Apple has bought Silicon Valley based P.A. Semi, a processor design firm. At first sight it seems to not make too much sense to buy a processor design company and for P.A. Semi, which is late in its target markets, telecommunications and medical devices, just a great exit deal. Now the blog community speculates why Apple would do that. Common wisdom is that chip making is a pure economy-of-scale innovation race. You need to be able to come up with a new technology first or with the first ones to make some healthy margins, and most importantly be able to win design-in projects. Then when competitors catch up you are already designed in and can even live with diving prices as shipments ramp up. A game that P.A. Semi seems to have lost as they were late with their products and missed many design-in possibilities. That P.A. Semi has not had any design-in wins with the mobile infrastructure players (Ericsson, Nokia Siemens, Alcatel Lucent, ...) I know first-hand.

Now what has attracted Steve Jobs to buy this company?

I think it is all about differentiation. With Apple competitors catching up against the iPhone (Android and others) it is key for Apple to build better and most importantly unique products. Apple seems to expect that P.A. Semi can help them do that in particular with being able to integrate video and data communications functionality in a very low power design. In the end, people buy Apple gadgets not because they are cheaper but because they offer a better designed and a more usable product that also looks better than the rest.

If P.A. Semi again does not deliver then at the least Apple has better negotiation power with the chip suppliers which will pay the price for P.A. Semi easily by itself. Overall a no-risk deal for Apple it seems.

The magazine Forbes attracts readers with their list of top people in the world. They have a list of the richest people, a list of the top venture capitalists, most generous philanthropists, the most influential business books, the best paid CEOs, outperforming CEOs, world's most powerful women, the most influential celebrities and many many more. In a highly creative strategic move trying to win over readers Fortune Magazine now has a list too: the 25 most powerful business people. In this list we have a few (pure) ICT company leaders as well. They are:

1. Steve Jobs, Apple

4. Eric Schmidt, Larry Page, Sergei Brin, Google

6. Bill Gates, Microsoft

11. John Chambers, Cisco Networks

16. Mark Hurd, Hewlett Packard

Most notable difference to other lists is that Bill Gates is only on place 6.
Forbes would certainly win as the magazine with the most top people lists. But Fortune would win the title for the publication with the most influential list of influential people. I am now wondering what list we should come up with today in order to market ourselves?

It is quite fun to watch what Apple is doing with the mobile operators around the globe right now. Fully aware of their superb iPhone success story, they are playing the operators against each other and have - I am quite sure deliberately - launched many rumors of done - or nearly done - deals. Now it seems Vodafone in the UK will not do a pan-European deal and even "worse" not a deal at all. In the UK it will be O2, in France Orange and in Germany T-Mobile, who all seem to be OK with Apple taking (another rumor) 40% of their plan revenue. If true, that will make Apple an operator, without having to invest a dime into a mobile phone infrastructure, any spectrum licenses nor operate the network.

What this really shows is how desperate the mobile operators must be, to be giving in to such a deal. It of course also shows how well Steve Jobs is negotiating by playing them against each other. What he has done with Pixar to Walt Disney is now being repeated in the mobile phone industry, too. Vodafone decided to run against them, and I think they are doing the right thing, while all the others don't seem to have a problem with handing over their expensive assets to Cupertino's Apple.

"If you can't innovate, you have to imitate, but it's never quite as good."

Steve Jobs on Microsoft and he added:

"You know, our friends up north spent over $5 billion on R&D, but these days all they seem to be copying is Google and Apple. Shows money doesn't buy everything. Today we want to give you a preview of Leopard..."

Ok so what's Apple's innovation this time? MacPro and Leopard, Apple's long awaited follow up to OS X 10.4.

Summary: You need to keep the good guy/bad guy image alive since it makes life for every Apple user so much easier... of course we all know that's just PR or how would you interpret this picture here:

Having finished reading the second part of the Steve Jobs biography –iCon- I now also want to wrap up what I started in Part I. That part was largely unfavourable for him and showed the many mistakes he made. This was in addition to a very obvious personal character issue that seem to plague so many high-tech icons.
Now what is it that makes Steve Jobs such a phenomenon despite his otherwise lack of personal skills as well as product management 101 know-how?
Following are book samples that illustrate his qualities:

Presentation skills
Sale of the NeXTSTEP OS to Apple:“… he launched into a pitch that was Steve Jobs at his best. At some of the most challenging moments in his business life, he gives the impression that he has done no preparation and has not bothered with any rehearsals because he simply does not need them. He speaks with the fluency of someone in total command of his subject, the passion of someone totally committed, and exactly the right control over his listeners’ emotions.”

Design savvyness
”From a young age, Steve had recognized his own uncanny flair for computer design…. The Macintosh was the next product stamped with his indeniable sense of design - an amalgam of cool, surprise, elegance, and wit.”

Negotiation toughness and ruthlessness
”Both (Michael Eisner and Steve Jobs) are master negotiators who know how to spot the other guy’s weakness and take advantage of them… Yet Michael Eisner capitulated.”
On C&G (a small company from which the iTunes software originated (C&G’s SoundJam)) “Apple was killing off one of the developer companies that is so vital to any computer firm’s continued success. In Terry’s colorful phrase, “Apple was eating their young again.””

Operational efficiency
“One of Steve’s strongest suits had always been his operational management. From the days of his high-school job at Haltek to his aggressive bargain shopping for parts for the Apple II, and on to the Mac, he was obsessed with details. Not just the details of design and software user interface, but the details of manufacturing efficiency.

Taskmaster
“How many companies could tackle a project in a brand-new category, create a groundbreaking widget that looked great and worked better than anyone else’s-and do it all under a year? It happened only because Steve Jobs cracked the whip in his usual roles of slave driver, taskmaster, and ringmaster.”

Business savvyness
Steve refused to get a paid salary but instead took stock options which subsequently were worth more than any pay cheques. This gave him both enormous wealth as well as ownership which put full control into his hands.

Fast moving
“Steve had shot down a number of Apple development efforts because they weren’t aimed at creating products that matched the company’s core focus. Neither did an MP3 player. Now that reasoning didn’t seem to matter anymore. He saw the new frontier, recognized the market potential, and seized it.”

Stop with the NIH (not invented here) philosophy
For the development of the iPod Apple stopped its former practice of developing core technology inhouse by working with PortalPlayer who already had a software and hardware design ready to be used as a design base. “For most of that year, the entire engineering force of PortalPlayer, in the United States and in India, worked only on the new Apple MP3 device.”

I am reading this biography, which carries the subtitle “The Greatest Second Act in the History of Business”.
The first half of the 300+ page book describes Steve Jobs in his years up to age 30 or so. While he built Apple Computer during this time, lots of his major failures happened as well. According to this excellently researched book by Jeffrey S. Young and William L. Simon, Steve Jobs was -to summarize it in a simple way- quite a jerk both personally as well as in business. His early success made him arrogant and his capability of sensing next wave technology developments was both a blessing and a problem. Convinced about himself, he thought he was able to rely on his instincts only and avoid market research entirely. Some infamous examples of his subsequent product management failures at that time were:

• The first Macintosh lacked software applications (only Mac Word, Mac Paint and MS Word were available); also the internal memory as well as hard disk drive capacity were too small, requiring users to constantly use the floppy disk drive. This was dubbed the “Disk Drive Olympics” within the Apple Mac team.

• Another major failure was the Apple internal project Lisa, which never managed to develop a product that had a market acceptable price.

• Infamous, too, was his first venture NEXT Computers, right after he left Apple. No clear customer target group in mind, endless product development, and again way too high product price, which ultimately lead to its failure.

• Most of us know of Pixar as being a success story in the animation movie. Have you ever heard of Pixar Image Computer? Steve Jobs had it in mind –in retrospect quite amusingly- to market the customized computer system that the Pixar group, which he bought from Star Wars Star Trek inventor George Lucas for a cheap 10 million USD, used to create their cutting edge animated films. Jobs tried to sell this computer system to hospitals because he thought that the image processing capabilities would be of great use in analysing X-ray or MRI pictures. Of course that environment cannot accept complicated-to-handle tools, which is what their system was. And the price was once again way too high. This is yet another example where Jobs did not analyse market needs prior to a product development launch.

While the above gives the impression that Steve jobs was by no means the genius so many think of, please note that this summary is only based on one half of the biography. I assume I will read about some more human side and also a more business savvy side of him in the other half, which I plan to write about as well.

Also, the above examples lead me to a book I intend to read next. It is called Why Smart Executives FAIL – and what you can learn from their mistakes.