Inside Steve's Brain (25 page)

On October 23, 2001, about five weeks after the events of 9/11, Jobs introduced the finished product at a special event at Apple’s HQ. “This is a major, major breakthrough,” Jobs told the assembled reporters.

And so it was. The original iPod looks primitive now: a big white cigarette box with a blocky black and white screen. But every six months Apple improved, updated, and expanded the device, which culminated in a family of different models, from the bare-bones Shuffle to the luxurious iPhone.

The result: more than 100 million sold by April 2007, which accounts for just under half of Apple’s ballooning revenues. Apple is on track to sell more than 200 million iPods by the end of 2008 and 300 million by the close of 2009. Some analysts think the iPod could sell 500 million units before the market is saturated. All of which would make the iPod a contender for the biggest consumer electronics hit of all time. The current record holder, Sony’s Walkman, sold 350 million units during its fifteen-year reign in the 1980s and early 1990s.

Perhaps the most important aspect of the iPod’s success is the total control Jobs exercised over the device: hardware, software, and online music store. The total control is key to the iPod’s function, ease of use, and reliability. And it will be critical to Apple’s future in the exploding digital entertainment era, as we’ll see in the next chapter.

Lessons from Steve

“I’ve always wanted to own and control the primary technology in everything we do.”

In 1984, Steve Jobs’s baby—the first Macintosh computer— shipped without an internal cooling fan. The sound of a fan drove Jobs nuts, so he insisted the Mac didn’t have one, even though his engineers strenuously objected (and even sneaked fans into later models without his knowledge). To prevent their machines’ overheating, customers bought a “Mac chimney”—a cardboard stovepipe designed to be placed on top of the machine and draw heat up and out by convection. The chimney looked preposterous—it looked like a dunce’s cap—but it prevented the machines from melting down.

Jobs is a no-compromise perfectionist, a quality that has led him and the companies he’s founded to pursue the same unusual modus operandi: maintain tight control over hardware, software, and the services they access. From the get-go, Jobs has always closed down his machines. From the first Mac to the latest iPhone, Jobs’s systems have always been sealed shut to prevent consumers from meddling and modifying them. Even his software is difficult to adapt.

This approach is very unusual in an industry dominated by hackers and engineers who like to personalize their technology. In fact, it’s been widely regarded as a crippling liability in the Microsoft-dominated era of cut-price commodity hardware. But now consumers want well-made, easy-to-use devices for digital music, photography, and video. Jobs’s insistence on controlling “the whole widget” is the new mantra in the technology industry. Even Microsoft’s Bill Gates, who pioneered the commodity approach, is switching gears and emulating Jobs’s line of attack. Gates is starting to build hardware as well as software— with Microsoft’s Zune and the Xbox at the heart of Microsoft’s own “digital hub.” Controlling the whole widget may have been the wrong model for the last thirty years, but it is the right model for the next thirty—the digital entertainment age.

In this new era, Hollywood and the music industry are supplementing CDs and DVDs with Internet delivery of music and movies, and consumers want easy-to-use entertainment appliances like the iPod to play them on. It’s Steve Jobs’s model that will deliver them. Apple’s trump card is that it is able to make its own software, from the Mac operating system to applications such as iPhoto and iTunes.

Jobs is a control-freak extraordinaire. He controls Apple’s software, hardware, and design. He controls Apple’s marketing and online services. He controls every aspect of the organization’s functioning, from the food the employees eat to how much they can tell their families about their work, which is pretty much nothing.

Before Jobs returned to Apple, the company was famously laid back. Employees arrived late and left early. They lounged around the grassy central courtyard, playing hacky-sack or throwing Frisbees to their dogs. But Jobs soon imposed new rigor and new rules. Smoking and dogs were barred, and the company had a renewed sense of urgency and industry.

Some have suggested that Jobs keeps tight control at Apple to avoid being ousted again. The last time he ceded control to his supposed friend and ally, John Sculley, Sculley had him expelled from the company. Perhaps, some have speculated, Jobs’s controlling tendencies are a result of his being adopted as a child. His controlling personality is a reaction to the helplessness of being abandoned by his birth parents. But as we’ve seen, Jobs’s control-freak tendencies have lately turned out to be good business, and good for the design of consumer-friendly gadgets. Tight control of hardware and software pays dividends in ease of use, security, and reliability.

Whatever their origins, Jobs’s control-freak tendencies are the stuff of legend. In the early days of Apple, Jobs fought with his friend and cofounder, Steve Wozniak, who strongly advocated open, accessible machines. Wozniak, the ultimate hackers’ hacker, wanted computers that were easy to open and adapt. Jobs wanted the precise opposite: machines that were locked shut and impossible to modify. The first Macs, which Jobs oversaw mostly without Wozniak’s help, were tightly sealed with special screws that could be loosened only with a proprietary foot-long screwdriver.

More recently, Jobs locked software developers out of the iPhone, at least initially. In the weeks following Jobs’s introduction of the iPhone, there was a storm of protest from bloggers and pundits who furiously ranted and raved that the iPhone would be a closed platform. It wouldn’t run software from anyone but Apple. The iPhone was poised to be one of the hottest consumer electronics platforms in recent memory, but it was forbidden fruit to the software industry. Third-party applications were verboten, except web applications running on the phone’s browser. Many critics said locking out developers this way was typical of Jobs’s controlling tendencies. He didn’t want grubby outside programmers wrecking the perfect Zen of his device.

“Jobs is a strong-willed, elitist artist who doesn’t want to see his creations mutated inauspiciously by unworthy programmers,” wrote Dan Farber, ZDNet’s editor in chief. “It would be as if someone off the street added some brush strokes to a Picasso painting or changed the lyrics to a Bob Dylan song.”
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Critics said barring third-party software was a critical mistake. It would cost the iPhone its killer app—the crucial piece of software that would make it a must-have device. In the history of the PC, successful hardware has often been determined by an exclusive piece of software: VisiCalc on the Apple II, Aldus Pagemaker and desktop publishing on the Mac, Halo on the Xbox.

Jobs’s strategy of keeping the iPod/iTunes ecosystem closed to partners was also seen by pundits as another example of his desire to maintain complete control. Critics have argued that Jobs should license iTunes to competitors, which would allow songs bought online from the iTunes music store to be played on MP3 players made by other manufacturers. As it is, songs bought from iTunes can be played only on iPods because of copy protection code attached to song files, known as Digital Rights Management, or DRM.

Others have argued that Jobs should do the opposite: open the iPod to Microsoft’s competing Windows Media format. WMA is the default file format for music files on Windows PCs. CDs ripped on a Windows PC, or bought from an online store like Napster or Virgin Digital, are usually encoded as WMA files. (The iPod and iTunes currently import WMA files and convert them to the iPod’s format of choice: AAC.)

Predictably, some critics argued that Jobs’s refusal to open the iPod or iTunes to Microsoft’s formats or outside partners was because of Jobs’s long-seated need to maintain absolute control. Rob Glaser, founder and CEO of Real Networks, which operates the rival Rhapsody music service, told the
New York Times
that Jobs was sacrificing commercial logic in the name of “ideology.” Speaking in 2003, Glaser said: “It’s absolutely clear now why five years from now, Apple will have 3 to 5 percent of the player market.... The history of the world is that hybridization yields better results.”
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Glaser and other critics could see a clear parallel to the Windows versus Mac war of old: Apple’s refusal to license the Mac cost the company its massive early lead in the computer market. While Microsoft licensed its operating system to all comers and quickly grew to a dominant position, Apple kept its toys to itself. Even though the Mac was much more advanced than Windows, it was doomed to a tiny sliver of the market.

Some critics have argued that the same thing would happen with the iPod and iTunes, that Jobs’s refusal to play nice with others would result in Apple’s getting the same trouncing in digital music that it received in the PC business. Observers argued that eventually an open system licensed to all comers, like Microsoft’s PlaysForSure, which was adopted by dozens of online music stores and manufacturers of MP3 players, would trump Apple’s go-it-alone approach. Critics said Apple would be faced with the fierce competition that naturally arises from an open market. Competing manufacturers, trying to outdo one another on price and features, would constantly drive down prices while improving their devices.

Apple, on the other hand, would be locked into its own cuckoo land of expensive players able to play songs only from its own store. To critics, it was the classic Steve Jobs play: his desire to keep it for himself would doom the iPod. Microsoft, with its legions of partners, would do the same thing to the iPod that it did to the Mac.

And again, the same criticisms were leveled with the release of the iPhone, which was initially closed to outside software developers. The iPhone ran a handful of applications from Apple and Google—Google Maps, iPhoto, iCal—but was not open to third-party developers.

The hunger for developers to get their programs on the device was evident from the start. Within days of its release, the iPhone had been opened up by enterprising hackers, allowing owners to upload applications to the phone. Within weeks, more than two hundred applications had been developed for the iPhone, including clever location finders and innovative games.

But the application hack depended on a security weakness, which Apple quickly closed with a software update. The update also closed holes that had allowed some iPhone owners—in fact, quite a lot of them—to “unlock” their phones from AT&T’s network and use them with other wireless providers. (Apple revealed that as many as 25,000 iPhones hadn’t been registered with AT&T, suggesting that nearly one in six phones sold were being used with other providers, many likely overseas.)

The update disabled some iPhones, in particular ones that had been hacked. This appears to be unintentional on Apple’s part, but the “bricking” of so many devices turned into a PR nightmare. For many commentators, customers, and bloggers, it was Apple at its worst: treating early adopters and loyal customers like dirt, disabling their devices because they had the temerity to mess with them.

The developer community also reacted with shock and outrage, accusing Apple of blowing an opportunity to get an early lead on rivals like Microsoft, Google, Nokia, and Symbian in the smartphone market. To assuage the outrage, Apple announced a plan to open up the iPhone to third-party developers in February 2008 with a software developer’s kit.

Jobs’s desire to control the whole widget is both philosophical and practical. It’s not just control for control’s sake. Jobs wants to make complex devices like computers and smartphones into truly mass-market products, and to do that, he believes that Apple needs to wrest control of the devices partly from the consumer. The iPod is a good example. The complexities of managing an MP3 player are hidden from the consumer by having iTunes software and the iTunes store manage the experience. No, consumers can’t buy tunes from any online store they like, but then the iPod doesn’t freeze up when music is transferred onto it. This is the practical aspect. The tight integration of hardware and software makes for a more manageable, predictable system. A closed system limits choice, but it is more stable and more reliable. An open system is far more fragile and unreliable—this is the price of freedom.