The effects of Steve Jobs’ resignation will take some time to play out

There are several reasons why the resignation will not
have an immediate impact. Firstly, Tim Cook, former COO and newly appointed
successor to Steve Jobs, has been running the company since Jobs began his
latest medical leave in January. Secondly, Jobs will now serve as Chairman and
will therefore continue to have a role with the company, at least in the short
term. And thirdly, the broad direction and strategy for the company and its
major products for the short to medium term will already be in place, and will
not be affected by this change.

Longer term, there are more reasonable grounds to believe
that Apple may face greater challenges. Though Tim Cook is considered a safe
pair of hands as an operational leader, he does not have a reputation as a
visionary. And should the time ever come when Steve Jobs no longer has a role
with the company, Cook will have to rely on others on Apple’s senior leadership
team to provide an ongoing strategic vision, and there is no single figure that
obviously fills that role going forward.

Steve Jobs has presided over one of the great
corporate success stories in recent history

Steve Jobs founded and then later returned as CEO to
Apple, which was until the announcement was made the company with the highest
market capitalization in the world. During his first stint as CEO, he created a
company which offered an alternative to the Windows hegemony in the PC world,
but which always remained marginal in terms of market share. Following his
ouster as CEO and his return, he began rebuilding an Apple that had been on the
brink of collapse.

He laid the foundation for the subsequent fourteen years
of Apple’s history by building a new version of Apple’s operating system, Mac
OS X, on technology from his previous company, NeXT. He then built in
succession three products that would redefine segments of the technology
industry in the next few years: the iPod, the iPhone and the iPad, the latter
two running operating systems based on Mac OS X.

Without a doubt, Steve Jobs has been the architect of
major shifts in the music market, the smartphone market and the personal
computer market. Of the three major new products he created over the past ten
years, the iPod and iPad gained dominant market shares, while the iPhone
transformed smartphones from mostly enterprise-centric devices with hardware
keyboards and buttons to a series of black slabs with touch screens. At the same
time, these products, the company behind them, and Steve Jobs himself have
become the subject of resentment and criticism for their relatively closed and
proprietary approach to these products and the related platforms and

Short term, there will be little impact

The short-term selloff of Apple shares immediately after
the announcement is driven by fears that Apple will not continue to perform as
it has once Steve Jobs leaves the CEO role. However, these fears appear
relatively unfounded at least in the short term. Tim Cook, formerly COO and now
CEO, has been in day-to-day charge of Apple not only since January but during
two previous periods when Steve Jobs’ health prompted extended absences. On all
three occasions, Steve Jobs was nevertheless involved in major decisions and
continued to set strategy for the company. His new role as Chairman suggests
this will continue to be the case even if he does not sit at a desk in
Cupertino for eight hours every day.

In addition, Tim Cook has by all accounts managed the
company well during these absences, and is considered by most to be a
particularly strong operational leader. Since many of Apple’s current
challenges revolve around producing sufficient inventory to satisfy demand,
these talents will be in high demand and suit Cook well to lead the business.
Meanwhile, Steve Jobs will continue to provide the visionary leadership Apple
is accustomed to. Lastly, it is very likely that at least the next iterations
of major products such as the iPhone and iPad are already well underway, and
that the broad strategic direction for future versions has also been set
already, so that there is unlikely to be any impact in the next one to two

Longer term, there is a risk of a lessening
of Apple’s pre-eminent position

Longer-term, however, if Steve Jobs’ health is indeed
behind his resignation, as many have speculated, and his condition worsens to
the point that he can no longer be involved in even occasional decision making
at the company, there are reasons to fear that the company will struggle to
emulate its recent success. Steve Jobs has provided both strategic vision and
personal leadership at the top of the company, as arguably the most visible and
well-known CEO of any technology company today. Tim Cook will not step easily
into either of these roles, as a safe pair of hands but hardly a visionary or a
charismatic figure.

That visionary role now has no obvious owner among the
second tier of management at Apple. Jony Ive is well known as the lead designer
at Apple, responsible for the look of Apple’s iconic products, while Scott
Forstall has a background in product leadership spanning NeXT, Mac OS X and
latterly iOS. It is not clear who among these two (or other senior figures) will
step into Jobs’ shoes as a visionary and leader, complementing Cook’s
operational leadership.

As such, there may be either conflict among these senior
leaders or a lack of clear vision for the company going forward, either of
which would be damaging for the company. Cook’s challenge will be to harness
and channel the creative energies of the team beneath him such that a single
vision and strategy emerges, something that will be difficult to do on a
bottom-up basis in contrast to the previous top-down strategic leadership of

By Jan Dawson, chief telecoms analyst, Ovum
[email protected]