Apple is defying gravity?

Yesterday’s announcement of Apple’s fourth quarter result for 2011 was astounding to say the least. Growth from a year-ago quarter was 118%. Sales for the quarter at $46.3 Billion yielded profit of $13.1B. Wow – that profit is more than 3 times what General Electric earned in its most recent quarter. These figures blew analysts’ projections. Apple’s cash hoard is $97.6B, more than the market capitalizations of all but 52 publicly traded companies.

Today Apple’s shares are up around $450, making its market capitalization surpass Exxon Mobile. So Apple is the most valued corporation in the US and the world. This is significant as the founder and visionary leader of Apple Steve Jobs died last October. The momentum of sales continued even stronger than before. The new iPhone 4S sold briskly contributing to the total sales of 37M iPhones. Even the iPad sold 15.4 Million units. The Amazon Kindle Fire made no dent to iPad as many pundits had speculated. Now the onus is on Apple to continue keeping up with sky-high expectations.

But what a remarkable journey! Tim Cook said yesterday that they could have sold even more if they had enough supplies. He also said new products are in the pipeline later this year including new releases of iPhone and iPad. The Apple TV box for wifi link to the TV has also sold better than expected.

Just see what is happening to RIM, makers of Blackberry with their rapid market erosion forcing the  change of CEO. Also Yahoo reported decline in sales and profit as the new CEO Scott Thompson takes over and Jerry Yang finally steps down. These former market leaders can look with envy at Apple’s tremendous success – a testament to excellent product design and world-class execution by its leadership team.

Apple seems safe for a while executing its product roadmap and plans. One never knows what will happen five years from now. But they have reasons to celebrate now.

Leadership at IBM – Sam Palmisano

Sam Palmisano took over IBM’s CEO role back in 2002 from Gerstner who was brought in to restore IBM from its historic decline during the early 1990s. I was an employee of IBM for 16 years until the year 1992. I left early in 1992 and by the end of the year people were asking me how did I know that such decline was coming. My answer was that I had no idea and I really agonized over the wisdom of leaving IBM, a great company by any measure.

Palmisano went into the second phase of “value creation” and changing IBM’s course in several ways. He said that the world is instrumented, interconnected, and intelligent and hence IBM’s new solutions have to address that. Here are some of the key decisions during his tenure:

• Acquisition of Price Waterhouse Coopers in 2002 for $3.5B, injecting business solutions services for large clients
• Selling of the PC business to Lenovo for $1.75B back in 2004-2005 to get out of the consumer hardware commodity business. Again to refocus on large enterprises.
• Selling of the storage business to Hitachi, which was not yielding great profits
• Increasing the R&D budget by 20% to a whopping $6B per year, to refocus on innovation. A new research lab came up in Brazil, the ninth such lab across the globe.
• Introduction of several initiatives like Smarter Planet in 2008, Watson supercomputer last year (answering questions posed in natural language for speed, accuracy, and confidence. It trumped in the Jeopardy game against two smart humans), Corporate Services Corps to address hard issues with clients across the globe, etc.
• Cutting $8B cost to make IBM operationally trim

What were the results of such moves? Well, during his tenure, IBM’s earnings quadrupled and the  market cap went up above Microsoft last September(first time since 1996) to $214B, just behind Apple’s. So shareholders are happy and even Warren Buffet (who never buys technology stocks) bought significant chunk of IBM stock late last year.

Like a true leader in IBM’s tradition, Palmisano celebrated the 100th. birthday of a great company and reminded everyone of the basic principles of its founder Thomas Watson Senior. In October, 2011, he named Virginia Rometty as his successor as the new CEO starting this month and him serving as chairman of the board.

IBM’s sustainability as a great company is exemplary in the world.  Many of today’s high-flying valley technology companies can learn from IBM’s leadership and value system.

Information – Knowledge – Wisdom

As we usher into the new year, one thought keeps haunting me – how many hours are we spending in front of a screen, be it our smart-phone, tablets, laptop, desktop or TV? Gone are the simple joys of life – reading a book quietly, taking a walk without any distractions, or just being quiet.

The average American spends at least eight and a half hours a day in front of a screen, Nicholas Carr notes in his eye-opening book “The Shallows,” in part because the number of hours American adults spent online doubled between 2005 and 2009 (and the number of hours spent in front of a TV screen, often simultaneously, is also steadily increasing). Even more scary - The average American teenager sends or receives 75 text messages a day, though one girl in Sacramento managed to handle an average of 10,000 every 24 hours for a month.

Few years back, at a conference, the interviewer asked Eric Schmidt, then CEO of Google, “what is the first thing you do when you get up in the morning”? Pat came the reply – “check email”. What was considered cool few years back – “Always On”, seems like a real burden now. The constant barrage of emails, Tweets, Facebook, SMS, does not leave us any time to be quiet with ourselves.

I have been saying for years, “we are drowning in information, but starving for knowledge”. Above that is Wisdom and you might as well forget that one. So it is like a pyramid and at the bottom is the flood of information we are bombarded with. Filtering essential nuggets of knowledge is a monumental task. No wonder the emphasis is on business intelligence and meaningful analytics to make the information useful. Wisdom is above that which becomes our guiding light in life.

In a recent thought-provoking article in New York Times, the well known author Pico Iyer said, “In barely one generation we’ve moved from exulting in the time-saving devices that have so expanded our lives to trying to get away from them — often in order to make more time. The more ways we have to connect, the more many of us seem desperate to unplug. Like teenagers, we appear to have gone from knowing nothing about the world to knowing too much all but overnight.”

I have always used the adage – “ease of use equals ease of abuse“. The perfect example currently is the overuse or abuse of Facebook. Over-communication of trivia is happening in the name of social networking. Even in offices, productivity is affected negatively by such distractions of constant email, tweets, etc.

As Pico Iyer says, we need to get back to allocating quiet time to ourselves – set aside a chunk of hours every week with no interruptions. He comically mentions resort hotels charging a premium for rooms with no TV, no Internet, and no phones. People are willing to pay for being away from all these distractions.

I recommend highly to do meditation every day for 30 minutes, preferably in the early morning.  Yoga is another option also.

The new B2B is Back to Basics.