Tax investigations are not Apple’s biggest worry
We’ll send you a myFT Daily Digest email rounding up the latest Jonathan Ive news every morning.
Apples’s next big thing was probably far from Tim Cook’s mind on Tuesday, when the technology giant’s boss received a senatorial grilling on its corporate tax affairs. But Apple’s alleged scheme to avoid paying taxes on billions of dollars of profits has deflected attention from a more fundamental issue facing the company: what’s next?
Few people in tech can recall the last time Apple went half a year without introducing new gizmos for the world to savour. According to Mr Cook, we will have to wait at least until the last quarter of the year for the latest devices. What’s going on? Part of the reason for Apple’s fallow 2013 is that the company released a new iPhone, two new iPads and a slew of Macs late last year, so it simply needs time to recover.
But there is a more troubling theory, too. Last year Mr Cook fired Scott Forstall, the group’s longtime head of iOS, its mobile operating system, and promoted Sir Jonathan Ive, Apple’s celebrated design chief, to oversee all hardware and software at the firm. Sir Jonathan is instituting a top-to-bottom review of its software, according to reports.
This move is risky. Apple’s main problems, globally, are slowing growth in iPhone sales and shrinking profit margins across its line-up. Of all the ways to address these problems, why spend so much time and energy repainting iOS?
It is because, in the tech industry, interface redesigns have become a catch-all solution to every business ailment. When Microsoft saw its PC empire flagging, it slapped a new, tablet-friendly look on its latest version of Windows. Not only did that move fail to help Microsoft win the tablet market, but it also so deeply alienated longtime users that the company has been forced to announce an upgrade, Windows 8.1, which will restore some aspects of the software’s old look and feel. Facebook suffered a similar embarrassing turn with Home, its effort to increase engagement on its mobile software. The app turned Android users’ home screens into a billboard for Facebook – a switch people found so annoying that they are abandoning the app in droves.
Nobody outside Apple knows Sir Jonathan’s plans. Reports suggest he is looking to “flatten” the software’s design – making it look sleeker than the current version, whose look has not really been altered since the iPhone was first released in 2007.
However slowly and carefully Sir Jonathan goes, making a new interface a priority is a puzzling decision. It is true that iOS is falling behind Android – Google’s operating system now makes up more than half the smartphone market. And iOS has had some high-profile failures, too. Apple’s maps application was not nearly as good as Google’s version and Siri, the group’s much-advertised personal assistant, seems to work better on television than in reality.
Yet it is difficult to make the case that these problems were caused by poor design. Instead, the maps fiasco was due to Apple’s relative lack of geographic data. Its flagging market share, meanwhile, is probably due to price – there are mountains of subpar Android devices, a market that Apple, with its costly devices, cannot compete in. Meanwhile, usage data suggest that if people have grown tired with iOS’s interface, they have a funny way of showing it. Even though Android outsells iOS, people use Apple devices more often.
None of this is to suggest that all is well for Apple in the phone business. The iPhone’s growth slowed and that is likely due to increased competition from Android, especially in the developing world, where many phones are sold without a carrier subsidy. In those markets, Apple’s cheapest phone – the $400 iPhone 4 – is still more expensive than competing Android devices. If Apple releases a cheaper phone, it could take a bite out of that market. But doing so will come at a cost – if many people buy the cheaper phone instead of the flagship model, Apple’s prized profit margins would fall.
This is a tricky act, though it is one that the company has managed before, first with many varieties of the iPod and recently with the iPad Mini. Now – while tamping down the outcry over taxes – Mr Cook has to triumph with the iPhone. Whatever he does, though, it needs to be big – bigger, that is, than putting a new coat of paint on its mobile software.
The writer is a Slate columnist
Get alerts on Jonathan Ive when a new story is published