disease, called neuroendocrine cancer, is known to be slow-growing and even treatable. And complications related to liver transplants, such as infection and duct blockage, often can be fixed. But both pose substantial lifelong risk.
Two years ago, Apple told investors that Jobs was stepping away from the company to receive hormone treatments. After his return, the company disclosed that his condition actually had been far more acute and that he had undergone a liver transplant.
Shortly after that revelation, the Securities and Exchange Commission started an inquiry into whether Apple appropriately disclosed the nature of his illness. The SEC has declined to comment on the investigation.
The latest apparent medical setback for Jobs comes with the company at its pinnacle. Apple's market capitalization surpassed that of Microsoft last year — making Apple the most valuable property in the tech universe. The company broke quarterly revenue and profit records four consecutive times during its just-completed fiscal year.
In 2007, the Jobs-led Apple introduced the iPhone, which revolutionized the smartphone industry, an area in which the Cupertino, Calif., company never had competed. The company last year launched the iPad, a new computing device that has triggered a stampede of competitors who are rolling out copycat tablets.
Yet, Google's Android platform is now more popular than Apple's iPhone, according to research companies ComScore and Nielsen. Samsung's Galaxy Tab already is battling the iPad on the market, and more than 80 new touch-screen computers were unveiled at the recent Consumer Electronics Show in Las Vegas.
Whether Jobs returns, as he said he hoped to, or does not, as some investors fear, most experts believe he will be hard to replace, despite Apple's strong executive team.
"The company could not thrive if Steve didn't have an extremely talented team around him," said David Yoffie, a Harvard Business School professor who has studied the technology industry for decades. "But you can't replace Steve on some levels."
Yoffie and others said Jobs' creativity, obsession with a product's design and function, and management style, as well as the force of his personality, were unusual, not only in Silicon Valley but also in American business. They said that it would take several people with different skills to fill Jobs' shoes.
As in a five-month leave in 2009, Jobs is leaving Cook in charge. His performance during that time provides a heavy dose of reassurance for nervous investors.
Cook, who joined Apple nearly 13 years ago and is otherwise responsible for the company's worldwide sales and operations, steered the company successfully and kept the development of products such as the iPhone 4 and the iPad on track, increased Macintosh computer sales and improved Apple's financial performance during an economic downturn.
While Apple shares dipped when Jobs announced the 2009 leave, they rallied strongly under Cook.
While Jobs has remained intimately involved in the company despite his health, Cook's responsibilities, and his position as apparent heir to Jobs, have strengthened.
"I was with Tim Cook last week in New York, and I walked away from that thinking, 'This guy is more in charge and more in control of Apple than I think people understand,' " said Tim Bajarin, a Creative Strategies analyst who has followed Apple for nearly three decades. Like Jobs, Cook is obsessed with details and involved in minute elements of the business, analysts said.
"Tim is obsessive about operational detail, and Steve is obsessive about product detail," said Gene Munster, an analyst with Piper Jaffray.
A handful of other executives, whose roles are complementary to that of Cook's, also are expected to see their profiles rise in Jobs' absence. They include Jonathan Ive, a London-born designer who is Apple's senior vice president for industrial design and close to Jobs.
"He's arguably the most important person there outside of Steve," said Shaw Wu, an analyst at Kaufman Brothers. "He's responsible for the look and feel of the products, the way they interact with users."
Philip Schiller, the marketing chief, took over as Apple's chief showman during Jobs' previous leave, taking the stage at events typically headlined by Jobs. Among other products, Schiller unveiled the iPhone 3GS as well as an updated line of MacBook Pro laptops.
And Scott Forstall, senior vice president for iPhone software, is believed to have an increasingly influential role as software becomes the distinguishing factor on phones and tablets. He has been behind Apple's push to unify the software that powers its mobile devices and its Macintosh computers.
One area where Jobs' influence will be hard to replace is at the negotiating table. He has sought to sway many through the strength of his personality, for instance, playing a direct role in persuading media companies to make their content available on Apple's products. That role is increasingly important, as Apple seeks to become an even bigger power in media distribution.
Jobs has some recent victories on that front; for instance, when The Beatles agreed to sell their music on iTunes. He also persuaded Disney and News Corp. to make some television shows available for 99 cents through the Apple TV device.
"When Steve talks, people listen," Harvard Business School's Yoffie said. "It would be hard for anyone in the industry to have a comparable level of influence."
No one expects Apple to suffer in the short term, as the company has a long product cycle. But some raise questions as to what will happen over the long term if Jobs does not return.
"The problem, really at the core," Piper Jaffray's Munster said, "is that Steve Jobs' inspiration is irreplaceable."
Information from the Los Angeles Times is included in this report.