Is Apple Rotting from the Inside Out?

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I started this week thinking about Apple killing off Think Secret and actually threatening the income and family -- during the Christmas season, mind you -- of the highly visible Forbes reporter who pens the very popular Fake Steve Jobs blog. This changed the whole tone of my piece, which was to focus on products and now will question Steve Jobs' sanity; I wonder if people on his staff are setting him up for the kind of coup that could get him removed, much like he removed his predecessors.


We'll get to the battle of Apple vs. CES in a few days but first let's ask if Apple is rotten at the core.


Is Apple Rotting from the Inside Out?


In my mind, Apple's greatest asset isn't its products, software, employees, or even CEO. It's the incredibly loyal customer base. These people, many of whom are reporters, have stuck with the company through thick and thin. Some of the "thin" parts have been really bad, with products like the Mac Cube, which, while pretty and inovative, were horribly engineered.


It was so bad at one point that I've been told that when Steve Jobs rejoined as interim CEO, he refused to use an Apple and had his own NeXT machine installed at headquarters. Even he thought the Apple machines at the time were crap and he moved to fix that.


A lot has changed over the last five or so years and now Apple is riding high. The company can seem to do no wrong, but on the eve of what is likely to be the biggest and most highly funded fight in Apple's history, Apple seems to be setting up for failure by putting down one of its most loyal fan sites, Think Secret, and by going after a highly visible reporter like an organized crime lord might. In short, it is pushing the envelope on evil, during a time of year when there often is incredibly little tolerance for that behavior.




By now, you should know that Apple took one of its leading fan sites, Think Secret, to court to get it to disclose a contact inside Apple who leaked a product that Apple later decided not to bring to market. It is not an uncommon practice for executives who believe their management is stupidly releasing a product to "leak" it, giving the thing visibility. This extra visibility allows the market to weigh in on the merits, or lack thereof, of the offering and often, as in this case, the ill-advised product is killed.


Getting caught doing this can get a person fired; Think Secret protected, with its life, the anonymity of the executive who released the information (he may write for Wired). Apple basically gave the publisher of that site an offer he could not refuse (reminiscent of the Godfather) and the publication ceased to exist. We haven't seen that kind of a misuse of power since the Standard Oil days and it is a chilling reminder of what can happen if a firm gets too much power.


With this success firmly in hand, Apple next went after Dan Lyons, who is one of the top journalists at Forbes. First it offered him money. When he disclosed this bribe, it threatened his income and his family. The evidence it had was so incredibly lame that if it weren't for the fact that this kind of thing in my world is deadly serious, it would be funny. Thanks to SlashDot for bringing this to our attention.




Journalists are part of the loyal Apple base and have been for some time. In fact, I would argue they may be the most powerful part of this base. Folks like Walt Mossberg have historically followed Apple almost blindly, praising everything the company brings to market. They do so not because they are bribed, but because they honestly like what Apple brings to the table. But shutting down a blog because the site was protecting a source, and trying to pay off, and then blackmail, a highly visible senior journalist likely won't sit well with this audience. They might start to wonder if they are next.


Apple is going to want positive coverage for the news that will likely start coming out about the options scandal, which is likely to come off the back burner as election time starts getting closer. In the fight with every high-tech company on the planet, it'll need its greatest asset, journalist fans, to step up to its defense.


But I'll bet a lot of folks are now starting to look at Apple like it's full of rotting zombie worms and that will make the help Apple needs much harder to come by.


Is Steve Jobs Being Tricked?


Rumor is that there are people on the Apple board who have had enough of Steve's shenanigans and would like to distance the company from him once again. However, as long as he is popular, this is simply not going to happen, and the options scandal, so far, just hasn't created the needed support for Jobs' removal.


However, going after fan sites in this way, coupled with the fallout from threatening a reporter's family and income, could be enough to tip the balance, particularly if the company missed a quarter or two. You may want to hit the stores and see just how much unsold iPod and iPhone inventory there is this year. From what I can see, there is a lot of stuff sitting on shelves that isn't moving. Not scientific by a long shot -- but it does suggest that Apple may have an inventory problem next quarter.


So I wonder if somehow Steve Jobs is being tricked into making these decisions so that he can be easily removed when the options problem once again makes the front page.


Wrapping Up


"Power corrupts, absolute power corrupts absolutely" is a saying folks seem to recall but often, once they get into power, forget. Just because you have the right to do something doesn't mean it is right that you do it. Harming others, particularly fans, and particulaly over the holidays just feels evil (click through on this link and wonder like I did what happened to the source for this comment). This time, it is Apple that has strayed far over the line and I think it will hurt the company a lot as it tries to fight off the CES mob next year.


There is clearly something rotten at Apple and we'll know in a few months whether is it is a coup in the making. Until then, our hearts go out to Dan Lyons and his family, as nobody should have to deal with this any time -- particularly not at Christmas. Folks are clearly thinking differently about Apple in 2007, which is why I'm thinking Apple is rotting at the core.


If you feel like like making a statement about this, think of buying Dan Lyons' book, "Options: The Secret Life of Steve Jobs." It's an easy and fun read and you'll be making a statement about how this kind of behavior is ill advised by any company. It's only $16 on Amazon.