I Thought They Were Smart?

After including them in my list of things I was thankful for just last week, Apple has let me down twice in the past few days.  One was somewhat insignificant, but the other is something that could impact the company for the next generation.  Both surprised me as my opinion of Apple is very high.  They seem to be a forward thinking company, always on the cutting edge of technology and very focused on the customer experience.  In these two cases, I find them to be not so forward thinking and certainly not focused on the customer. First, the barely significant.  I bought a MacBook Air laptop last week.  However, when I saw late Friday that it was marked down $100 for Black Friday, I immediately called Apple and asked them to credit me the difference.  Should have been easy, right?

The person I spoke to told me that they didn't keep records like this at the corporate office, only locally, and couldn't help me.  I explained to him that the receipt had been emailed to me and that I was sure a company like Apple had all sorts of records they could access.  Clearly, he was just trying to get rid of me.  When I explained that the $100 was worth the effort to return the one I had purchased and buy a new one online that evening (with free shipping), he still couldn't help me.  I then asked to speak to a supervisor.  The supervisor didn't want to help me either so I ordered the same laptop online and returned the original to the store for a full refund.  They could have solved this issue with a simple credit or even throwing in a $100 iTunes gift card.

I don't blame the people I spoke to on the phone.  It reminded me of a negotiating concept my father taught me years ago to never negotiate with someone who isn't authorized to make or influence a decision.  The people on the phone simply weren't empowered and this disappointed me; I thought Apple's customer service would have been better.

What surprised me more than the disappointing customer service was reading about Apple's plans for a new headquarters building.  Apple is planning a new 2.8m sf headquarters building shaped like a space ship in Cupertino, California.  The building will house over 14,000 employees and will feature a strong amenity package including underground/structured parking, and its own power plant.  Each pane of glass needs to be custom as they will all be curved to accommodate the design.  And it will be very green.  The site will have generous landscaping and will be designed to provide for 80% of the site to be greenery.

Screen Shot 2011-08-13 at 12.10.47 PM

Screen Shot 2011-08-13 at 12.10.47 PM

Apple accumulated 175 acres for a cost of approximately $300m and the planned building is expected to cost in excess of $500m.  Personally, I think the $500m is low, but let's assume that's the case.  I know they have the money, and I know it's going to be a very cool and amazingly gorgeous building, but is $800m on a new headquarters a smart investment?  I don't think so.

I looked to see who sits on Apple's board of directors.  Not one real estate person.  With an investment of this size, you would hope that they brought in some outside expertise that didn't have a vested interest in the size and scope of the project (i.e. not an architect who could potentially design the building).  In a previous blog post, I was critical of George Lucas for a building that LucasFilms was building in Asia shaped like a Sandcrawler.  I will use the same argument here.  If Apple's needs change, what do they do with this building?

With so many tenants valuing flexibility, this is the least flexible solution they could have come up with.  With the passing of Steve Jobs, the company could change directions, but this headquarters building locks them in to a footprint that they simply can't change.  If they invent the next "big thing" - iPod changed the way we listen to music, iTunes changed the way we purchase our content, the iPhone set the bar for mobile devices, and the iPad is just scratching the surface of its highest and best uses - where would those people work?  If they decide to sell off iTunes because they didn't want to be in the content business, who would work in those vacated seats?

You get my point.  If it was my decision to make, I would build a campus with 20 buildings.  If a division was sold, the building could go with it.  If the acquiring company didn't want to be in the Apple campus, I am sure there are Apple vendors who would gladly lease the space.  If they needed more space, they could simply add to the campus.  When space becomes obsolete, new buildings could be built and the older buildings renovated or knocked down.  Again, this is all about creating flexibility to accommodate changes to the way we work, as well as the unforseen.

And shouldn't the town encourage them in a different direction?  I am sure they are excited about the tax revenue, and the mayor was even quoted as saying, "There's no way we are saying no," but what happens when they leave?  We have seen several examples here in New Jersey with large facilities that sit vacant for years waiting for redevelopment.

I thought Apple was pretty smart.  That said, after the customer service issue I had and their plans for the new headquarters, I don't think I will be buying any Apple stock any time soon.  It's probably my loss, and they are probably smarter than I am, but time will tell.

JN