Whatever happened to the American corporation of the ’50’s. ’60’s and ’70’s? I remember corporations as being good stewards of their communities. I remember CEO’s being paid reasonably and occasionally visiting the factory break room to chat with employees and even taking a stint on the production line to see what it felt like. During those decades American corporations seemed to exhibit a balanced interest in their respective stake-holders: customers, workers and stockholders.
Today that balance is lost: workers’ wages are stagnant and unions are dying and there certainly seems to be much less care about customers. Only the bottom line – profits and share price, in otherwords the stockholders, are truly valued. And one of the foremost corporations in the US, indeed in the world, now the most valuable corporation on the planet, Apple, appears to perfectly mirror this dramatic change. This corporation is now the quintessential embodiment of corporate greed – from obscene profit margins to outsourcing jobs overseas to stashing billions in low-tax havens.
I have always loved Apple products. I experienced them in my various schools as an elementary principal supervising early “computer literacy” programs employing first the venerable Apple IIe, then various versions of the Macintosh including the iMac with its brightly colored translucent plastic case.
The first computer I ever owned was the Apple Iic, replete with the Apple Flat Panel Display, the first portable (somewhat!) computer from Apple. Even though the primitive flat screen was dim and difficult to see without a bright light, I used this computer’s word processing capability to type the entire first draft of my doctoral dissertation in 1985. Then after a multi-decade succession of Windows computers that I used as a professional because of compatibility with the technology used by the various school districts for which I worked, I moved back to Apple computers recently with the purchase of a MacBook Pro laptop on which I am typing this article.
In 2000-2003 when I was a superintendent on the Navajo Reservation I owned a Palm Pilot PDA (Personal Digital Assistant) and was so impressed that I could keep addresses, phone numbers, calendars, notes and lists in this handy little pocket sized instrument. And I could sync it with my office computer as well, to share information between the two. At that time I also used a cell phone for professional business and I remember many times holding my Palm Pilot in one hand to reference a phone number and holding my cell phone in the other awkwardly trying to dial one handed and saying to myself – why the heck doesn’t someone combine these two marvelous devices? Well in 2007 Apple did exactly that and more when they produced the iPhone, the first everything-in-one “smartphone”. I now am on my third iPhone and have loved every one.
But looking back over my technological life, the Apple product that meant the most to me was the iPod. As an avid collector of and listener to all kinds of music, I had spent most of my life wrestling with finding the right LP, then finding the right track or racing through a reel to reel or cassette tape trying to locate the right song or symphony. So you can imagine my dizzy pleasure at being able to place virtually all of my favorite music onto my iTunes music library on my computer and then on that little hard drive miracle, the Apple iPod, where I could easily locate and play whatever I wanted whenever I wanted. Also, having purchased many LP’s and CD’s for only a few tracks and rejecting the rest, Apple’s iTunes store provided the opportunity to buy individual songs rather than albums. I simply cannot describe how much the iPod meant to me.
So you can imagine my shock when I attempted last year to buy another 160 GB iPod Classic from the Apple website and found it gone, simply gone, with no warning, no explanation and no announcement. Apple had simply made an arbitrary decision, presumably based on waning sales, that the famous iPod Classic with its huge capacity, distinctive click wheel control – the dream of music lovers like me, had to go. Why? Not enough profit yielded with sales diminishing. Simply a corporate decision based on profit, without the faintest sign of concern for faithful customers. And this after years of ads featuring a smiling (or was it cynical grimace) Steve Jobs extolling the virtues of this marvelous little machine.
Long ago I suspected that Apple might be discontinuing the iPod Classic at some future point but had always fancied that they would replace it with something else with similar or greater capacity. But all that’s left to carry on is the “iPod Touch”, with touch screen, limited capacity, a pile of useless apps and, of all things, a camera – simply an iPhone that you can’t use as a phone. I’m still numb with the realization that the iPod I have is all I ever will have unless I want to pay the grossly inflated prices being charged for the few leftovers still available on E-Bay.
My feeling of injustice at Apple’s discontinuation of the iPod is exacerbated by the iPod’s incredible sales record at Apple over the years. After the return of Steve Jobs the iPod was mainly responsible for the resurgence of Apple after its near-collapse in the late 1990’s, its huge sales carrying Apple until the introduction of the first iPhone. In January 2007, Apple reported record quarterly revenue of $7.1 billion, of which 48% was made from iPod sales. On April 9, 2007, it was announced that Apple had sold its one-hundred millionth iPod, making it the biggest selling digital music player of all time. And as of September 2012, Apple reported that total number of iPods (including the “Touch”) sold worldwide was 350 million.
After the introduction of the iPhone, iPod sales diminished yearly as a percentage of total revenue, not a surprising trend for Apple, as Apple CFO Peter Oppenheimer explained in June 2009: “We expect our traditional MP3 players to decline over time as we cannibalize ourselves with the iPod Touch and the iPhone.” Yet one would think that Apple could exhibit a corporate loyalty to the iPod classic somewhat similar to its customers’ loyalty to a music player so important to its financial success. But alas, at Apple there is only one corporate consideration – profits and share price for its stockholders.
Another example of Apple’s heartless, corporate, profit-at-all-costs, consumer-be-damned behavior is with its latest iteration of successive iPhone models. Traditionally, new iPhone models replacing the older ones contained doubled storage capacity for apps, pictures and information. For example the iPhone 4 came with 4, 16 or 32 gigs of storage and my iPhone 5 was available with 16, 32 or 64 gigs of storage. So when I shopped for my iPhone 6s I was amazed to find that the storage in the middle and top models was indeed doubled – to 64 and 128 gigs respectively, but the least expensive model, which I had planned to purchase, was still a measly 16 gigs, in spite of expanded storage requirements for its new camera and video capabilities. Apple had cleverly decided not to double the storage for the entry level model, assuming correctly that customers would need to buy the 64 gig model for $100 more. If the storage had been doubled for the entry level model to 32 gigs as I had expected, it would have been perfectly adequate for me and a host of other customers. Incidentally it costs Apple less than $20 to increase the storage from 16 gigs to 64, so they made an extra $80 profit on the thousands of these phones sold.
In addition, Apple has a nasty habit of changing other features so the customer has to buy extras. I was very disappointed to see that the connector on my iPhone 5 had changed from the 30 pin connector used on the iPod classic and the iPhone 4 to the new “Lightning” 8 pin connector, requiring the purchase of expensive converters, from Apple, of course, for my older chargers. And Apple connectors seem to always be proprietary, used only on their products and no others. Again, I suspect, despite being cloaked in terms like improvement, efficiency and convenience, changing these connectors was simply another way to increase profits.
And the latest tech gossip indicates that Apple is about to get rid of the headphone jack on its iPhones and replace them with some new kind of proprietary connection. Yes, just like Apple, yet another way to force customers to buy more and consequently increase profits. This change, if it occurs, is especially egregious, because the headphone jack is truly one of the few tech intercompatability standards left – I can plug virtually any headphones or earbuds into my Apple devices, other brands of tech devices, my stereo equipment. and the exercise machines at my gym. But if Apple has its way….and it likely will…. this will no longer be the case.
Apple has demonstrated its corporate greed in many other ways. It has continued to stick it to the American worker by assembling most of its products in China. But this has not made its products any cheaper – Apple continues to sell the most expensive computers and smartphones on the market, offers no discounts on its website or in its stores and has carefully limited discounts offered by retailers licensed to sell Apple products. Apple could easily afford to discount its products from time to time. Again, to hell with the consumer, but hail to the investor.
The young, well-informed, animated, energetic and enthusiastic people that work at Apple Stores all over the country are paid surprisingly low wages for the work they do for the wealthiest corporation in the world. They are not only salespeople – they are helpers, advisors and unabashed fans of Apple products. All should be paid appropriately – no less than $50,000 a year, instead of the measly $30,000 or so they earn now. Apple could easily afford to pay its store employees what they’re worth, not what the market will bear.
And Apple continues to operate with the largest profit margin of any tech company, averaging about 40 percent across all its products with iPhone profit at an ungodly margin as high as 69 percent. For example, costs range from $200 to $247 for iPhone 6 models that sell in the US for $649 and $849 without a contract.
With profits like this, Apple could well afford to be the model US corporation. It could demonstrate care for the US economy by manufacturing in the US instead of China and providing these US employees adequate compensation. And it could have emulated the fabled loyalty of its customers by continuing to manufacture the iPod classic with the sacrifice of a mere tiny sliver of its massive profits. Really, Apple could become the perfect “retro” US corporation, raising its concern for workers, customers and its corporate community to the level of its concern for share price and investors, with little cost to its bottom line.
But what does Apple do instead? The most valuable corporation in the US and in the world provides the most glaring example of corporate greed and national disloyalty by continuing to sacrifice the US worker and economy by manufacturing overseas and betraying its parent country by stashing its billions of obscene profits overseas, avoiding taxes, creating shell corporations and playing the tax avoidance game better than anyone else. Indeed the “most valuable corporation in the world” has disgracefully led the way in minimizing its taxes “better than anyone else in the world”.
Maybe Apple should heed the advice that the visionary leader of Intel, the late Andy Grove, offered in an oft-quoted essay he wrote in 2010 for Bloomberg. Grove warned that tech companies’ refusal to “scale up” their latest gadgets for manufacture in the US and rely instead upon the financial advantages of manufacturing in Asia was a serious mistake. It not only strikes a blow to the workers and the economy of the US but also allows the Asian country to develop the engineering skills and know-how that would have nourished the company’s potential for successful future innovation. In Mr. Grove’s words, ”Without scaling, we don’t just lose jobs – we lose our hold on new technologies. Losing the ability to scale will ultimately damage our capacity to innovate.” Keeping the brains, design and finance in the US and the manufacturing in Asia will ultimately backfire on us. It might be worth noting that in 2010 when Grove’s article was written, Chinese tech manufacturer Foxconn (where Apple products are assembled) employed more people – 800,000 in total – than Sony, Intel, Apple, Dell, Microsoft and HP combined. This company now employs over 1.3 million workers, all engaged in tech manufacturing that could and should easily be done here in the United States. Unfortunately, an important part of every tech start-up’s business plan is a “China strategy”. And Apple leads the way.
A final issue – maybe I’m wrong, but the revered, iconic and godlike Steve Jobs has always seemed as pecuniary as the company he named. In contrast to other billionaires, who are busy curing disease and empowering women and the poor all over the world (Bill Gates) or have pledged to give all their billions away (Warren Buffet), what did Steve Jobs or his heirs do with his estate of roughly $19 billion? Where is the “Steve Jobs Foundation”? Any diseases cured? Any wells dug? Any hungry people fed? How have his billions benefitted mankind? Just asking.
Perhaps Apple should critically examine its short-sighted profit-at-all-cost and consumers-be-damned corporate philosophy before it’s too late. Recent headlines from the New York Times: IPhone Sales Drop, and Apple’s 13-Year Surge Ebbs; from the UK’s Daily Mail: Apple Watch is a FLOP: Sales of the gadget have fallen by 90% since April, report claims and from a recent issue of Fortune: Apple Watch Sales Have Plummeted, Analyst Says, may be prescient.