Apple Cuegis

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CHANGES, ETHICS AND CULTURE at Apple Inc.

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A CUEGIS Report (Draft) Compiled by Kenny Yin

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CHANGES AT APPLE ! ”As we reconsider something, our purpose is to create an experience that’s simpler, more useful, and more enjoyable — while building on things people already love about.” - Apple

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MANAGEMENT SHAKEUP (LATE 2012 TO EARLY 2013) Scott Forstall is an extremely valuable asset to Apple as he led the software design and development for multiple commercially successful products - OS X and iOS, as well as their corresponding SDKs (Software Development Kit), Xcode. Although he has some extremely insightful gifts, such as the ability to evaluate software usability from a beginner’s perspective despite working on them for an extended period of time. However, according to various people familiar with the matter, such as previous Apple employees, it is known that Scott is also extremely self-oriented and bad-tempered, caring little or even nothing about cross-team collaboration, causing other senior managers, most notably the leading designer behind all Apple products, Jonathan Ive, to “refuse staying with Scott in the same room” unless Apple’s CEO Tim Cook is present. After causing the Maps fiasco and refusing to sign a public apology letter, in September 2012, Apple’s board of management made the decision to shake up management structure by firing Scott Forstall despite his enormous contribution to Apple’s previous success. His jobs are then given to Jony Ive, Craig Federighi and Eddy Cue. Jony takes charge of software aesthetics design, Craig takes charge of software coding and development, and Eddy takes charge of crowd-sourced mapping database and artificial intelligence system, Siri. Altogether, they brought Apple’s different departments closer together. The same application or frameworks on different platforms are now developed and maintained by the same group of engineers. One of the most visible results to this change is Apple’s different products can communicate to each other in ways that is not possible under previous management structure, such as the ability to hand off tasks when devices are in proximity and the ability to relay phone calls and messages to different devices. After the management shakeup, Apple also adapted a friendlier public image. For example, management teams are more open to accepting public interviews and interactions with the public. Most notably, Apple’s senior vice president of software 2

engineering, Craig Federighi, publicly pokes fun at Apple itself during media events, such as joking about his hair (Hair Force One!) and secrecy measurements at Apple.

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ENTERING THE FASHION MARKET (MID 2014 TILL NOW) Apple announced purchase of Beats Electronics at May 2014, one month before its annual WWDC (WorldWide Developer Conference) with $3 billion. Although Apple has plenty of previous records on buying smaller companies or startups, this is the first time Apple has spent huge amounts of its cash deposit to buy such business. Beats Electronics is mainly known for its electronic music accessories, such as earphones and speakers. It is well-known that Beats’ productions have higher fashion value than actual technical value. Previously as a technical-oriented company, Apple’s move of purchasing Beats can be seen as one of the first steps of an attempt to enter the fashion market. Apple also hired Angela Ahrendts, Burberry’s previous CEO who led the company through a period of outstanding global growth, as president of retail and online stores to better market Apple products to fashion-oriented customers. Apple’s purchase of Beats electronics also coincides with its later announcement of marketing its watch product line not only as digital gadgets, but also as fashion accessories. The addition of Apple Watch Edition, which presumably costs more than $1500 since it’s made of premium materials such as 24-karat gold. Apple Watch also made its appearance on multiple fashion magazines, such as VOGUE China. This sends the signal to public loud and clear - Apple is not only producing electronic gadgets any more. It has a much wider ambition of entering the fashion world.

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ETHICS AT APPLE !

”All over the world, we’re expanding opportunities for workers and ensu -ring that they’re treated with respect and dignity.” “Supplier Responsibility Report”, Apple

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FOR THE FUTURE - ENVIRONMENTAL RESPONSIBILITY After environmental-oriented pressure groups continuously criticise Apple’s use of un -renewable energy in its iCloud Data Center, Apple realised its mistake and invested more than $1 billion to deploy environmentally-friendly power systems in its data centers, such as solar panels and wind-turbines. However current technologies limit the durability of such systems. According to analysts, these systems will stop functioning long before the costs and benefits break-even. Apple also saw its own continuous effort in becoming more environmentally friendly as an competitive advantage, launching campaigns, such as “We want to leave the world better than we found it”. Apple also took the chance to poke fun at competitions who rip off their products’ designs, featuring advertisements about their innovation on being environmentally responsible on newspapers with slogans “Here’s some ideas for everyone to copy”. Apple also depreciated the use of harmful chemicals from their products by designing their products with cleaner, greener materials, such as replacing PVC with “nonchlorinated and nonbrominated thermoplastic elastomers” in power cords and headphone cables, using LEDs instead of fluorescent lamps to backlight Apple’s computer lineup. Apple also internally tests for toxins with “X-ray fluorescence spectroscopy and ion chromatography”. As a result, Apple markets their products are “better for the environment”, “better for people who use them” and “better for people who make them”.

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FOR PRESENT - HUMAN RIGHTS AND EQUALITY According to demographic data, more than 50% of all employees at Apple HQ are white people and 70% of all employees are male. Both of these data are slightly higher than industrial average, but still lacks diversity. After Apple’s suppliers being exposed for multiple times on newspapers and TV stations for labour abuse, use of child labor, excessive working hours and poor working condition, Apple responded and started investigations to deploy more regular 4

inspections, provide training courses for suppliers’ employees to bring more ethical employment approaches than previous years. However, the ignorance of human rights is not only present at Apple’s suppliers, but also within Apple Cooperate (although to an arguably lesser degree). Employees often receive emails during mid-night and are expected to reply within an extremely short amount of time. This mentally condensed and physically intensive workflow seems “rewarding but extremely challenging” from Apple’s perspective, but employees do express their rising concerns about human rights. Under the new leader, Tim Cook, Apple is seemingly to care more about human rights, as seen from them sponsoring Human Rights Campaign, the largest LGBT rights organisation in United States. Tim even went to extreme lengths, such as shutting off anti-environmental investors during an investor call with “we do a lot of things for reasons besides profit motive," and recommending that anyone who had a problem with that “should get out of the stock.”

! FOR PRESENT - CUSTOMER PRIVACY Despite US government agencies constantly reaching out technological businesses and pressuring them to add “back doors” to their software or service, Apple pays an continuous effort to refuse cooperation with such agencies. Certain judges in federal agents even went to extreme lengths to pressure Apple, such as claiming “A child will die due to filesystem encryption” after Apple added automated, hardware accelerated full-filesystem encryption and no longer stores encryption keys, so that even if law enforcement presents a physical iOS device to Apple and ask Apple to extract data, Apple is unable to decrypt any data from it as long as the device has a password lock. Unlike alternatives, Apple’s digital wallet system, Apple Pay, does not store credit card number or security codes on devices or Apple’s servers. Instead, Apple uses various technologies, such as generating nonce-based tokens specifically for every transaction where only bank receives detailed information while Apple itself only receives approximate time and location for diagnostics usage. Other Apple services, namely FaceTime and iMessage are also built on the foundation of similar technologies to ensure secrecy and privacy. Independent security researchers have mostly verified such claims through techniques such as extracting Apple’s software installation package, then decompiling executable binaries to examine them.


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CULTURE AT APPLE !

”One powerful thing we share is the belief that we can make a diffe -rence in the world. Through our products. And through our values. Through who we are.” “Inclusion Inspires Innovation”, Apple

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THE GOOD - PUSHING THE ENVELOPE Apple pushes the envelope whenever possible. This means forever asking, “Why is it this way?” and “How can it be better?”. It means to rethink customer experience until the clutter falls away — until all that remains are essentials. Throughout Apple’s business life, it never actually lead development of completely new technologies. Instead, Apple often waited until technologies are mature enough to ensure usability. For example, Apple implemented multitasking on iPhone (on user-land level, of course) a few years after competition because they did not want to sacrifice performance or (the already not-so-excellent) battery life. Instead, they took the time to implement a system that makes little sacrifices. They also made a bold decision to eliminate swap files to make memory management as aggressive as possible so that 3rd party developers will not abusively use iOS devices’ RAM. In addition to future ones such as dropping full-sized USB ports and recent ones such as dropping optical drives throughout computer lineup, Apple’s fondness of bold decisions dates way back to the 1990s, where Apple first dropped floppy drive on its desktop computer. While pushing the envelope is mostly beneficial, there are definitely drawbacks for doing so. It may compromise other aspects of Apple’s products. One of such examples is Apple’s obsessive with products’ thinness and lightness. Apple breaks the record of thinnest smartphone on planet with every year’s iPhone lineup refresh. Thinness is not bad, but between a good battery life and crazy thinness, Apple prefers thinness within a heartbeat. As one of the industrial leaders in electronic gadgets, competition often follow up and start having a “thinness-war”, bringing little usefulness to customers. Apple analyst Marco once shared his thought on such matter - “Unless it comes one day where you can have a paper cut from your iPad or iPhone, Apple’s obsession with thinness won’t end.” Also, about that lightness - Have you ever wondered why are there two thick, ugly antana breaks on the back of iPhone 6? That’s also an indirect result of Apple’s obsession with lightness. 6

THE MEDIOCRE - SMALL “START-UPs” Inside Apple, employees are often devised into small teams, consisting of a relatively small amount of manpower. This has been embedded in Apple’s DNA since decades ago. As an example, Apple’s hardware designing team, designing all aesthetics and architectural aspects of all Apple’s hardware products, only consists of 15 employees. While It can be argued that breaking a business as huge as Apple into smaller “start -ups” can enable better concentration, it also makes collaboration and communication arguably more difficult between different departments. As an example, Apple’s peer-to-peer file wireless transfer service under its mobile operating system and desktop operating system shares the same marketing name, AirDrop, but they used to work extremely differently (one based solely on peer-to-peer WiFi and the other one basing on Bluetooth Low Energy and WiFi direct). A a result, they were incompatible with each other for over 14 months, causing confusion among users. One of Apple’s telephone support operators shared his experience, “I have got no less than a thousand calls over this confusion and it is really difficult for me to explain reason behind their incompatibility.”

! THE UGLY - HOSTILE PUBLIC RELATIONS Unlike other companies that encourages, or at least does not discourage public interaction between development teams and users (or 3rd party developers), Apple builds a strong, brick wall to prevent such communication. This is embedded in Apple’s culture, dating way back to the 1990s. This approach has been widely criticised, especially among 3rd party developers. As an example, while Apple’s software get more and more complicated, this hostile approach when dealing with developers has led to a gradual decline in Apple’s software quality. For example, its bug reporting system, internally codenamed “radar” is designed to be opaque and unfriendly. It still features an user interface that is inconsistent with the rest of Apple’s other software Bug reports and feature requests filled by developers with their own precious time falls into a gigantic black hole. Apple usually does not respond to such reports at all. In fact, developers’ reports are either left open or marked as duplicate. When marked as duplicate, developers lose track of their report and cannot follow-up any more. Developers can also not search, or vote on reports sent by other developers..

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From the outside, It seems like Apple cares little about such reports. However, from the inside, these are simply the result of Apple’s extremely small developer relations team, consisting less than 20 employees, while other leading technological companies has hundreds of employees dedicated to such matters. Although as a cooperation, Apple has a culture of being mysterious and unreachable, most employees within Apple cooperations have completely different personalities. They are just like every other human being on planet earth, where they are friendly, helpful and enthusiastic. And they are extremely glad to help users and developers to solve their issues. However only based on one prerequisite - if you can reach them. And usually, you can’t. Unless you are their friend or family, of course.

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Information discussed in this report may directly come from Apple’s public website or marketing resources, 3rd party news and rumours sites such as MacRumors, 9to5Mac and BusinessInsiders. Some information are paraphrased from speech or conversations of people who has experience of working at Apple, or who has been in touch such people. Certain comments are collected from analysts, including but not limited from John Gruber and Guy English. Kenny is not responsible for the accuracy of discussed information, and such information should only be perceived as references. Company names and product names are trademarks of their respective owners.

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