Debunking the cult of Apple

Of course, I don’t believe in any kind of personality cult. This article debunks the cult of Steve Jobs to quite an extent by suggesting he was just another capitalist like Gates. I don’t know anyone who idolises Gates that much. Apple have made some great hardware, but the prices they charge help to create the kind of elitism they aspire to, by pushing the purchase out of reach for a lot of people. That is one reason why the Ipad is so popular, because the cost has come down to something an average person can afford, but then it throws into hard focus why people are expected to pay so much more for a Macbook, Imac or Mac Pro.
Alex Gibney also made a documentary called “The Man in the Machine”. The second article linked to refers to that documentary, and also a book which has questioned whether Apple will turn out to be too dependent on its visionary leader and floundering since he has gone. I think that is a very real likelihood because it has happened in so many other corporates; look at Microsoft’s history under Steve Ballmer and all of their many new product fiascos. Apple went through that too, starting with Jobs’ original tenure in charge of the Mac product development and launch, which soon demanded change he was unwilling to provide as early sales figures flopped, and which led to his ouster and departure. Apple did a lot of things right after he left, but it also made a lot of mistakes which led to his return 12 years later, and Jobs must have learned from the experience to have built the company up to where it was when he died. So there is plenty of scope for Apple to have a few challenges in the years ahead, and the size that the company is now makes it more likely to happen; a few bad product launches will hardly make a blip in a big company, but the US DOJ and EU will look at them a lot harder with antitrust considerations, and they are likely already in the legislators’ sights.
The Mac4Newbies article is disappointing in that it dismisses the Apple scandals, the real ones like Jobs hounding Gizmodo over the lost iPhone prototype, suicide rates at Foxconn, the stock backdating scandal or the tax havens in Ireland. Over a four year period, from 1997 to 2001, after Jobs had returned as CEO, a number of backdated stock options were issued to Jobs and other senior Apple figures. The issue was that the options were not reported properly in Apple’s books and led to charges of fraudulent behaviour against a couple of senior managers at the company. Both settled out of court and were subjected to various penalties by regulatory agencies. The tax rip-off is a much bigger issue not just for Apple but other companies worldwide which have engaged in similar practices to avoid paying tax in the countries in which they sell their products. In a nutshell this is how it works:
  • Manufacturer in the USA through its Chinese subsidiary makes a product in China for say $100
  • International Distribution in Ireland buys the product from Manufacturer’s Chinese subsidiary for the $100 plus shipping costs.
  • International Distribution sells the product to New Zealand Retail subsidiary for $500.
  • New Zealand Retail ships the product to New Zealand and sells it for $600 to the customer.
We can see that a large amount of the profit was made in Ireland, not in the country where the sale was made. If a company in New Zealand is getting stuff manufactured, then the markup is generally going to occur in New Zealand and will be subject to our local laws and tax rates.  But if a company has enough volume of sales to open an office in Ireland then they can take advantage of the very low tax rates in that country in order to pay almost no tax. In fact there has more recently been allegations brought against Apple that Ireland improperly have levied almost no tax against them. The result has been that countries around the world are now looking at the amount of tax that is being avoided from these practices and it may well come to pass that Apple and other big corporates will find it much harder to engage in these practices in the future.
The doco is interesting because it managed to dig out a few people like one of the early Mac hardware developers, Bob Belleville, who haven’t been in high profile roles since their time at Apple. Belleville got shown the door at the same time as Jobs, but unlike his erstwhile leader, little seems to be known of his work since then. Andy Hertfeld’s Folklore website and the resulting book paint a great insight into some of the early developmental work at Apple, particularly around the time that the Mac was first developed in the mid 1980s.