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Feature Article
Applesauce
by Peter Schwartz

Steve Jobs returned from exile on September 16, 1997. Since then, Apple Inc.’s stock price has risen nearly 2,500 percent. Revenues have jumped from $7.1 billion to $32.5 billion. In 1997, Apple lost $1 billion. In 2008, the company netted profits of nearly $5 billion. Today, Apple is the most renowned consumer products company in the world. Steve Jobs is widely viewed as the most brilliant and visionary businessman of his generation.

What secret to this applesauce?

Not any single product or marketing decision. Not the sleek MacBook, the sexy iPhone, or the iconic advertisements. The secret sauce is Jobs’s tart disdain for his customers.

Apple succeeds because it violates every large-company, mass-consumer convention. Other companies reach out to their customers and design their products to measured and varied consumer needs. Apple stands apart from its customers, shaping its market, not shaped by it. Consumers worship Apple because the company is aloof and arrogant. Apple’s products are totemic because they emerge fully formed – designed from a singular, unitary, secretive vision.

Jobs scorns focus groups. As he told Business Week, “A lot of times, people don't know what they want until you show it to them."

Indeed.

Let’s consider Mac and PC. The PC is inexpensive and suffers from efforts to be all things to all people, and hence very little to any one person. The PC’s architecture is transparent, yet graceless. It invites customization, but thereby shears down the wall between its designers and its consumers, leaving all befuddled. The PC suffers because it honors free choice as the foundation of commercial enterprise.

The Mac is different. By definition. The Mac is expensive because it means to be exclusive. It possesses a proprietary blend of hardware and software, designed to work hand in glove. Its guts are elusive and mysterious, plug and play but hidden away. Apple cleanly separates its customers from its products, and defines the relationship between the two in terms of that separation. It is that simple. The Mac and the iPod are what they are. There is no choice. You either buy them, and embrace them. Or you don’t.

What are we to make of this approach? The arrogance is at once fascinating and off-putting. But there is no denying the effectiveness of the business model as a framework for establishing a powerful connection between a company and a brand with its customers.

Seattle's iconic public library - showing the Fifth Avenue entrance and atrium, and a poriton of the Microsoft Auditorium. Photo by Jeff Wilcox.

Document of the Week
Money vs. Market

This week, the SEC released its proposal for changes to the regulatory structure of money market funds. In the wake of the Reserve Primary fund “breaking the buck”, terrified investors pulled money out of money market accounts in record numbers. After a temporary guarantee by the Treasury Department, the situation partially stabilized, and now the SEC is exploring what it can do to make things run more smoothly. The proposed options include requiring funds to invest only in top-tier securities, shifting away from reliance on credit ratings by NRSROs, and making funds retain at least five percent of their assets in liquid forms such as cash or Treasury securities to cover a possible wave of redemptions. As always, the public has concerns that the proposed measures would make the funds more stable but would lower returns. With the market continuing in its shaky state, investors may have to choose between the possibility of making more money and the guarantee of getting back what they put in.
Money Market Fund Reform

Website Tip
Supremely Sortable Search Results

Although search results on the All SEC Filings page appear in descending chronological order, you can re-order your results by clicking on any of the hyperlinked column headings, including Company Name, Form, and SIC code. What’s more, there’s a neat trick for sorting by those column headings that aren’t hyperlinked. Click “Printable Report,” then “Excel,” and you’ll have an Excel spreadsheet to sort or filter by other parameters.

Website Tip
Sometimes You Need to Get Personal

If you typically access Securities Mosaic through your organization’s general (IP-authenticated) license, you may not be aware of the benefits of also maintaining a personal account. Only by logging in with your own username can you set up personalized Watchlist alerts, add and save documents in your very own Document Cart, memorize and store searches, access the site remotely, and adjust your news email profile yourself anytime, online. And personal accounts are included as part of your organization-wide license at no extra charge. Click here to sign up for one now.

KM Picks

Interesting or noteworthy items in print, onscreen, or online.

The Sausage
"No man should see how laws or sausages are made" goes the apocryphal quote, the apparent source for the title of this newish blog, a spin-off from Slate.com’s The Big Money. But you have to believe the name also nods to the sausage’s status as a quick, easy meal, satisfying but only marginally nutritious, and something of a guilty pleasure. These characteristics certainly fit The Sausage, whose mantra is to “translate” business news into digestible, bite-size nuggets. No, The Sausage is not your blog for nuance or in-depth analysis--but when you’re on the go or in a hurry, it can really hit the spot.