Apple is
riding a wave of popularity and success seldom seen in the tech industry — or
any other industry. With the company’s recent white-hot success, including
today’s release of a new model of the market-leading iPad, it’s easy to forget
that it wasn’t always this way.
The
company’s history is well-known to anyone even remotely interested in Silicon
Valley lore. Apple was launched in 1976 by the affable and brilliant Steve
Wozniak and the charismatic visionary Steve Jobs in a garage in Los Altos,
California. Its first line of PCs, the Apple II, is credited with igniting the
personal computer revolution and became a mainstay in schools and homes
throughout the 1980s. The Mac, introduced in 1984, forever changed the
interface between humans and computers, bringing to the mass market advances
that today we take for granted, including the mouse, the graphical interface,
and tiled windows.
The 1990s,
however, were not so kind: Innovative products like the Newton failed to catch
on, the Mac languished as an overpriced, niche PC (with less than 5 percent
market share), and a misguided strategy to allow manufacturers to clone Macs
pushed the company to the precipice of irrelevancy and bankruptcy.
Jobs’s 11-year
exile ended in 1996, when Apple purchased his NeXT Computer company. Back in
control of his baby, he slashed product lines and employees, focused on form
and function, and soon introduced another hit, the bulbous Bondi-blue iMac.
With some cash in the bank and a rejuvenated fan base, Jobs orchestrated a
string of hits — iPod, iTunes, iPhone, and iPad — that have swelled Apple’s
bank account to more than $100 billion and made it the most valuable company ever.
But what do
you really know about Apple and how it operates? If you are like most people,
and even most of the company’s 50,000 employees, you know precious little about
what goes on inside 1 Infinite Loop, Cupertino. Competitors, analysts,
investors, employees, the press, retailers — everyone — are kept in the dark
about what’s coming until the very last minute.
Hoping to
shed light on how Apple operates, Fortune magazine reporter Adam Lashinsky
interviewed numerous former and current executives and employees. His findings,
which have surely upset Apple, were published in his book Inside
Apple: How America’s Most Admired — and Secretive — Company Really Works.
Yahoo!
talked with Lashinsky in late February, the same day Apple sent out invitations
to a event that turned out to be the unveiling of its newest iPad.
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–>[Related: How does Apple’s new iPad rate against
rivals?]
Given the
timing, we asked Lashinsky to talk about the findings in his book in the
context of Apple’s mysterious product-development cycle.
As you read
this interview, long lines are snaking around Apple stores, consumers receiving
their iPads via FedEx are breathlessly tweeting their joy, and tech blogs,
newspapers, and the evening news are eagerly covering Apple’s latest big product
release. Indeed, today marks the culmination of months of detailed planning,
exquisite execution, and masterful media manipulation. As uncovered by
Lashinsky, this is how Apple does it.
Yahoo!: Talk about the genesis of a
product formation at Apple. How does a product idea get bubbled up? At what
level is it being approved?
Adam: Apple has relatively few
products, first of all. For many years, the company would say that it could fit
all of its products on a conference room table. That’s not completely true
anymore. But in spirit, it is true that Apple has a simple lineup compared with
so many other companies.
[Related: The secret reason Apple has so much
cash]
The products
that Apple has had over the last 15 years have been part of a larger strategy, part of this digital-hub strategy, starting
with the Macintosh, extending out to iTunes and iPod, and so on. So each
product has to fit with the previous products. And the very first thing that
happens once Apple is going to do a product is to do the design of the product.
This is very unusual compared with other companies. The design is so
preeminent.
Yahoo!: You give an example in the book
about the designers walking into a meeting, and everything sort of gets calm
for a minute, because these are the princes and princesses of the company.
Adam: That’s right. And it would be
outrageous at Apple for a financial person to be involved in that conversation
before the design person. At many companies, the financial person would say, “Well,
we can’t afford to do that” or, “This would cost X.” And at
Apple, they say, “This is what we want it to look like. You figure out how
to pay for it.”
Yahoo!: The chief designer there, Jony
Ive, kind of works in this secretive Willy Wonka-ish lab room down in — I don’t
know where it’s at actually, but very tight security obviously, and very tight
group of people that have access to this place. And Steve Jobs liked to spend a
lot of time in there touching and feeling what was being worked on.
Adam: They have all the latest
equipment and prototyping machines, and they’re big into building models, as
other device manufacturers would be. And the designers will build multiple
prototypes and play around with them. And yes, Jobs liked to visit and hang
out, because he found it inspiring to see what the designers were working on.
[Video: Six surprising facts about Steve Jobs
Apple]
Yahoo!: One thing that’s fascinated me
with Apple is their ability to understand engineering and the materials that
are used in products. They always seem to be really on the cutting edge of not
just the latest input/output port or something like that, but just the
materials that get used; they seem like they’re three years ahead of everybody
else.
Adam: Ive himself is very interested
in materials science. He has spent time in Japan with samurai sword master
manufacturers, for example. And so as a designer, he considers materials
science to be part of his domain. So yes, they’ve been at the cutting edge of
using materials that led to more beautiful products that were able to have
curved edges, where the industry was using sharp edges before Apple. And they
conceive of the physical nature of the products as being as important a part of
the aesthetic as the user interface on the screen.
Yahoo!: Do they look at what their
ultimate product would be as far as the performance, the aesthetics, the
features it will have, and then kind of reverse-engineer it, like you said? The
finance people are cut out of it, all those sorts of people are basically on
the back burner until it’s unveiled, “This is what we need to make.”
Adam: Yes, but I think even
performance is subservient to appearance. Now, that’s not to say that they don’t
care about performance or that they don’t have ideas about performance, but the
first thing is to decide what it will look like.
Now, what you
asked me earlier was, How does that lead to the keynote presentation and “one
more thing”? Well, Apple plans, first of all, the product manufacturing
process with something called the Apple New Product Process, ANPP, which is a
written-down process for everything that will happen over the course of the
manufacturing and design of the product.
At the same
time, they’ll have a marketing plan, and there will be timeline that will spell
out what all the milestones are for the product, so that every aspect of
product manufacturing and marketing and selling will be planned out and
coordinated and integrated in advance, leading right up to the moment when the
product will be unveiled to the public.
One of the
interesting things is that these facts are on a need-to-know basis even within
Apple, and they will be kept very close. One group repeatedly frustrated by
this is the salespeople. Salespeople don’t get the product details until the
public gets the product details. And so they are continuously annoyed that they
can’t prepare their training manuals for how to use the products, because they
haven’t seen them yet.
Yahoo!: OK, so a product’s been
approved. They have the ANPP set down. Again, anybody who’s involved in that
specific product as it goes through the chain, they’re the only ones that know
what’s going on. If you’re in marketing and you’re not working specifically on
the iPhone, you would not know what’s happening with the iPhone coming down the
pipeline.
Adam: That’s right. And it’s deeper
than that. So if you’re working on the hardware of the iPhone, you won’t
necessarily be familiar with the user interface of the iPhone until a certain
point. Your job will be the prototyping and the modeling of the hardware. And
that doesn’t mean that you’re in the know on the software, at least not early
on.
Yahoo!: For an Apple employee, is that a
good thing or a bad thing? I think it’s good to be associated with the final
product, but maybe on the way you feel like you’re just kind of an assembly
line worker, a worker bee, and you know your little piece of it. Is it
satisfying, fun, to work at Apple?
Adam: I think people describe it as
being very satisfying but not often very fun. It’s a work-oriented environment.
You focus on your task. You are told to mind your own business. You’re
discouraged from meddling in other people’s business. You follow orders. And
there’s not a culture of a lot of back patting either. When you’re done, you move
on to the next project. You’re always busy. There are always things to do.
There’s never enough time. So there’s not a lot of celebratory jigs going on.
Yahoo!: At the same time, they’re not
really out there talking to the press, obviously. They’re not going to
conferences and touting whatever they’re doing at Apple. You just do not see
these people. And that goes all the way up. The top execs are not out there,
either. They have to take a back seat to Apple and/or Steve Jobs when he was
alive.
Adam: That’s exactly right. I quote
someone in the book saying that “you check your ego at the door when you
walk in the door at Apple.” Working at Apple is not about you. It’s about
Apple. And everything that you do, you do for the greater good and glory of
Apple. And so if you’re going to have a public profile, which you probably aren’t
— but if you were to, that would be because Apple management has determined
that that’s what’s best for Apple.
Yahoo!: Back to the product. What is the
philosophy that goes into the Apple product? When they’re approving that design
and the aesthetic and all that kind of stuff, are there some adjectives that
kind of scream “Apple”? You know, simplicity, cleanliness?
Adam: Yes. The chief characteristics
of an Apple product are simplicity, ease of use, the tight integration of
hardware and software, and simplicity, again. And this is really significant.
Apple products don’t tend to have more features than are necessary. And
sometimes people will complain that they have too few features. The iPads 1 and
2 don’t have USB connections, and the iPad 1 didn’t have a second camera.
Yahoo!: So the product is finished. That’s
where we’re basically at today. They have put out an invite to the members of
the press. You’ve covered these releases. Tell me what it’s like to be in that
room.
Adam: If you sit back in the room and
you think about what you’re experiencing, you realize that you’re part of an
extremely well-orchestrated production, from the music that’s playing when you
sit down in the room, to the array of the executives in the front row, just
like the officials in the old Soviet Union who would be standing near Lenin’s
tomb at a May Day event, to the fact that these events typically begin at 10 a.m.
on the dot.
And then
continuing on with whoever’s onstage, to the exact words that come out of their
mouths — scripted and timed to the pauses for laughter — to the images
onscreen that are typically filled with beautiful people, and also what people
in product marketing refer to as “hardware porn”: you know, these
loving, revolving shots of these beautiful products.
Yahoo!: You’ve often got some employees that
worked on specific products in the very front, and they’re cheering as their
products are mentioned. And you’ve got thousands, literally, of press all
blogging madly every single word and every single image that gets put up there. And
this is a lesson that traces back to the original Mac in 1984 with a big
unveiling. Nobody does it better.
Adam: Actually, what I wrote about in
the book is that Jobs may or may not have learned this from one his heroes, who
was Edwin Land of Polaroid, who had mastered the big reveal as far back as the
1940s. He would invite both trade journalists and mainstream journalists to his
unveilings of new technology, so that he could get maximum coverage.
But, yes,
Apple is masterful at getting all the right press in the room — broadcast,
print, and so on — and making it so that they’ll time the reporting of the new
product to exactly when Apple wants them to time it, and gives them, by the
way, very good information about these new products. And the demos at the
unveiling are live demos, so that this isn’t vaporware, which is so popular in
the rest of the technology industry.
Everyone who
attends the event is invited to walk across the hallway into the demo room and
see the products that were shown onstage. And then, yeah, various executives
and lower-down employees will be milling around the demo room to have friendly
scripted conversations with the journalists to talk about whatever was
announced that day.
Yahoo!: And that’s the remarkable thing,
going back to tie two things together: the scripting and the fact that even
these top, top execs of arguably the most successful company in the world stay
on script. They will be out there, and they will never deviate. Everything that
they will say at that point is really just parroting what we already heard from
Steve Jobs onstage. They’re disciplined.
Adam: And for a very good reason. As I
describe in the book, they’ve worked very hard on the script, so why would they
want to deviate from the script? The script is powerful. You want to say it
over and over so that the journalists you’re talking to will write it the way
you wrote it, so that their readers will read it and repeat it to their
friends, so that positive feedback loop will exist in the marketplace — so
that the script, as you wrote it, will start to get repeated by your customers.
Yahoo!: Is there a monetary value you
could even place on that?
Adam: Academics have done research on
the monetary value of the publicity that Apple gets from its product
unveilings. And so this speaks to the importance of the secrecy before the
event and also, I think, describes the value of the free publicity that Apple
gets from its unveilings.
Yahoo!: So the product is out now. The
press has written about it. They’re gushing about it, most likely.
Adam: Typically.
Yahoo!: You get people waiting in line
for these products. Now, tell me about the packaging of the products, which is
also something that Apple does not take lightly.
Adam: No. They work very hard at
making the packages for their products beautiful, because they’ve taken great
care to make sure that the product is gorgeous, and what it comes wrapped in
should be gorgeous too. So in the book I describe how Apple at one point, with
the introduction of the iPod, had a package designer work on making sure that the
little piece of tape that you peel back when you open the box was placed just
right.
And they worked
with hundreds of prototypes to make sure that the way that it was affixed would
be exactly right to please the customer when they pulled that tape and opened
the box and they see their device stacked perfectly on top of the very
elegantly designed instruction manuals, so that you get a good feeling when you
take that wonderful thing out of the box and hold it for the first time. No
detail is too small for Apple when it comes to presenting its gorgeous products
to their customers.
Yahoo!: Because there is a feeling that
you get. You just spent hundreds, thousands, of dollars on this thing, and
Apple wants to make sure that the first impression is not a cardboard box with
some crappy shipping tape that you’ve got to tear off.
Adam: Correct. And this is one of the
many examples of why when you put these things together in the aggregate, Apple
can charge a premium for its products; why an iMac might be hundreds of dollars
more than an all-in-one PC with extremely similar physical characteristics in
terms of the microprocessor, the screen size, the memory — all these old
boring things that product marketers talked about in the PC industry for years,
Apple can charge a premium for.
Yahoo!: And customers don’t typically
complain about the price of an Apple product. They are more likely to say, “I’m
going to hold my product and show you and be proud about what it does and how I
feel about it, and not worry that it was $100 more for this phone than the
phone you have. That’s not my concern.”
Adam: Apple fans will complain about
many things because they’re so in love with the product that they will
scrutinize it very carefully. But price is not one of those things.
(This
interview was edited for clarity and readability.)
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