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What Will Happen to Innovation at Apple With Jobs Out as CEO?

August 25, 2011 at 12:00 AM EDT
Apple announced Wednesday that CEO and co-founder Steve Jobs had stepped down from his helm, but will serve as chairman of the board. Ray Suarez discusses Jobs' lasting impact on innovation and what comes next for Apple and the tech world with Walter Mossberg of The Wall Street Journal and Charles Golvin of Forrester Research.
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TRANSCRIPT

RAY SUAREZ: One of the leading figures in the tech world steps aside, and that’s spurring many questions about the future for his company and the industry more broadly.

His name is virtually inseparable from that of the company he co-founded, Apple. And Steve Jobs was greatly responsible for its newest high-tech game-changers, the iPod, iTunes, iPhone, and, more recently, the fastest-selling tech device ever.

STEVE JOBS, Apple: The iPad.

RAY SUAREZ: But even while he’s remained the public face of Apple, Jobs’ owns health has been an issue.

At 56, he has already had a bout with pancreatic cancer in 2004, and a liver transplant in 2009. And he’s been on medical leave from Apple since January for undisclosed reasons. Now, his health problems have forced him to take another step back.

On Wednesday, in a letter to the company’s board of directors and the Apple community, Jobs wrote: “I have always said, if there ever came a day when I could no longer meet my duties and expectations as Apple’s CEO, I would be the first to let you know. Unfortunately, that day has come.”

News of the decision helped knock about two-thirds of one percent off the value of Apple shares today amid a broader market sell-off. Earlier this month, Apple briefly surpassed ExxonMobil as the most valuable company in America.

It was all a far cry from the days when Steve Jobs and co-founder Steve Wozniak began building their now ubiquitous brand, from scratch, in a California garage. They scored an early hit with the Apple II, the first consumer-grade computer to catch on. By the mid-1980s, the company was in a slump, and Jobs was forced out.

But he returned in 1996, and Apple began a turnaround. Still, in a rare interview in 2007, he said his work was never about creating the next big thing.

STEVE JOBS: We don’t worry about stuff like that. We just try to build products that we think are really wonderful and that people might want. And sometimes we’re right, and sometimes we’re wrong.

RAY SUAREZ: In fact, not every Apple product has been a home run. An early model of a personal digital assistant, the Apple Newton, didn’t catch on. Apple also has also come under criticism for the low wages and labor practices of its suppliers in China.

In one such incident, as seen on the NewsHour earlier this year, the company was accused of being slow to respond when workers building iPhones were poisoned by toxic chemicals.

But, despite those allegations, Steve Jobs’ track record has made him almost a mythic figure in the tech world.

ROBERT HOHMAN, Glassdoor.com: He’s a beloved leader. I mean, he’s iconic. He represents the heart and soul of Apple. And, frankly, it’s going to be very hard, I think, moving on.

RAY SUAREZ: That task now falls to the current chief operating officer, Tim Cook, handpicked as Jobs’ successor. Cook has been running the company since Jobs took medical leave.

Jobs is not leaving Apple. He will stay on as chairman of the board.

More now about the impact Steve Jobs has made and what his resignation means from two who watch this field. Walter Mossberg is the longtime personal technology columnist for The Wall Street Journal. And Charles Golvin is a principal analyst for Forrester Research.

Walt Mossberg, whether it’s consumer electronics, entertainment, even computing, which is where it all started, this has been a big impact player, hasn’t it?

WALTER MOSSBERG, The Wall Street Journal: Well, you know, Ray, I think Steve Jobs is a historic figure.

He’s not only a historic figure in business, but really in America. He has not only disrupted and innovated in computers and consumer electronics for all those products we saw just now listed, but he has, in the process, shaken up and revolutionized the music industry, the movie industry, publishing industry. Even the retail industry, the Apple store chain that he built, is widely admired.

And on the side, while he was doing all that, he bought a little company called Pixar and turned it into the most successful studio in Hollywood and revolutionized animation.

RAY SUAREZ: Charles Golvin, it’s famously told, that story, and told again about Jobs coming back to the company when it was on the verge of bankruptcy. What did he do to shake it up? What happened next?

CHARLES GOLVIN, Forrester Research: Well, he — I think he reinvigorated the passion of the people who had come to Apple who had always cared so deeply about the great products that they made.

In your piece, you heard that quote from him about just having this incredible passion for making great products. And he came with this first vision of the original iMac, the different colors. No commuter had ever been colored anything but gray before that.

And he launched that first product. And — but I think, more than anything else, he resurrected that belief that was latent in all those people in the company that they could once again make great products and change the way people used computers and then, in the future, used music, and now telecommunications, and then reinvented the way we compute.

RAY SUAREZ: Let’s talk a little bit more about that devotion to great product, because they weren’t products that competed on price. They almost ignored that. And many of the company’s failures were because they were wonderful things that people just didn’t want to pay the extra 30 or 40 percent for.

WALTER MOSSBERG: Well, I think their failures really had more to do with really badly executed business strategies, for the most part, not in every case.

But the devotion to product is — goes beyond just those words. It’s really a devotion to designing products for actual users. You know, a lot of computer companies — Hewlett-Packard is a good example in what they are doing in spinning off P.C.s — are really much more interested in selling to businesses, selling to intermediaries, like I.T. departments.

Steve Jobs calls those orifices. He’s much more interested in designing something for the actual consumer, whether they’re in a big company or just a family. And that — and he’s a perfectionist about it. And he’s surrounded himself with other people who are just laser-focused on that.

The other thing, Ray, I think is incredibly important is, they don’t just make little innovations based on market research. They take big risks and make big bets on what they think the next thing that people will want is, even if the people don’t know it themselves at the time.

RAY SUAREZ: And in doing so created, Charles, one of the most valuable companies on the planet. In his resignation, in his preparation to leave, what has Steve Jobs done to keep it that way?

CHARLES GOLVIN: Well, he’s put people in place who share that same vision, all the people like Jonathan Ive, who is responsible for their designs, and Scott Forstall on the iOS, the software that runs the iPhone and the iPad, and Phil Schiller, who runs marketing.

All of these people really share that devotion to the vision that Steve Jobs created. And I think, as Mr. Mossberg said, that — making something for consumers that is going to benefit them in a really significant way allowed them to do something they have never dreamed that they could do before. And all of those people share that same passion, that vision, and the devotion to perfection and making that product as good as it can possibly be across the board.

RAY SUAREZ: And what should people know about Tim Cook?

CHARLES GOLVIN: Well, what I know about him is that he is an operational genius. I think we have heard that phrase thrown about a couple of times talking about him.

He has streamlined Apple’s supply chain. When — before he came, they really were kind of a mess in terms of their sourcing of the components that go into their products. And he turned that around, made it extremely efficient.

And, clearly, he’s demonstrated through these times that Steve Jobs has been out on health issues that he can operate this company and keep it running at the same high level and performance that it has been able to do when Steve Jobs is there.

RAY SUAREZ: Walt, the lead time on new products, presumably, is not today or tomorrow. The next generation of Apple products are well-launched in the pipeline, aren’t they? When will we stop seeing Steve Jobs’ direct hand on some of these products?

WALTER MOSSBERG: Well, I think there are two ways to measure it.

One, as you say, is the length of pipeline. And I think, at Apple, it’s — it’s a little bit longer than at other companies. They have never managed the company for short-term goals, like, quarter to quarter. So, I wouldn’t be surprised if their product pipeline is two or three years, although, obviously, the ones toward the end maybe not fully fleshed out.

The other thing is, Steve Jobs is very much intending to remain active in — as chairman in making these big product decisions. He’s not going to make day-to-day decisions anymore, but when a big new thing, something on the scale of the iPad, is ready to come out or is in its formative stages, he’s going to be consulted, and he’s going to be involved.

Now, obviously, given his health problems, we don’t know how long he will be able to do that. So, the answer to your question is, I guess, when the next big product decision comes up in that pipeline a couple of years from now, if Steve Jobs isn’t around to have his input, then it really will fall on the shoulders of Tim Cook to not really replace Jobs, because I think he’s sort of an irreplaceable figure, but to do the kind of curation of products that Jobs is so famous for.

RAY SUAREZ: And, Charles Golvin, before we go, briefly, what do people who do what you do for a living watch for now from Apple? What are analysts going to be looking for to see just how much of a role the new chairman Steve Jobs will have?

CHARLES GOLVIN: Well, what I’m going to be looking for really is the pace of innovation.

You know, we have seen Apple steadily produce not just these revolutionary new products like the iPhone and like the iPad, but the successive iterations of those products continue to bring a high level of innovation, new experiences, new ways of doing things.

And I’m going to keep a sharp eye out for that what that pace looks like and are we continuing to see the same flourishing of new ideas, and if we start to see that decline, then I think will — that will be attributable to Steve Jobs’ lack of influence.

RAY SUAREZ: Charles Golvin, Walt Mossberg, thank you both.

WALTER MOSSBERG: Pleasure.