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Can Apple Survive the Second Going of Steve Jobs?

Where Steve Goes

Apple CEO Steve Jobs is taking another medical leave, reassuring investors and fans that he has “great confidence that Tim and the rest of the executive management team will do a terrific job executing the exciting plans we have in place for 2011.” But at Business Insider, longtime Apple watcher Henry Blodget thinks that Jobs’ public statement might prove to be his valedictory.

Jobs wrote, “I love Apple so much and hope to be back as soon as I can.” And Blodget thinks that “those are not the words of someone taking a short leave who is confident he will be back at the company soon (or ever).” Blodget cites the statement Jobs released before his first medical leave, when he promised to return in just six months. Jobs has made no such promise this time around.

Considering just how sick Jobs has been, and for how long, the safe bet is the one that Blodget is making: Apple is about to endure the Second Going of Steve Jobs.

Over at the Wall Street Journal, Brett Arends says that Jobs “has proved himself to be the most extraordinary chief executive in the world and among the most extraordinary in living memory.” And that his “absence must subtract enormous [shareholder] value.” The key graf in Arends’ piece is this:

Apple true believers may argue that the company will continue to succeed, regardless of its leadership, because of its superior technology. Yet Apple computers were better than PCs back in 1997, as they were in 1987 and as they are today. But the company was still heading for oblivion. Technological brilliance is not enough to make stockholders rich. You need management brilliance too. Steve Jobs has given Apple a focus and an edge that is matched by few other companies. This is a fast-moving, brutally competitive industry.

Arends makes almost-uniformly good points here, but one of them is wrong and the others need expanding.

Where Apple Was

Contrary to what Arends claims (and contrary to what most of the Mac faithful believe), Macs were no longer superior to Windows machines — by August 1995, when Win95 was released. At that time, Mac users had just gotten hold of the System 8 Mac operating system, which was a concession of failure by Apple to produce the long-awaited “Copland” OS. Prior to that, Mac fans had been stuck with the nearly-obsolescent System 7 since 1991. And Mac buyers were confronted by a confusing array of computers from which to choose, with tell-nothing names like “Centris” and “Quadra.”

The original Mac OS was a real kludge, albeit a gorgeous one. But to fit it into the then-available 64k of system memory (yes, 64k), much of the OS existed in the Mac’s hardware, in chips. In 1984, Mac OS made something like 400 different calls to hardware. Trying to modernize all that hackery was more than Apple could do.

But what Arends has exactly right is that Apple did have “technological brilliance” without “management brilliance.” Apple’s engineers continued to come up with brilliant new technologies and innovations (QuickTime and Newton and HyperCard are just three that come immediately to mind). What Apple had trouble doing in the years after Jobs was forced out, was creating products marketable at a profit.

Jobs himself faced a similar problem at the company he founded after his Apple ouster, appropriately called “NeXT.” NeXT developed a brilliant OS, fantastic object-oriented programing tools, and innovations like multimedia email before they were even pipe dreams for Windows or Mac users.

Problem was, NeXT couldn’t make much money either, and might have folded if not for cash injections from Ross Perot, the company’s major investor.

By 1997, Apple was in dire straits. They had great hardware, but a kludge of an OS. NeXT had a brilliant, fully-modern OS, but little hardware — and even less consumer mindshare. Apple bought NeXT, Steve and his NeXTstep OS came with it, and the rest is history. Profitable, profitable history.

Where Apple Goes

And to call Jobs merely “innovative” would be slander. He helped to invent the personal computer (Apple ][), but then went on to reinvent it, not once (Macintosh) but twice (iPad).

But Apple’s current success comes from exploiting minimal R&D investments into maximum markets. Nearly all of Apple’s enormous success comes from two products: the iPod and OS X (as NeXTstep has been known since it was ported to Mac).

iPod’s “halo effect” helped to reignite consumer interest in Macintosh computers — I know, because I’m one of those consumers. OS X has been upscaled from a niche product when NeXT marketed it, into arguably the finest mass OS available. Even more importantly, OS X has also been downscaled to iOS, where it runs iPhones, the iPod Touch, and maybe most importantly, the iPad. (There’s also the new, iOS-fueled Apple TV, but that remains “a hobby.”)

In the Naughts, Apple finally built and exploited the technological foundation it tried to create in the ’80s, and let atrophy in the ’90s — mostly thanks to the OS Jobs created twenty years ago at NeXT. Now, the simple OS behind the iPod Classic and Nano and Shuffle is on the way out, or at least marginalized, as iOS devices take over. And I’m not yet worried about Google’s Android OS. When it comes to phones, Google makes Android, but Apple makes money.

So my first question is: Can Apple continue to exploit OS X and iOS into new markets and new devices? And my second question is: Does Apple have a roadmap for what comes after NeXTstep has finally run its course?

The answers to both of those question lie probably two years or more in the future — OS X still has lots of life left in it. In the meantime, Apple should keep hauling in the cash, with or without Steve Jobs. The company will surely miss its visionary CEO, but in Tim Cook and Jon Ive, they have the product management and product design leaders better than most any competitor.

One More Thing

That’s not to say that everything is going to be OK at Apple, even in the short term. Because until (unless?) Steve Jobs returns, the new product demos are totally going to blow.

RELATED: If, in the months and years ahead, you want to know if Apple has lost its way, just remember that “Steve hates SKUs.”