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Apple Doomed, According to News at 11

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The woman was young, on the short side, and exceedingly anxious. “I noticed your media badge,” she said. “Would you have five minutes for an interview about Apple?” She said she hadn’t been able to find anyone with a media badge that morning, and I got the impression that her producer had told her to come back from Macworld/iWorld with footage or not come back at all. She led me over to her cameraman and sound guy, and after she introduced them and told me what outlet they worked for — a name I lost in the hubbub of the show floor — she proceeded to ask me my opinion about the waning of Apple’s fortunes.

She didn’t put it exactly like that — I don’t remember the actual words — but the implication was clear: Apple might have come back from near irrelevance under the leadership of Steve Jobs to become the world’s most valuable company, but with Tim Cook in charge and after the last disappointing financial report, the company’s star was once again falling.

My anxious interviewer wasn’t alone — in another interview during the show I was asked much the same question, and in each case, I had to resist saying, “Are you high? What could you possibly be smoking to see $54.5 billion in quarterly revenues and $13.1 billion in profit as a sign of impending doom?” (For full details of Apple’s “disappointing” financial results, see “Apple’s $13.1 Billion Profit for Q1 2013 Dismays Analysts,” 23 January 2013.)

This was fascinating — I’m no fanboy, but I can’t see any way that Apple’s Q1 2013 financial report could be viewed as a bad thing, at least unless you’re an analyst whose reading of bird entrails caused you to predict unrealistic earnings. Don’t get me wrong — Apple is far from perfect, and even at a business level, there have been some missteps of late.

For instance, after being announced in October 2012, the latest model of the iMac didn’t ship in time for much of the holiday buying season, which seems like a glaring operational lapse. Even now, you’ll wait 2–3 weeks for a 21.5-inch iMac and 3–4 weeks for a 27-inch iMac. Of course, we (and the same is true of analysts) don’t know why this happened. Did Apple’s executives choose to pre-announce a Mac they knew they couldn’t deliver in time to prevent potential buyers from purchasing something else? Or perhaps they were taken unawares by manufacturing problems or supply shortages? The latter seems increasingly likely given the continued delays.

Similarly, Apple admitted that it hadn’t been able to make all models of the iPhone and the iPad mini fast enough during the quarter to meet demand, which had to hurt sales. Was that because Apple failed to line up enough manufacturing capacity, which seems unlikely given their experience with iPhone launches by this point? Or were the problems actually insurmountable due to parts shortages or the lack of sufficiently advanced manufacturing capabilities? (The iPhone is known to be difficult to manufacture due to its extremely tight tolerances.)

But while these operations-related problems are both surprising — Tim Cook has a reputation as an operations genius — and troubling, I believe it’s overreaching to attribute a significant corporate downturn to such issues, at least at this point. If the company continues to stumble with bringing products to market, a notable problem for Apple many years ago, there would be cause to worry, but basing anything on a single quarter’s results is silly.

Though I may never know what will eventually come of these interviews, I did appreciate the opportunity to point out that Apple does suffer from some concerning problems that haven’t gotten as much press. These worries aren’t likely to affect the stock price in the short term, but could have long term consequences. I’m talking here about the drop in software quality over the last year or two, and Apple’s capricious and draconian policies surrounding its relationship with developers and publishers.

In terms of software quality, we’ve noticed significantly more problems over the last few years, with more (and more-troubling) bugs in iOS 6 than any previous version of iOS in particular. Our articles about issues with excessive cellular data usage and battery drain continue to garner comments from people who are struggling with their iPhones, and while we hope iOS 6.1 has finally addressed them — four months after iOS 6 shipped — it’s still too early to tell (see our series “Problems with iOS 6”).

Plus, one long-time industry friend said that in some developer circles, it was generally agreed that Mac OS X 10.6 Snow Leopard was the high-water mark of stability, and that the integration of sandboxing and iCloud in 10.7 Lion and 10.8 Mountain Lion had caused increased flakiness. Another friend with contacts inside Apple told me that some long-time engineers had been leaving for other companies, in part because they felt their software was being shipped before it was ready.

Although no developer wanted to go on the record about this, I heard story after story of Apple’s App Store policies and behaviors causing significant headaches. One developer told me of the nightmare caused by the App Store actually removing necessary files from his approved app, such that it basically didn’t work at all, and of the trouble and reputation hit that caused when he couldn’t respond to complaining customers.

Another developer related the fascinating tale of joining forces with a programmer with an existing app — the two formed a new company and tried to update the EIN (the employer identification number that uniquely identifies a company for tax purposes in the United States) in the original programmer’s iTunes Connect account. The interface wouldn’t let them, and when they queried Apple, they were told that it’s not possible to change the EIN. To get the business details right for their new company, they were told they would have to delete the original app and resubmit from a new iTunes Connect account. Anyone familiar with the App Store sees the problem here — the 10,000-plus customers of the original app were orphaned, and the new app lost the roughly 1,000 positive reviews garnered by the original app. The only workaround was to update the original app to display an alert prompting users to download the new app for free on a particular day, but fewer than 10 percent of the customers saw that in time, generating hundreds of support requests and requiring additional free download days.

(When I asked the obvious question, I was also told that it’s not possible to transfer an app between iTunes Connect accounts, a fact that reduces the value of apps on the resale market and thus changes the economics for app developers or companies looking to be acquired.)

Apple’s refusal to allow paid upgrades also came up in conversation. Since it’s thoroughly unreasonable to expect developers to give out upgrades for free forever (sales to new users always tail off after the initial release), most have gone the route of releasing a completely new app, orphaning the users of the previous version and offering discounted “upgrade pricing” to everyone for some time after release. It’s an awkward set of hoops to jump through, and encourages many developers to release numerous new apps rather than put in effort over time to improve a given app over multiple major releases.

If I had to speculate, I’d say that Apple’s amazing success over the past five or six years has effectively blinded the company to these problems, or, to be more charitable, that the success has resulted in Apple prioritizing software quality behind hardware quality and predetermined ship dates, and in sticking with a set of App Store policies that no company in a less dominant position could ram down developers’ throats.

I’m not about to describe Apple as “beleaguered” or suggest that the company won’t be able to maintain its profitability or industry position (though its growth curve will flatten out — no company can grow at Apple’s recent rate forever). But even though pointing out these concerns is not a case of the emperor’s new clothes, ignoring them or focusing only on analyst expectations and stock price is definitely a case of failing to acknowledge the emperor’s wardrobe malfunction.

 

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Comments about Apple Doomed, According to News at 11
(Comments are closed.)

David Rabinowitz  2013-02-04 11:55
“Are you high? What could you possibly be smoking to see $54.5 billion in quarterly revenues and $13.1 billion in profit as a sign of impending doom?”

My thoughts exactly....
With tongue planted firmly in cheek.... :D
Tom Gewecke  2013-02-04 12:18
I think you are correct about the software quality issue. Not seriously upgrading iWork for 4 years is bad, but failing to fix 8 yr old bugs and missing features that make these apps of marginal value for those writing in Arabic and Indic scripts or Chinese/Japanese (literally billions of people I think) is truly foolish.
Harry Carnes   2013-02-04 12:25
Thanks Adam. A nuanced and interesting overview of the situation at Apple. I got here because I was looking for information about the Podcast app, and the flakiness problems it is having. Clearly software released before it was ready for the prime time.
Adam Engst  An apple icon for a TidBITS Staffer 2013-02-05 08:27
Yes, the Podcasts app is extremely weak software, in my opinion, although some early bug fixes addressed the major problem in the initial release. But it's still pretty wonky, and we've written a good deal about it and alternatives to it.

http://tidbits.com/search/Podcasts%20app
Joe Swann  2013-02-04 12:41
You have verbalized what I have been feeling about Apple for a couple of years now.
Scott Rose  2013-02-04 13:52
I have reported to Apple over 20 MAJOR OS X bugs (some of which cause PERMANENT DATA DELETION) since 10.7... none of them have been fixed by Apple. I am completely convinced that Apple is fully asleep at the wheel. They are worse than a drunk driver!
Tallrob  2013-02-04 14:37
Yeah, but really, this has all played out before. The bugs will be worked out, and App Store policy will evolve, slowly but surely. The point is, there's nothing pointing to doomsday anytime soon.
Adam Engst  An apple icon for a TidBITS Staffer 2013-02-04 15:05
Well, some bugs will be fixed, certainly, but if more are introduced at the same rate, we're not improving. The simple fact is that we went downhill for years with Lion and Mountain Lion.

And as far as the App Store policies go, I would have agreed with you a few years ago, but they haven't changed basically at all in that time.

Assuming that Apple will fix this stuff (without causing additional problems) may be what got us to this point.
Steven Fisher  2013-02-04 15:27
I have been developing on Mac OS X solidly since the 10.1 days, at first as a faster-rebooting Mac OS Classic. I have no doubt that Mac OS X has improved each major OS release, including Lion and Mountain Lion. While new frameworks ship with bugs, the core of OS X has continued to improve.

Undoubtably, sandboxing is not as ready as it should be, but so what? Sandboxing is a concept you can use or ignore. Developers who choose to use it — and yes, it's a choice — cannot possibly speak for the stability of the OS as a whole.

I would love to see those developers actually develop for or on 10.4, .5 or .6 again. I think they would quickly realize that the good old days were not so good after all.
Glenn Fleishman  An apple icon for a TidBITS Staffer 2013-02-04 20:40
Not doomsday, but it's unclear whether the bugs and operational choices will ever change. Apple seems fixed on its path.
WalkerBell  2013-02-04 15:27
I have to agree - the OS X updates are getting worse and worse. This is not the place for specifics and i can't speak to the iOS issues but the desktop/laptop OSX inconsistencies, bugs, kernel traps etc, are becoming almost a daily occurrence over the last 2 updates ( up to 10.8.2). I had not thought about a 'high water mark' but our company frustrations with 'Apple quality' mirror others in this post. Tim, stop worrying about the curtains on this boat, pay attention to the hull.
Eolake Stobblehouse   An apple icon for a TidBITS Supporter 2013-02-04 16:48
Damn, now I am worried about the whole platform!! I am stuck on Snow Leopard because nothing about the Lions attract me, the iOSification pushes me away, and several of my most used/useful apps have not been made for Intel Macs and I haven't found good replacements.
Is the Mac platform becoming an amateur platform?

Gawd, I'd hate to have to use Windoze one day.
Is comparing things to Snow Leopard fair? SL was a deliberately planned maintenance and bug-fix release (so much so that people panned it for not having enough in the way of new features). Lion and Mountain Lion were not.
e.g., I note that the release of Leopard 10.5.3 led to the following TidBITS headling:

"Mac OS X 10.5.3 Update Resolves Numerous Issues"

and then with Snow Leopard:

"Apple Needs Public Betas for Mac OS X"
Adam Engst  An apple icon for a TidBITS Staffer 2013-02-04 17:36
I think Snow Leopard actually did pretty well after the first couple of bug fix updates, but Apple kept releasing updates that introduced new problems. The eventual status of 10.6.8 was very stable, though - I stuck with it on my main Mac in favor of 10.7 until I felt that I had to upgrade to 10.8 for iCloud reasons.
Okay, but my point was that Snow Leopard was a release aimed specifically at quashing bugs. Comparing a more generic release to it is always going to put that release to shame. It's like having a car detailed professionally and then pointing out that it's cleaner than a car right off the street.
Adam Engst  An apple icon for a TidBITS Staffer 2013-02-06 06:54
Apple made a big deal about that for Snow Leopard, yes, but conceptually, I think Mountain Lion really had the same goal - few new features, cleaning up the underpinnings. And for the most part, I find Mountain Lion better and more stable than Lion, which I never liked.
By the way, mistyping "TidBITS" in the address bar as ttidbits takes one to "Torah TidBITS" a periodic email of TidBITS from (you guessed) the Torah! What this has to do with the conversation, I don't know, but I thought I'd mention it.
Alan Sanders  2013-02-04 17:11
The sad truth is that most people are sheep. They will believe whatever the loudest voice is telling them. Public opinion isn't just influenced by the media—it is almost solely determined by the media. And the media basically works for Big Business, which has traditionally been totally anti-Apple. What to do?
Adam Engst  An apple icon for a TidBITS Staffer 2013-02-05 08:29
I'm not quite sure what you're suggesting here. In the article, I find it surprising that some mainstream media outlets are focusing on a single quarter's financials (which were very good) as evidence that Apple is in trouble, but my goal is to point out that Apple does have some real problems that aren't getting sufficient coverage.
21st Floor  2013-02-04 17:43
This whole article is based on hearsay...That means Rumors... This person said this or that. Another writer trying to make something out of nothing. Plan TABLOID CRAP NEWS! There isn't one company that wouldn't want Apples bottom line quarter after quarter. And for people leaving I don't think so, unless another company really wants to come up with some big money. Most everyone that walks through Apples door stay, You have any idea how many people would love to work there. And anyone can be replaced, just like dumb writers.
Peter Londey  2013-02-04 19:17
This is a ridiculous reply, as though Apple has to be above criticism. I've used Macs since 1987, so I am as much a fanboy as anyone, but Apple is getting a bit like Smaug sitting on a pile of gold and snoozing. Adam is quite right about the decline. My MacBook Pro has crashed entirely once a week or so with Lion and Mountain Lion: it's like going back to the pre-OSX days. A few years ago my iPhone was rendered useless as a phone by an OS update (it was still a nice PDA). It took Apple about 3 months to bring out an update which solved whatever the problem was, without as far as I recall ever publicly admitting there was a problem. It is a truism of the world that big successful organizations become arrogant, and that's how Apple seem to me now. As an ordinary user, I approach every OS update with trepidation, waiting to see (a) whether things still work and (b) what has been snatched away (like the hand-tool in Preview - what's with that? or the ability to open a PDF in Preview directly with a script in Filemaker - that went west with Lion). My Mac is my most important tool - I just want it to work. That is more important than OMG glitz.
Adam Engst  An apple icon for a TidBITS Staffer 2013-02-05 08:32
Umm, no, it's not based on hearsay. It's based on details from industry insiders and developers who don't wish to be quoted on the record because they fear retribution from Apple. Remember, Apple has the right to reject or pull apps from the App Store or Mac App Store for ANY reason, including "We don't like you anymore."
21st Floor  2013-02-04 17:56
Don't forget a lot of these people leaving messages don't even own a Mac. Their just a Apple basher with their mighty PC.
Rob Lewis  2013-02-04 17:59
Terms you often find in lawsuits accusing parties of bad behavior are "arbitrary and capricious".

Not a bad description of Apple's recent policies. (Dammit, why can't I have permanent scroll bars in Mountain Lion if I want them?)

I know it may be a small share of their market, but really, how much would it cost to fix the serious and longstanding bugs in AppleScript?

The one-finger salute is getting old. If/when Apple comes back to earth, the reasons why won't be mysterious.
Bjorn Ahlen  2013-02-04 20:00
"why can't I have permanent scroll bars in Mountain Lion if I want them?

Uh? I'm writing this on Mountain Lion, with permanent scroll bars everywhere.

And I haven't done anything magical either.

You do know about "System Preferences>General>Show Scrollbars>Always" right...?

Perhaps you had read on the InterWebs that Apple's recent OS X versions were no good?

And since it was on the World Wide Web of Deceit, er, the InterWeb, it must be true, right?

Me personally, I love having iMessages on my desktop as it lets me communicate quickly and concisely with the people I work with remotely, without having to pull out my phone.

Apparently someone else likes the concept of iMessages, because Apple passes on nearly 1 billion of these each day...

I also like having my iPad and iPhone in sync in every possible way with my desktop and laptop, so Viva Apple for the iOSification!

Let's focus on the real problems that we can verify ourselves, and pass on those only.
I am very concerned about the loss of functionality (I.e., loss of the desktop metaphor) in iOS. Perhaps understandable for iPhone, but not iPad. If iOS and OS X converge on an operating system without desktop, my love affair with Apple (first hundred days, 1984) is over.
I'm one of those that thinks Snow Leopard (10.6.8) was the high point of OS X in terms of both performance and stability. It's still the fastest, most rock-solid system I've ever run on any Mac. If it weren't for a handful of features in Mountain Lion (I do love iMessage integration, for example), as well as a few apps that are starting to require one of the "Lion" versions of OS X I would still be using it.

I have occasionally heard people refer to Snow Leopard as the "Windows XP of the Mac world" in that people will continue to use it for years because it just works.
Bo K Engelbrecht  2013-02-06 06:02
With the difference that XP works on most new machines (we can even order some pre-downgraded). 10.6.8 does not. Now a days we do not sell any new Macs, only older used ones that works with Snow.
I am also troubled by the number of bugs I run into in OS X these days, and particularly with Apple software. For example, I use Final Cut Pro X for film editing. Despite all the criticism it gets it's actually a really well thought out piece of software. Except - and this is the biggie - it's full of bugs that have persisted through many updates and which are potentially catastrophic when they occur.

This is not acceptable for a professional editing platform. It was OK in the first version or two because we all knew it was a new thing. But seven updates later it continues to unexpectedly freeze, break plug-in functionality, or fail to save data. This is what will drive the pros away from the platform.
Bjorn Ahlen  2013-02-05 07:47
FCP X needs RAM. If you only have 4 GB you're seriously asking for trouble. Perhaps you have a 2008-2010 MBP and have been told that it can't be upgraded? It took me 10 minutes and $61.79 to go from 4 GB to 8 GB using the instructions at OWC (macsales.com).

[I have no connection with OWC other than as a longtime satisfied customer.]
Bjorn, you're absolutely right! Final Cut Pro X does require a lot of RAM. And fast disk drives. And a good video card. If I was using a MBP with 4 GB of RAM I would be more understanding of the occasional freeze or random behavior.

Unfortunately, I'm using a top of the line 8-core Mac Pro with 20+ GB of RAM, high end video card, fast hard drives, etc, and Final Cut Pro X is still unstable and unreliable. And that's very disappointing because I really like it.

To be fair there are a lot of reasons why editors are leaving the Final Cut ecosystem, but Apple shoots itself in the foot when even the ones who like FCP X leave because they just can't trust it.

[I don't have any connection to OWC either, but they are great. I ordered something from them last week.]
The article raises a couple of ecxcellent points.

Regarding the unavailability of new iMacs during the quarter, I think it's generally accepted that this was the main reason for lower than expected Mac sales numbers and therefore probably also the root cause for much of the hysteria after the quarterly report.

What bugs me about this whole mess is that it's so incredibly unnecessary. The manufacturing issues that led (and continue to lead) to shipping constriants and unavailability stem from the new iMac's super-slim design. A design that solves a problem nobody had in the first place. The super-slim design of a desktop computer (that was already very slim before) solves no problems. It just created a whole lot of manufacturing issues and led to shortages and bad press. Not to mention specs that had to be dumbed down (e.g. 2.5" drives on the 21" model) to fit the new engineering constraints.

Can we have the previous iMac's design back? ;)
tom powers  2013-02-05 07:37
Yeah, and put the optical drive back in. I've still got a few hundred CDs and DVDs I like to listen to/watch without needing an external drive to clutter up my desktop.
Bjorn Ahlen  2013-02-05 07:54
"Can we have the previous iMac's design back? ;)"

Yes.
It's called buying refurb at Apple.com, and you get full same-as-new warranty and can add AppleCare anytime within the first year.

Oh, and Tom, it comes with a coaster slot too :O).
Adam Engst  An apple icon for a TidBITS Staffer 2013-02-05 08:36
Your point is well taken, Simon. No one would complain about having the thinnest possible MacBook Air, since you interact with laptops in that dimension. But with the iMac, you mostly just look at the front, rendering the slim design invisible in everyday use.

That said, I don't think it's a bad thing for Apple to push the limits on manufacturing technology and processes, since that's how things get better. But it seems that in this case, they guessed wrong as to just how hard it would be to mass produce.
No, it's not called a refurb. Because that would be last-gen CPU, specs, etc.

What I'd like to see is current generation specs and CPU in a sensible desktop package, i.e. one that's geared towards functionality and good value, not anorexic uber-design.
uhuznaa  2013-02-05 02:09
One problem that Apple has is that it basically exploded as a company in a few years. And they're serving an absolutely huge mass market which of course piles up countless edge cases they would have to care for.

Many things don't scale all that easily, you can't just hire a few thousand programmers and put them to work. Apple seems to be totally overstretched and almost certainly has missed to address this quick enough.
Adam Engst  An apple icon for a TidBITS Staffer 2013-02-05 08:39
You're absolutely right that things have changed radically for Apple in the past few years, and certain activities don't scale easily. (I believe "The Mythical Man Month" is the canonical book on the topic, pointing out that just because one woman can make a baby in nine months doesn't mean that nine women can make a baby in one month.)

What most people don't see however, is that Apple's back end software tools seldom have the elegance and ease-of-use as their user-focused tools, and I wonder if that's indicative of Apple not "thinking different" when it comes to solving these problems of software quality and developer-hostile App Store policies.
uhuznaa  2013-02-05 10:59
Absolutely, yes. Not long ago I submitted a bug with Radar and was shocked to see that the UI still has pinstripes and all...
Mark Slone  2013-02-05 06:46
Excellent article, echoing my experience with Apple's software, which always leaves me wondering how such a great company can leave so many problems unfixed for so long. One recent "bug" in OS X Safari makes it very frustrating for me to use; only using a developer menu option has kept me from bailing to another browser.

My understanding is that Apple doesn't have enough people to stay on top of the bugs and limitations, but that they feel hiring more people doesn't necessarily help due to training, etc. But I'd love to see Apple use some of their vast pile of cash to hire some top programmers/developers to improve the situation, at least in the long term.
Adam Engst  An apple icon for a TidBITS Staffer 2013-02-05 08:43
As I noted above, it's probably not so much a matter of just hiring more people, but in putting some very careful thought and development into tools and processes that would bring new ways of improving software. I don't know what it's like on the inside, but the external bug reporter hasn't changed in ages, nor has Apple's approach to communicating about bugs with the people filing them. (Generally, your bug reports are seemingly ignored. Sometimes you're told it's a duplicate, so you've wasted your time, and only occasionally do you hear back requesting more information or telling you it's been resolved.)
Mark Slone  2013-02-05 09:36
From what I've read, the number of people is a very big factor. The iOS Podcast app for instance is terrible, and only has one or two people working on it, part time. I don't know for a fact, but I'm willing to bet, they have plenty of great "processes" in place that don't do any good since they simply don't have the time or people to follow them properly.
Steven Fisher  2013-02-05 15:50
Assuming 50% from each person, larger apps are developed with smaller teams than that.
Ruckus1  2013-02-06 15:53
Apple was caught sleeping at the wheel by Samsung's "large Screen" phones! (N0TE 10) In China and many others places they cannot keep them on the shelves. That is not a mistake, it is a blunder. It is difficult to see the world from an Ivory Tower. I forgot to mention thier arrogant "Map" fiasco. Make enough mistakes and the dominos will begin to fall.
Adam,
Don't forget that arrogance comes with the profit.
Backend, we see service issues (more demand on AASP and store techs, GSX issues every day), outrageous parts per repair penalties,Apple stores getting preferential treatment, constriction of supply to non-apple stores, quality control and engineering issues.
Poor educational support, poor corporate support (death of Xserve...really by a Mini?). Supplier product issues (nVidia, Seagate, Hitachi,)
And then there is Samsung. That company has much vested interest in undermining AAPL. From perks of Galaxy sales (ever see ATT rep get $50-$100 per iPhone sold?) to saturation of product, Samsung gloats at Apple.
EU issues with warranties. 10.7.5 (stopped there!) then 10.8 (and bailing on 4 year old macs, RIP MacPro 2007), and now 10.9 Lynx coming! (we are at 10.8.2 and the devs are seeing 10.9? What is Apple now but Microsoft was...
AAPL should have never been over 200 let alone 500+/share. With fast growth comes weeds and pruning.