Inside Steve's Brain (23 page)

Instead of paying commissions, Johnson decided to enhance their status. The best staff would graduate to a Mac Genius or a presenter in the theater. “Your job is elevated to positions of status such as I’m a Mac Genius. I’m the smartest Mac person in town. People request me on the Internet, to come meet me at the store so I can help them,” Johnson said. “My job is to make the store rich with experience for people.”

The lack of a commission elevates the job from a purely mercantile position, and makes it much more like a profession. Even though many of the staff work part-time, or are paid by the hour, they enjoy some of the status of a professional. Johnson says, “It’s not the boring, laborious I’ve-got-to-move-merchandise-and-take-care-of-customer problems. I’m suddenly enriching people’s lives. And that’s how we select, that’s how we motivate, that’s how we train our people.” This is classic Apple, of course: even retail has been instilled with a sense of mission.

Apple tries to recruit creative computerphiles fresh out of school, the kind of kids who think working at the Apple store would be a good first job. As an incentive, Apple offers in-house training. While working at the store, staff members are taught how to use professional software applications like Final Cut Pro, Garageband, and other applications that may prove useful later on. The turnover rate is relatively low for retail: about 20 percent, when the industry average is above 50 percent, according to Apple.

The stores are evolving from well-designed shopping centers into learning environments. Apple has been adding additional advice “bars” at some of the bigger stores, including an iPod bar for advice and repair, and a Studio bar to help customers with creative projects, like making movies or laying out photo books. The idea of free advice bars is beginning to spread to other retailers. Whole Foods grocery, for example, in 2006 started experimenting with an advice bar for recipes and ingredients at a store in Austin, Texas.

When most computer companies sell their wares at high-volume big box stores, and offer support only by phone, Apple’s stores are a radically different proposition. Johnson calls the stores “high touch,” a phrase that means dealing with a human instead of a computer. The term is sometimes used to mean good customer service. Nordstrom and Starbucks are said to be high touch, but no one had tried it with computers. “In a high-tech world, wouldn’t it be nice to have some high touch?” Johnson said. Jobs and Johnson decided to put good service into computer shopping and change the way people shopped for technology.

The retail stores demonstrate Apple’s innovation at work. The philosophy, design, and layout came from the digital hub strategy, and the execution from Jobs’s uncompromising focus on the customer experience.

Lessons from Steve

“Software is the user experience. As the iPod and iTunes prove, it has become the driving technology not just of computers but of consumer electronics.”

The iPod is the product that transformed Apple from a struggling PC company into an electronics powerhouse. How the iPod came together illustrates a lot of the points discussed in previous chapters: It was the product of small teams working closely together. It was born of Jobs’s innovation strategy: the digital hub. Its design was guided by an understanding of the customer experience—how to navigate a big library of digital tunes. It came together through Apple’s iterative design process, and some of the key ideas came from unlikely sources (the scroll wheel was suggested by an advertising executive, not a designer). Many of the key components were sourced from outside the company, but Apple combined them in a unique, innovative way. And it was designed in such secrecy that not even Jobs knew that Apple had already trademarked the iPod name.

But most of all, the iPod was truly a team effort. “We had a lot of brainstorming sessions,” explained one insider. “Products at Apple happen very organically. There [are] lots of meetings, with lots of people, lots of ideas. It’s a team approach.”
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Necessity is the mother of invention. Apple started writing application software for OS X because other companies balked, and it’s turned out to be another golden opportunity for the company.

In 2000, the iMac was leading the charge for Apple’s comeback, but Jobs’s attempts to persuade developers to write software for OS X was getting a mixed reception.

Jobs’s deal with Bill Gates ensured that Microsoft would produce new versions of Office and its Internet Explorer browser for OS X. But Adobe, one of the biggest software makers for the Mac, had flatly refused to adopt its consumer-level software for OS X.

“They said flat-out no,” Jobs told
Fortune
magazine. “We were shocked, because they had been a big supporter in the early days of the Mac. But we said, ‘Okay, if nobody wants to help us, we’re just going to have to do this ourselves.’ ”

At the same time, consumers were beginning to buy lots of devices designed to be plugged into computers—Palm Pilots, digital cameras, and camcorders—but in Jobs’s view, there was no good software to manage pictures or edit home movies on either the Mac or Windows.

Jobs figured that if Apple could build software to enhance these devices—to make editing a home movie easy, for instance—customers might buy Macs to manage their pictures, edit video, and synchronize their cell phones. The Mac would become the digital hub of the home, the technology centerpiece to connect all these digital devices.

As described in Chapter 6, Jobs spelled out the PC’s third great age at the 2001 Macworld. “This age is spawned by the proliferation of digital devices everywhere: CD players, MP3 players, cell phones, handheld organizers, digital cameras, digital camcorders, and more. We’re confident that the Mac can be the hub of this new digital lifestyle by adding value to these other devices.”
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The digital hub is a fresh spin on the old “killer apps” strategy that has long driven the technology business. Customers rarely buy computers for the hardware alone; they’re more interested in the software it can run. An exclusive piece of killer software is usually enough to guarantee the success of the machine it runs on. The Apple II was a hit thanks to VisiCalc, the first spreadsheet. Nintendo became a force in the console business thanks to its Mario Brothers games. And the Mac took off only after Adobe developed PostScript, a standard language for documents and printers, which launched the desktop publishing revolution.

Jobs’s digital hub strategy has been a mixed success. The software it inspired—applications like iPhoto, iMovie, and Garageband—have been highly praised by critics, and are regarded by some as the best on any platform. But, on their own, they have failed to attract new users to the Mac in huge numbers. They haven’t proven to be killer apps.

Nonetheless, as corporate strategy, the idea of the computer as a digital hub has been phenomenally successful, and still is.

When most observers were still comparing Apple to Microsoft and couldn’t see beyond the old battle for the enterprise, Jobs focused on consumers and saw the looming digital entertainment revolution. Computers were becoming the key
lifestyle
technology, not just the key
work
technology. From the digital hub idea rose Apple’s suite of software apps, which are becoming the lifestyle equivalent of Microsoft’s Office suite. And, as we’ve seen, it also inspired the iPod, the iTunes music store, and Apple’s phenomenally successful retail stores.

One of the primary features of the early iMac was its ability to connect to consumer camcorders via a FireWire port. FireWire is standard equipment on many consumer camcorders, and the iMac was one of the first consumer computers designed as a home-video-editing station.

Jobs had long been interested in video, and thought that the iMac had the potential to do for video what the first Mac had done for desktop publishing. The first piece of digital hub software Jobs created was iMovie, an easy-to-use video-editing application.

Trouble is, in the late 1990s, consumers were more interested in digital music than digital video. Jobs was so consumed by video, he didn’t notice the beginnings of the digital music revolution. Jobs has a reputation as a technology seer. Supposedly, he has the ability to divine future technology—the graphical user interface, the mouse, stylish MP3 players—but he totally missed the millions of music lovers who were trading tunes by the billions on Napster and other file-sharing networks. Users were ripping their CD collections and sharing tunes over the Internet. In 2 000, music started migrating from the stereo to the computer. The rush to digital was especially marked in dorm rooms and, though college kids were a big source of iMac sales, Apple had no jukebox software for managing collections of digital music.

In January 2001, Apple announced a loss of $195 million thanks to a general economic downturn and a sharp decline in sales. It was the first and only quarterly loss since Jobs returned. Customers had stopped buying iMacs without CD burners. In a conference call with analysts, Jobs admitted that Apple had “missed the boat” by excluding recordable CD burners from the iMac line.
³
He was chastened. “I felt like a dope,” Jobs said later. “I thought we had missed it. We had to work hard to catch up.”
⁴

Other PC makers hadn’t missed it, though. Hewlett-Packard, for one, was shipping CD burners with its computers, a major feature that Apple had to follow. To catch up, Apple licensed a popular music player called SoundJam MP from a small company and hired its hotshot programmer, Jeff Robbin. Under the direction of Jobs, Robbin spent several months retooling SoundJam into iTunes (mostly making it simpler). Jobs introduced it at the Macworld Expo show in January 2001.

“Apple has done what Apple does best: make complex applications easy, and make them even more powerful in the process,” Jobs told the keynote crowd. “And we hope its dramatically simpler user interface will bring even more people into the digital music revolution.”

While Robbin was working on iTunes, Jobs and his executive team started looking at gadgets to see if there were any opportunities. They found that digital cameras and camcorders were pretty well designed, but music players were a different matter. “The products stank,” Greg Joswiak, vice president of iPod product marketing, told
Newsweek
.
⁵

Digital music players were either big and clunky or small and useless. Most were based on fairly small memory chips, either 32 or 64 Mbytes in size, which allowed them to store only a few dozen songs—not much better than a cheap portable CD player.

But a couple of the players were based on a new 2.5-inch hard drive from Fujitsu. The most popular was the Nomad Jukebox from Singapore-based Creative. About the size of a portable CD player but twice as heavy, the Nomad Jukebox showed the promise of storing thousands of songs on a (smallish) device. But it had some horrible flaws: It used USB 1 to transfer songs manually from the computer, which was painfully slow. The interface was an engineer special (unbelievably awful). And it often sucked batteries dry in just forty-five minutes.

Here was Apple’s opportunity.

“I don’t know whose idea it was to do a music player, but Steve jumped on it pretty quick and he asked me to look into it,” said Jon Rubinstein, a veteran engineer who headed up Apple’s hardware division for more than a decade.
⁶
Now the executive chairman of the board at Palm, Rubinstein is a tall, thin New Yorker in his early fifties with a frank, no-bullshit manner and an easy smile.

He joined Apple in 1997 from NeXT, where he’d been Jobs’s hardware guy. While at Apple, Rubinstein oversaw a string of groundbreaking machines, from the first Bondi-blue iMac to water-cooled workstations and, of course, the iPod. When Apple split into separate iPod and Macintosh divisions in 2004, Rubinstein was put in charge of the iPod side, a testament to how important both he and the iPod were to Apple.

Apple’s team knew it could solve most of the problems that plagued the Nomad. Its FireWire connector could quickly transfer songs from computer to player: an entire CD in a few seconds, a huge library of MP3s in minutes. And thanks to the rapidly growing cell phone industry, new batteries and displays were constantly coming to market. This is Jobs’s “vectors in time”—keeping an eye out for advantageous technological advances. Future versions of the iPod could take advantage of improvements in cell phone technology.