A week or two ago I bought a game called Game Dev Tycoon. It’s a simulation game that lets you control multiple areas of game development and marketing. At first you start off working in your own garage, but as you become successful you advance further and can even hire more employees.
The first batch of games I created didn’t do too well. As I refined the perfect balance between artificial intelligence, stories, graphics, and game play, I started churning out really successful games. However, when my game company became more successful, the quality of my games started to decline. I was worrying more about funding, marketing, and employee training/vacations than I was about actually building games.
Then I started thinking about the implications of this. If I could forget my own roots that made me successful in a strategic game development simulation, could big tech. companies do the same in real life? It only takes one missed product (or game in my case) to start a chain of negative media attention and declined sales.
Let’s Examine Other Companies
In Game Dev Tycoon I started building games in 1980. So let’s take a look at some companies stock that were around that time and examine their success Granted, for every example you see here you could argue a market boom had a play, and you could also find hundreds of counterexamples. Obviously some companies do well. But we’re interested in the ones that don’t do so well.
So if you look at Ford, AMD, Sony, Microsoft, or Toshiba you’ll notice some interesting trends in their stocks over the past couple of decades. They all had their success booms long ago. Take a look at Sony’s stock for example:
This seems to mimic the exact thing I experienced in Game Dev Tycoon. Just like I became successful and had to start worrying more about human resources, marketing, and funding, so did Sony. You can imagine when they had their big spike in 1999-2000 their focus shifted away from their products to their company.
How it Ties Into Apple
Apple’s success that started in the 21st century with the iPod and Mac line was simply unbelievable. However success like that is not only unsustainable but it’s also prone to cause a rift in a company’s focus like we mentioned.
Whereas Steve Jobs was once interested in giving consumers an upper hand in the music market with his break-through software, iTunes, his interests seem a little distorted a decade later. Last year the Department of Justice (DOJ) filed suit against Apple and six eBook publishers regarding an eBook price fixing conspiracy.
The government’s conclusion of law cites an e-mail in which Steve jobs was clearly bent on fixing eBook prices:
The government also mentions that Steve Jobs had reason for price-fixing because of the profits Apple would benefit from:
If that’s not a perfect example of contrasting intentions, then I don’t know what is. Apple’s outlook in 2000-2001 was to revolutionize the market. However as their success became more exponential, their focus shifted. Their focus shifted so much that they were willing to price fix eBooks, which is actually bad for the market!
The Plot Thickens
Apple’s also been hit with a class action lawsuit over it’s power button. Apparently Apple knew that the power button was caused by a defect in a flex cable but continued to sell the phones and not inform consumers about the issue. Isn’t this the same exact thing as fixing eBook prices just to make more profits? It’s certainly another great example of why shifting intentions are bad for a company. And as our stock chart tells us, consumers get wind of this, and so do investors.
Apple’s Stock
To top it off a 14 year old girl discovered that the magnets in iPads can cause heart pace makers to fail. Apparently there is no warning in the manuals that tell iPad owners about these risks. This magnet issue isn’t really an example of Apple’s intentions shifting. But remember earlier in the article where I said:
It only takes one missed product (or game in my case) to start a chain of negative media attention and declined sales.
eBook price fixing, in-app purchase lawsuits, selling defective iPhones, and not mentioning that iPads can cause pace maker failure is certainly more than “one missed product.” Obviously you can’t fix Apple’s company, plans, or stock. But what you can do is learn from these types of mistakes. Whether you’re an app developer or a business owner, it’s important to hold true to your roots. These types of intention shifts can be seen in recent IRS lawsuits, oil price fixing schemes, and many other examples. Don’t sacrifice profits for your customers’ trust, because it never ends well.
These are some amazing observations resulting from an uncanny but (as it turned out to be) very fitting comparison.. Another important factor that leads to the decline of product quality as a company grows is the fact that, as more people join the company, and as the product line expands, it becomes more difficult to eliminate human error and guarantee the same product quality. I also suspect that these shady business practices are actually happening in most companies, but that in the case of a big organisation like Apple these problems just happened to have been uncovered and then got blown out of proportions, simply because of all the focus on them and interest in what they do. The general public loves to hear about the downfall of a big powerful company, which motivates the media to dig up what they could. Big companies are also more prone to lawsuits simply because, well, they’re more worthy of suing because the potential payout is more rewarding. I’m not trying to defend Apple at all, because as you’ve pointed out, they have done things that were not fair to consumers. Just wanted to add my 2cents. Great read!
Amy
Yeah it just snowballs. As you said when the company is larger they are more likely to amass negative media attention. Whether the news gets blown out of proportion or not, a big company will be prone to negative feedback.
The more products you create with a larger team, the more likely things are to go wrong. And when you’re like Apple and each product is important, small things count. Like when the iPhone 4’s antenna didn’t work as well when you held the phone.