Steve Jobs, the visionary chairman of the board and co-founder of Apple, passed away on Wednesday.
As technologists, we reflect on the fact that Jobs' incredible accomplishments and contributions precipitated a cultural transformation, and have fundamentally redefined how humans interact with technology. He was one of the pioneers of personal computing, and his unwavering commitment to usability rather than hardware specifications has distinguished Apple in myriad ways. The string of product innovations he has delivered since returning to Apple in 1997 has formed the basis for one of the greatest turnaround stories in the history of business.
As investors, we ask, "How do you replace Steve Jobs?" The answer is simple: you don't. We believe Tim Cook will be an effective leader, but it is impossible for anyone to command the same moral authority and professional gravitas that Jobs had over every aspect of Apple's product line. Momentum, and a pipeline full of Steve-approved products, will mask the transition for a few years. However, the next 15 years at Apple will inevitably be filled with slightly less visionary insight and slightly less operational excellence, in our view.
Nonetheless, Apple's substantial engineering talent, appreciation for design, retailing skills, distribution, and dedication to usability will deliver products that attract new customers. Furthermore, Apple's ecosystem of content and services will pull customers from one generation of devices to the next, sustaining momentum through any uncharacteristic hiccups. The suddenness of this news was surprising, but Job's inevitable departure was--sadly--less so. The questions that loom today over Apple's future are the same questions that existed yesterday. Steve Jobs was instrumental in carving out Apple's economic moat, but the competitive advantages Apple now enjoys are structural, and will remain intact for many years to come.
(This article is written by Michael Holt who is Senior Equity Analyst with Morningstar Inc.)
