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This week: Apple ramps up its decentralization from Silicon Valley, Safari’s upcoming redesign on the iPhone is a giant step back, and accessory makers are struggling to get their hands on Apple Watch charger supplies.
Hey everyone! Welcome to the second edition of Power On, and for those in the U.S., I’m wishing you all a very happy Independence Day.
The Starters
Just a few years after completing the multibillion-dollar Apple Park headquarters in Cupertino, California, Apple Inc. is ramping up efforts to decentralize out of Silicon Valley. I’m told that executives at the highest levels of the company recognize that hiring and retaining talent will be one of the biggest challenges to its future success, and reducing its reliance on the Valley is a key step in mitigating that issue.
Apple has traditionally operated on the principle that ambitious technologists yearn for a place in Silicon Valley where they can put their mark on the next iProduct. The company’s top brass for years fought against decentralization. But that thinking has changed for several reasons based on what I’ve heard from Apple employees.
- The company has been losing talent who, despite being high earners by most standards, have said they could barely afford the extraordinary cost of living in the San Francisco Bay Area. Many engineers lamented that they couldn’t balance living expenses with other pursuits like college tuition for their children and long-term savings.
- Recruiters at Apple have found it difficult to build a more diverse workforce. Geography plays a role. Apple says it knows there is more work to do but that the number of employees from underrepresented communities has increased 64% over the past five years.
- Apple realizes it can no longer wait for the best designers and engineers to gravitate toward its spaceship. It needs to go where those people live today. Apple no longer has the same scrappy feel it had in the early days of the iPhone. It’s now the world’s most valuable company, under the watchful eye of antitrust regulators on multiple continents, and competing for talent with Amazon.com Inc., Google and Netflix Inc.
- The cost of operations is extremely high. Apple could get the same work out of employees demanding far lower salaries in less pricey regions.
Some members of Apple’s executive team had been pushing to decentralize out of Cupertino for years before a fuller realization came into place more recently. Johny Srouji, Apple’s head of custom silicon, was one of the strongest proponents of such a shift, I’m told. His group opened up offices in Florida, Massachusetts, Texas, Israel and parts of Asia years ago. It has since expanded in Germany, Oregon and San Diego.
Eddy Cue, Apple’s online services chief, has also pushed for decentralization, investing in multiple Los Angeles offices and a location in Nashville. The chief operating officer, Jeff Williams, has internally discussed the cost benefits of a more global workforce, and Deirdre O’Brien, the retail and HR chief, has evangelized for the diversity benefits.
Decentralization across the company is entering full swing, and Apple has engaged in a costly expansion from the sunny coasts of LA and San Diego to the Pacific Northwest of Oregon and Washington, the Rocky Mountains of Colorado, Iowa’s Midwest, the Eastern Seaboard of Massachusetts, Miami and New York.
Notably, it’s also spending $2 billion on building new campuses in Austin, Texas, and North Carolina. That’s in addition to hiring engineers in Canada, Germany, New Zealand, Spain and the U.K. Altogether, the moves will add tens of thousands of jobs outside of Silicon Valley. The breadth of the expansion is new for Apple, which has had major offices in Austin, Ireland and Singapore.
As it keeps moving beyond Silicon Valley, Apple will pilot a hybrid office and remote work arrangement globally when it forces nearly all staff back to its offices in September. Employees will be required to be in the office Mondays, Tuesdays and Thursdays, while they can choose to work at home the other days. Some retail employees will be given a similar arrangement to support online sales.
The moves appear generous for a company that had eschewed remote work, but internal response to the pilots has been mixed at best. Some employees with roots planted in Silicon Valley are satisfied, but others are jealous of nearby companies that offer more flexible remote options for a post-pandemic world.
Some staff are concerned the implementation will depend on the whims of their bosses. There are fears that a manager could, for example, schedule in-person meetings on days when remote work is offered, making staying at home not viable.
In an informal survey, about 59% of about 1,700 Apple employees said they “strongly agree” that some workers will leave the company due to a lack of more flexible work options, according to the Verge.
With just months before employees are expected back in the office, I hear managers have yet to be given formal training on the procedures. Another question is how long it may last, with Tim Cook telling employees that the plan will be reevaluated next year.
A memo from the chief executive officer also observes that Apple is a little different from many of its tech peers whose main businesses live online. Hardware engineers typically don’t have industrial-grade equipment sitting around at home. Those employees will be required four or five days a week, Cook wrote. “Some of our colleagues have jobs that can only be completed in person.” For many, “in person” often still means Cupertino.
But Apple realizes that many valuable employees don’t want to be in Silicon Valley, period. Its solution of building new offices in other cities and offering hybrid schedules that grant a day or two a week from home—despite being a reasonable compromise—will still restrict Apple’s talent pool. A sizable portion of workers simply don’t want to be in an office at all.
The Bench
Apple’s new Safari design in iOS 15 is a step back. Changes to the web browser for the next version of the iPhone operating system are so confusing and unnecessary that I think they might send loyal users hunting for alternatives. Moving the web address bar to the bottom erases 14 years of muscle memory and clashes with norms found in Apple’s other apps. Routine features like sharing links, accessing the download history and entering Reader mode now require extra steps. There are plenty of iOS features that could use a shake up. Safari was not one of them. Apple should consider reversing the changes.
Supply shortages hit some Apple Watch accessory makers. Have you been waiting a while for an Apple Watch charger made by a company other than Apple? Well, you’re probably not alone. Some smaller accessory companies told me that Apple’s proprietary watch charging pucks, which are available for third-party companies to integrate, have been in short supply, delaying some shipments. It’s unclear what has led to the shortages, but it could be another knock-on effect of pandemic-stricken supply chain issues that have occurred over the past year.
AmEx revamps the Platinum card, complete with a higher fee. In addition to Apple and the NBA, I’m a bit obsessed with personal finance. So the debut of any new credit card is pretty exciting. Check out my colleague Jenny Surane’s article on the launch of the new card. My take? The rewards on the Platinum card (1 point per dollar) are still mediocre, and the fee is now $695 a year (up from $550). Still, you should add up the value of the credits, including for Uber, hotels and flight incidentals, and ask yourself if that combined value is more than the fee. I think for some travelers, the answer will be yes.
The Buzzer
It’s July, the NBA Finals are upon us, and the only Lakers-related news is the hiring of a new assistant coach: David Fizdale—who failed to turn around the New York Knicks but was a strong LeBron James collaborator in Miami. I have two new feasible (read: dream) additions to the Lakers backcourt now that current point guard Dennis Schroder is reportedly asking for a massive overpay: Malcolm Brogdon from Indiana or Spencer Dinwiddie from Brooklyn. Make either happen, Lakers. Please.
The Schedule
Look for Apple to report third-quarter earnings on July 27. This should be an interesting one with Apple telling investors that it would see a $3 billion to $4 billion negative hit during the period because of chip-related component shortages. It also recently released new iMacs and iPad Pros, a spec-bumped Apple TV and the AirTag. We’ll likely get some color on how those performed.
Post-Game Q&A
Q: When should we expect the next MacBook Pro and MacBook Air—and what’s the scoop on the new features?
Q: Now that Apple Podcast Subscriptions have launched, will we ever see Apple Original Podcasts?
Q: Is the Apple AR headset still on track for this year?
Q: Will Apple call the next iPhone the iPhone 12S or the iPhone 13?
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