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Friday 26 August 2011

(BN) Jobs’s Departure Puts Pressure on Ive to Become Apple’s Product Visionary

Bloomberg News, sent from my iPad.

Jobs's Departure as CEO Puts Product Vision in Hands of Ive

Aug. 26 (Bloomberg) -- Steve Jobs's departure as chief executive officer this week leaves Apple Inc. without the full- time attention of its technology visionary, putting pressure on head product designer Jonathan Ive to fill that gap.

While new CEO Tim Cook comes from an operations background, Ive has been Jobs's foremost creative partner within Apple, said Eric Chan, who runs Ecco Design Inc., an industrial design firm. Ive, who goes by Jony, oversaw the exacting development that led to devices such as the iMac, iPod, iPhone and iPad.

"You need the combination of the chemistry that Jonathan and Steve have," Chan said. "They have trust and they have the kind of quality vision that you need. They push each other."

The company aims to prove it can still churn out successful products without as much oversight from Jobs, who is now serving as chairman. Ive drew inspiration from the former CEO's legendary attention to detail and aesthetic sense -- something that Cook hasn't had to demonstrate in his previous roles.

"The greatness of Apple has a lot to do with Steve's commitment to design -- the willingness to spend amounts of money on design that would be crazy to most other companies," said Robert Brunner, a former Apple design chief who hired Ive. "There's no better place to be to do great design. If Steve drops out of the picture, will Tim have the same religion?"

Close Relationship

Jobs and Ive honed a close working relationship since the British native began running Apple's design in the late 1990s.

In a typical scenario, Jobs or one of Apple's engineers would come up with a concept. Jobs would then commission Ive, 44, to come up with a variety of prototypes to turn the idea into a physical model. Since his return to Apple in 1997, Jobs frequently disappeared into the design studio Ive shares with his team of designers.

Once Jobs made his choice, Ive oversaw the painstaking development that led to Apple's computers and devices. While each process was different -- the team visited a confectioner to perfect the candy-colored enclosure on the iMac -- Ive consistently created products that were functional, reliable and melded with Apple's software.

If Jobs steps aside altogether, it raises the possibility that Ive may leave Apple as well, said Brunner, who now runs a design company called Ammunition LLC. That would make it harder for Cook to preserve the company's product vision.

Nothing to Prove

"Jony doesn't have anything else to prove at Apple, and he's made a lot of money," Brunner said.

Steve Dowling, a spokesman for Cupertino, California-based Apple, declined to comment on Ive's plans. The company has no additional personnel changes to announce, he said.

A design prodigy who won a British student award twice while attending Northumbria University in the 1980s, Ive is quiet and avoids cameras but shares Jobs's intensity for creating stylish products. His goal, he said in a 2006 speech, "is not self-expression. It's to make something that looks like it wasn't really designed at all -- because it's inevitable."

That's been the case since his college days, said Clive Grinyer, who went to school with him. Grinyer recalls visiting Ive's apartment, and being shocked to see hundreds of foam models of a single product. Each one was good enough to have been the final product, he said.

"They all looked bloody good to me," said Grinyer, who later formed a design firm with Ive called Tangerine. "He doesn't rest on his laurels. He does everything to the nth degree."

Designing Toilets

In 1992, Ive moved from projects like designing toilets at Tangerine to Apple. He no longer wanted to sell his services to clients who then refused to let him turn his ideas into reality. By the time he was put in charge of Apple's design effort in 1996, the company was struggling and he once again was spending much of his time lobbying executives for resources, said former Apple designer Thomas Meyerhoffer.

That changed when Jobs returned to the helm in 1997. He needed the yet-to-be-released iMac to be a hit. To make sure it stood out, Jobs approved Ive's plan to use a candy-colored translucent plastic enclosure -- a major expense given rapidly falling prices for computers at the time.

In the years since, Ive and his team have achieved rarified status at Apple. They do their work in a lab deep within Apple's Infinite Loop campus. Filled with expensive prototyping equipment -- often with music playing -- the room is locked off from all but the highest-ranking executives. While industrial design is seen as cost to be minimized at many companies, Ive has latitude to specify features that require his team and Apple's hardware engineers to create new production techniques.

'Antennagate'

Often they work well, as with the unibody design that helps make Apple's laptops thinner. On some occasions, Jobs has demanded things that Ive's team can't execute perfectly, as occurred when Apple designed the antenna of the iPhone 4 into the bezel of the device. Some consumers complained of dropped calls when they held the bezel in certain ways, setting off an imbroglio known as "Antennagate."

Apple's approach to design goes beyond cosmetics. Ive is known to travel to Asia for weeks, studying intricacies of metal-bending equipment, Meyerhoffer said. The result is that Apple's products have unique shapes, textures and thinness. The solid feel of products such as the iPhone is due in part to Ive's insistence on miniscule tolerances -- the tiny gaps around each part and screw in a product.

Choosing Your Victories

Like Jobs, he is private, living a low-key existence with his wife, a historian he's known since childhood. While he matches Jobs's passion for products, he's not widely regarded as a CEO candidate. Ive lacks operations, marketing and sales skills, something he doesn't regret, he said in the 2006 speech.

"Victories from your ability to sell are very short-lived," Ive said. "Victories from things you've really worked hard at can have a lasting impact."

The question now is whether Cook will make design as high a priority as in the past, said Meyerhoffer, who is head of his own firm in Montara, California.

Cook -- who has spent 13 years at Apple, six of them as chief operating officer -- reassured employees in a memo yesterday that "Apple is not going to change."

"I cherish and celebrate Apple's unique principles and values," he said in the memo. "Steve built a company and culture that is unlike any other in the world and we are going to stay true to that -- it is in our DNA."

Still, Cook is a spreadsheet junkie and operations wonk, who may be more likely to pinch pennies on a new iPad enclosure or iPhone, Meyerhoffer said.

"Even a subtle shift might unsettle the balance," he said.

To contact the reporter on this story: Peter Burrows in San Francisco at pburrows@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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Best Regards,
Christopher Tahir

Sent from my iPad

PS. Please forgive me for any mis-typing in the e-mail...:)

(BN) Bernanke Scholar Advises Bernanke Fed Chief to be Bold on Monetary Policy

Bloomberg News, sent from my iPad.

Bernanke Scholar Advises Bernanke Fed Chief to Be Bold on Policy

Aug. 26 (Bloomberg) -- Advice from Ben S. Bernanke, scholar, to Ben S. Bernanke, Federal Reserve chairman: Be bold.

As a Princeton economics professor from 1985 to 2002 and a Fed governor from 2002 to 2005, Bernanke -- a student of the Great Depression and Japan's lost decade -- faulted central bankers for failing to act aggressively in both cases to provide credit and weed out sickly financial institutions as they tried to rescue their economies and combat deflation.

Bernanke admonished Japanese officials for their unwillingness "to experiment, to try anything that isn't absolutely guaranteed," in a 1999 paper on their monetary policy. "Perhaps it's time for some Rooseveltian resolve," he urged, referring to U.S. President Franklin Roosevelt's sometimes unpopular efforts to push through Congress fiscal and social programs to pull America out of its worst slump.

Such conclusions from Bernanke's scholarly research have shaped the 57-year-old Augusta, Georgia, native's strategies for fighting the 2007-2009 U.S. recession and financial crisis, both the worst since the 1930s, and trying to rejuvenate the sputtering recovery.

He has used the Fed's powers to go where no U.S. central bank chairmen, including Alan Greenspan and Paul Volcker, have gone before: providing emergency loans to investment firms, bolstering money-market mutual funds and making sure companies had access to commercial paper -- short-term financing businesses use to pay for supplies and salaries.

"He is, by far, the most activist chairman we've seen in modern history," said former Fed Governor Lyle Gramley. "No other chairman has had a crisis of this magnitude to deal with, other than the people running the Fed in the late 1920s and in the 1930s, and they didn't do a good job."

Bolster Growth

With five of the nine economists on the academic panel that dates U.S. recessions saying the odds of a new slump are rising, investors and Americans are looking to Bernanke's speech today at a central bank symposium in Jackson Hole, Wyoming, for clues about his next move to bolster growth.

Lynn Reaser, chief economist at Point Loma Nazarene University in San Diego, California, and a former chief economist for the Bank of America Investment Strategies Group, predicts Bernanke will open the door wider to a third round of government-bond buying if the another recession seems imminent.

Last year, faced with a steadily weakening economy and 9.6 percent unemployment, Bernanke used his Jackson Hole presentation to signal that the Fed would embark on a second round of bond purchases to spur expansion and head off deflation.

Rising Prices

While it's difficult to tell whether the program, which included $600 billion in assets, helped the recovery, inflation expectations are higher now. The cost of living accelerated at an annual pace of 1.8 percent in July, excluding volatile food and energy costs. The gain was the largest in more than a year, according to Labor Department data.

Bernanke's strategies have been driven by his work in academia, where he's spent most of his professional life. Before Princeton in New Jersey, he taught at Stanford University in California, New York University and the Massachusetts Institute of Technology in Cambridge, where he earned a doctorate in economics after graduating from Harvard University.

He served as chairman of the President's Council of Economic Advisers from 2005 to 2006, when he became Fed chairman; he started a second four-year term in 2010.

'Doing Too Much'

"His thinking is informed deeply by his scholarly works," said economist Matthew Slaughter, associate dean of Dartmouth's Tuck School of Business in Hanover, New Hampshire, who worked with Bernanke on the economic-advisers council under President George W. Bush. "He'd rather err on the side of doing too much, rather than too little, when dealing with the fallout from a financial crisis."

Trying to avert a second Great Depression in 2008, Bernanke has said he was determined not to repeat the mistakes of Fed policy makers during the 1930s.

"Probably our most important finding is the confirmation of the view that monetary forces played an important role in the world Depression in both its early and later stages," Bernanke wrote in a 1999 paper about the crisis. Even though the central bank's actions were "generally expansionary" after 1931, they were "insufficient to counter the powerful deflationary forces that previous policy mistakes had unleashed," he wrote.

The initial responses from the Fed and President Herbert Hoover's administration "ran the gamut from passivity to timidity," Bernanke said in an April 8, 2010, speech in Washington. They erred by failing to act aggressively to prevent a wave of bank collapses, sever the link between the U.S. dollar and gold, and provide credit to stabilize the financial system, he wrote in essays on the era.

Crippled Recovery

Then, in late 1936 and 1937, the Fed tightened credit too soon and Roosevelt's administration made a mistake by tightening fiscal policy too soon, according to Bernanke, who blamed the actions for crippling the nascent recovery. The country fell back into a recession in 1937.

All this taught Bernanke that "policy makers must respond forcefully, creatively and decisively" and "crises that are international in scope require an international response," he said in the April speech. He's applied what he learned in engaging with his Fed colleagues in "what I call blue-sky thinking, generating many ideas," he said.

Besides developing special lending programs aimed at breaking through credit clogs, Bernanke has taken other unprecedented steps. He slashed the Fed's benchmark interest rate from 5.25 percent in early August 2007 to a near-zero record low in December 2008, where it remains.

Stress Tests

He forced the nation's biggest banks to undergo "stress tests" to see how they would hold up if the economy weakened. And the Fed, for the first time, bought mortgage securities in addition to government debt in a bid to revive the crippled housing market and spur Americans to spend more.

"Bernanke's studies of the Great Depression taught him that it is better to jump in with both feet and take action," Gramley said. "If he let the crisis spread and feed on itself, we would have gone down the tubes."

After the Fed embarked on its $600 billion bond-purchase program in November, Bernanke called on Congress and President Barack Obama to follow up with more fiscal stimulus. They did: A stimulus package, including a payroll-tax cut, was enacted in late December.

His call echoed similar advice he gave to Japan as a Fed governor in 2003, when the world's third largest economy was struggling with deflation and a stagnant economy.

'Greater Cooperation'

"One possible approach to ending deflation in Japan would be greater cooperation for a limited time between the monetary authorities and the fiscal authorities," he said. "The Bank of Japan should consider increasing still further its purchases of government debt, preferably in explicit conjunction with a program of tax cuts or other fiscal stimulus," he said.

In his 1999 paper, Bernanke had chided Japan for not acting aggressively to fight deflation and revive its economy, saying its monetary policy "seems to be suffering from a self-induced paralysis."

He urged the central bank to hold interest rates low until inflation picked up, buy government bonds to bolster the economy since interest rates were already at zero, and consider adopting an explicit inflation target in the 3 percent to 4 percent range and maintain it for "a number of years." A commitment to keep rates at zero at least until deflationary concerns subsided was "a problem" because of "its vagueness," he said, urging the central bank to link its pledge to achieving the inflation target.

'Honest Dialogue'

"I do not see how credibility can be harmed by straightforward, honest dialogue between policy makers and the public," Bernanke said.

He followed his own advice on Aug. 9, when he and a majority of his colleagues said they would keep the Fed's target for the rate on overnight loans among banks at a record low at least into mid-2013. It was the first time the Fed had made such an explicit time pledge.

Although Bernanke's unconventional measures have earned him recognition, including as Time magazine's Person of the Year in 2009, they haven't shielded him from criticism.

Lawmakers including Senate Minority Leader Mitch McConnell, a Republican from Kentucky, and House Majority Leader John Boehner of Ohio, have blasted Bernanke for the second round of asset purchases, saying it could lead to dangerously higher inflation and ignite a wave of speculative buying that could feed another asset bubble.

Bold Action

Other Fed chairmen also have been criticized for bold action. Volcker in the early 1980s pushed interest rates to a record 20 percent to target inflation above 13 percent. While prices eventually dropped, the economy fell into a 16-month recession in July 1981 after emerging from a six-month slump in July 1980.

Greenspan, after the 2001 recession, slashed the Fed's benchmark interest rate to 1 percent in late June 2003, the lowest since 1958, and held it there for a year in a bid to fend off what he called a remote chance of deflation. Critics blame him for inflating the housing bubble that burst in 2007 and thrusting the economy into recession by holding interest rates too low for too long.

Even so, Bernanke has presided over even more economic upheaval.

"Bernanke walked into a hurricane and became the most activist chairman of the Fed," said economic historian and author John Steele Gordon, whose books include "The Great Game: The Emergence of Wall Street as a World Power." History "will judge whether his policies worked."

To contact the reporter on this story: Jeannine Aversa in Washington at javersa@bloomberg.net

To contact the editor responsible for this story: Chris Wellisz at cwellisz@bloomberg.net

Find out more about Bloomberg for iPad: http://m.bloomberg.com/ipad/


Best Regards,
Christopher Tahir

Sent from my iPad

PS. Please forgive me for any mis-typing in the e-mail...:)