Apple and Steve Job’s first great revival

We often hear of the brilliance of Steve Jobs as he developed the iPod and then the iPhone and iPads, but little mention is made of his turnaround of Apple back in the late 90s. This coincided with the rise of the dominance of Windows.

Many commentators even suggested that Apple should allow themselves to be bought over by IBM, Motorola, Sony or HP!

In 1997, Apple was tottering down the path towards bankruptcy. This was when Steve Jobs took over as CEO again but investors were still bearish about Apple’s chances of any real transformation and were pressing for them to present themselves as attractive targets to IBM or Sony (in the event the IBM move had anti-competitive issues and challenges from the US regulators).

So what did Jobs do?

Secure immediate financing

The genius of Steve was to talk Bill Gates into providing US$150 million to pump some much needed liquidity back into Apple’s operations. He did this by showing Apple’s non-threatening position (at the time) to Microsoft and also explain to them how Apple’s survival will help Microsoft’s battles with the Department of Justice on an monopoly-charge.

Cut the product range and scale back Apple’s inventory

He removed the printer and peripherals department and also cut the number of desktop models (from fifteen to just one). He also reduced the scale of software development and engineering. He also shifted the manufacturing (of a much leaner product range and line) to Taiwan and cut inventory by 80%.

Control product distribution

He also cut over 80% of his existing national retailers and also focused on selling directly to customers through an enhanced website. He later did the same with applications and software through the App Store. The idea was simple – sell a simpler product range through a simpler range of outlets / retailers.

Take things one major leap at a time

Initially, all Jobs wanted to do was to ensure the survival (or going concern) of Apple. Sell a simplified product range through a limited range of sales outlets (both Apple’s Website and the limited retailers). He felt this would help apply pressure on the cash bleed that Apple was suffering from.

Once that was secured, he fixed his OS and had the Mac G3s. He waited before he decided to push on with the revolutionizing how people listened to music through the iPod and iTunes.

He then waited again before embarking on the iPhone and taking on the existing big boys of Nokia, BlackBerry, Sony, Motorola etc and redefined the phone industry.

Next came the iPad and the buttressing of the App Store. This redefined how people bought apps, both for portable devices as well as their laptops and desktops.

 

What did this mean for Apple and Steve Jobs?

Jobs focused on the most pressing matters of the day when he took over: survival. Once Apple’s survival was guaranteed, he then reached out to a niche market of fashionable consumers who became his strongest brand advocates. From there, he launched one big thing after another. This transformed the world of computing and personal electronics.

This is meant to be a very brief overview of how Apple took the steps needed to first survive and then subsequently thrive and then flourish in the technology world! Hope it is helpful!

 

Indonesia’s Economy – Opportunities and Challenges – notes from a lecture by Bapak Gita Wirjawan, Minister for Trade, Indonesia

ImageS Rajaratnam School of International Studies (RSIS) Distinguished Public Lecture by Bapak Gita Wirjawan, (GW) Minister of Trade, The Republic of Indonesia. (2nd September 2013, Pan Pacific Singapore) on “Indonesia’s Economy: Future Challenges and Opportunities.”

I had the pleasure of attending the distinguished public lecture by Pak Gita last week and I wanted to share some salient points from the discussions

 

Key highlights and introduction

  • July results for trade is a continuation of the trends observed in June – and are actually worse. (There was a US$2.3 billion trade deficit in July 2013 alone – cumulative deficit of US$6 billion for the whole of 2013). (Click here to see news on the latest trade deficit)
  • Continued outflow of capital resulting in a downward pressure on the currency.
  • The ongoing slowdown in Europe and uncertainty in the US/Middle-east is also having knock-on effects on Indonesia.
  • We are witnesseing a “recalibration of the global economic outlook.”
  • However, Indonesia has seen significant progress made under the Susilo Bambang Yudhoyono (SBY) presidency – Under Sukarno’s era, the GDP per capita was around US$500 per  capita – this went up to US$1,200 under the Suharto era. However the Asian Financial Crisis in 1997-1998 had a catastrophic impact on Indonesia, where the GDP per capital plummeted to US$600 per capita. Indonesia also very narrowly avoided the Balkanisation of the country during that period.
  • After the political reforms post-Suharto, GDP climbed steadily to US$1,100 under the Megawati presidency and today (2013), the GBP per capita has just about exceeded US$5,000 per capita under the SBY presidency. This has also resulted in the increased purchasing power of Indonesia leading to heightened domestic consumption, particularly from a growing middle class.

 

Can Indonesia emerge from the middle-income trap?

  • Indonesia’s improved its policy and position in the fiscal space.
  • However in the social space, the gini coefficient (one indicator of income inequality) has risen, which implies a widening income gap and disparity. This remains a critical issue which the government needs to resolve.
  • Furthermore, there is still an over-reliance on the commodities sector which is prone to very violent swings and shocks.
  • Infrastructure development remains a challenge for the country.
  • The needs to be further work done in the educational space as well.

 

Education and the economy

  • In 15 years, there will be 150 million Indonesians under the age of 30.
  • There remains an urgent need to sharpen the educational infrastructure.
  • As GW says, “It is important that we need a good runway, not just to land, but to also support us in taking off.”
  • Between 2012-2022 – it is estimated that Indonesia’s accumulated GDP be will be over US$60 trillion – on a cumulative basis.
  • There needs to be a supply side narrative to realise this estimated accumulated GDP and that remains the challenge.
  • The SBY government leaves a sustained economic trajectory for Indonesia.

 

The woe of the number of taxpayers (or lack thereof!)

  • For an economy in the top 20 largest economies grouping – the G20 – there are fewer than 20 million tax payers! (comparatively?)

 

Indonesia and her geopolitical relevance

  • GW highlighted the example of how South Korea has used its soft power effectively (from Gangnam style to Samsung products) to drive international trade and economic growth. What can Indonesia do to achieve a similar impact?
  • GW also highlighted that Indonesia has the ability to develop a high degree of political relevance because:
    • Indonesia has the potential to serve as the ‘middle power’ to narrow the gap between the Middle-East and the West
    • Indonesia can also narrow and bridge the gap between China and the US (a slightly debatable claim?!)
    • However, Indonesia needs sustained political order in order to develop and create this geopolitical relevance.
      • Indonesia must engage in Democracy 2.0 – the next iteration of her democratic freedoms enjoyed post-Suharto.
      • Improve her manufacturing and technological sector (invest in high-quality and high-yield technology and sectors).
      • Without Democracy 2.0 – it is highly unlikely that Indonesia will sustain her political and economic reforms and progress. Areas such as corruption must be tackled with and though there has been some good initial progress, this must remain sustained for there to be tangible returns and a progressive shift.

Indonesia as the ‘middle power’

  • Indonesia believes in regional cohesion and solidatiry.
  • ASEAN is a great example of multilateralism – socio-political, cultural and economic solidarity have helped ASEAN overcome initial challenges and be a more cohesive and effective regional bloc.

 

The future of Indonesia

  • Indonesia must continue her path of bundling pluralism and democracy.
  • Economic growth must be achieved hand in hand with economic equity – otherwise the unbalanced growth will have severe social impacts and fractures.
  • Without this economic equity – all of the work being undertaken now will be an exercise in failure.
  • This will take time to achieve.
  • Indonesians have now come much closer together than ever before (Indonesia has the second highest Facebook usage and the third most users on Twitter).
  • Indonesia and Indonesians must have the ability to say and proclaim that they have the wherewithal to move on with the necessary reforms and changes required for Indonesia’s sustained progress.