Apple 2.0

Covering the business that Steve Jobs built

Apple's 10 biggest problems - update

February 13, 2010: 3:16 AM ET

One of Apple's most influential pundits zeroes in on what's wrong with the company

Gruber at Macworld 2010. Photo: PED

Daring Fireball's John Gruber -- a Drexel University computer major turned professional blogger -- is perhaps the most forceful and articulate defender on the Web of all things Apple (AAPL). He came to Macworld Expo 2010, however, not to praise the company but to probe its vulnerabilities

He took his task seriously and gave a serious presentation, made a bit easier for the late Friday afternoon audience to swallow by a generous sprinkling of pop culture analogies, from Snow White to Raging Bull.

But the meat of his presentation was a surprisingly grim recitation of what he sees as the 10 most pressing issues facing Apple today, starting with the mortality of its co-founder and CEO.

UPDATE: Macworld has made the video of Gruber's talk available on YouTube here. The video itself is pasted below the fold.

The problems, in the order he delivered them:

  1. Steve Jobs. It can be argued, Gruber maintains, that Steve Jobs' most important product -- the thing he's spent the better part of his energy building since he returned to Apple -- is not the Mac, the iPod, the iPhone or even the iPad. It's Apple Inc., the company. The pessimistic dig on Apple, says Gruber, is that it's a supremely well-organized company organized around one irreplaceable guy. The optimistic view is that Jobs has structured it to run like his other company, Pixar, which manages to turn out hit after hit, year after year, without a charismatic celebrity leader.
  2. AT&T. Apple is a company that clearly believes in the adage that if you want it done right, you have to do it yourself . Which is why it must stick in Cupertino's craw that they are dependent on a carrier whose service in cities like San Francisco is almost comically bad. Has it reached the point where Apple turns to AT&T (T) and says, Darth Vader-style, "You have failed me for the last time"? Gruber thinks not, if only because AT&T so desperately needs the iPhone that Apple can extract far better terms from them than it ever could from Verizon (VZ).  So he takes Tim Cook at his word when Apple's COO tells analysts that the company has reviewed AT&T's plans and is going to give it time to work out the kinks. Meanwhile, however, AT&T's service problems are draining Apple's good will.
  3. Computers. Gruber thinks he's seen the future of computers, and it is the iPad. "It's really, really good," he gushed. If you are sitting on a couch and you need a computer, most people are going to reach for the iPad, not the MacBook Pro. And that puts Apple into uncharted territory. For the first time since the original Mac replaced the Apple II, it has two overlapping computer products. And although it took a few years for the corpse to grow cold, the Apple II basically died the day the Mac arrived.
  4. The App Store. There are two schools of criticism about the iPhone App Store: The most vocal critics say that it is totally going in the wrong direction and should be doing what Google (GOOG) does with the Android Marketplace -- offer users the option of downloading apps that aren't vetted and approved. The other school says that Apple is going in the right direction, but is hurtling at great speed a few degrees off course. Gruber fears that the shouting from the first school is so loud that Apple may be ignoring the second as well. There are game consoles -- like Nintendo's -- whose apps are as tightly controlled as Apple's. And there are computer systems with app libraries nearly as large as the iPhone's. But there's never before been a tightly controlled system with 150,000 apps. "If it proves unsustainable," asks Gruber, "what are they going to do?"
  5. Security. Microsoft (MSFT) put a lot of effort into building strong malware protection into Windows 7 because its operating system is under constant attack. Apple users don't fret nearly as much about Mac OS X malware because there is so little of it. Gruber doesn't care which OS is intrinsically more secure, but he is increasingly worried about Apple's sluggish response to its own publicly disclosed vulnerabilities. For example, it took Apple 75 days to respond to a hole in Open SSL -- the open-source encryption system that is supposed to protect credit card data from getting loose on the Internet -- even though the vulnerability was made public last September. "It happens again and again," says Gruber. Apple is the last vendor to respond, when it ought to be the first. Of the companies that use Open SSL -- and Microsoft pointedly does not -- Apple is the biggest.
  6. Mobile Me. It's great for syncing your iPhone to your Mac, but what's the point of Mobile Me's Web apps? If you're at your computer, you use Mail and Calendar. If you're out and about, you're supposed to use the iPhone. Gruber has a sneaking suspicion Apple put apps up on the Web because "that's what the kids were talking about." It's like the lounge singer, he says, who grows long sideburns after Elvis Presley arrives.
  7. Back Ups. Data loss is a tragedy, and Apple is particularly vulnerable because -- unlike Google -- the primary storage on their systems is local. Time Capsule is the right idea, but it's not really a solution for all those people who don't even know they're supposed sync their iPhones to their Macs. "Ultimately the long-term solution is to be in the cloud," says Gruber, but that puts Apple on poor footing compared with Google. Given how badly Apple handled Mobile Me, he's skeptical of Apple's ability to do cloud back-ups well.
  8. Apple TV. Gruber is not one of those who talks about Apple TV as Steve Jobs' one dud. He likes Apple TV, but says it has a fundamental problem: it's primarily about watching movies and TV shows through the iTunes store, with the result that there's a worse selection on Apple TV than there is at any local video store. Hulu is a wonderful solution but when Boxee figured out a way to put it on TV, the Hulu guys freaked out. They have "this crazy brick wall in their heads," Gruber explains, that perceives computers and TVs and two fundamentally different things. They worry about ad-supported Hulu getting on TVs when they should be worried about people bootlegging their content for free and watching it with no ads. "I don't see," Gruber concludes, "how Apple can get from where they are to where they need to be when they are negotiating with people that stupid."
  9. Arch Rivals. A company needs direct rivals to stay hungry, but when they get big enough they tend to run out of them. Case in point: Microsoft. "They were something to see," in the old days, "because they were relentless, they were fearless." Its no coincidence, according to Gruber, that since they got busted for beating Netscape -- Jake La Motta-style -- into a bloody pulp, the only new thing they've done is the one product that has serious rivals: Xbox. Apple's closest rival in smartphones, Gruber maintains, is not Google (which will rake in the Web ad riches whether Android succeeds or fails), but Palm, whose WebOS he admires. "I'm convinced," says Gruber, "that it would be good for us -- and good for Apple -- for Palm to do well. But not too well."
  10. About Box Credits. This one is a bit obscure, but if you look at the "About This ....." under the Apple menu for any Apple-made software, you get the same gray box with the name and version number of the program but little else. And, most significantly, none of the names of the people who created the program. This is a holdover of the dotcom boom, when Jobs got it into his head that the Silicon Valley headhunters who were poaching Apple employees were getting their names from the about boxes. Movies and TV shows may list the names of all the people who helped make their shows because union rules insist on it, but it's also the right thing to do. If software is a form of art, as Apple insists it is, "artists should get to sign their work."

And on that note, he stopped.

The video:

[Follow Philip Elmer-DeWitt on Twitter @philiped]

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About This Author
Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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