Job creation, innovation and the Apple iPad

It was a speech much-awaited, driving speculation and controversy before it even started.  No, not Steve Jobs in San Francisco but Barack Obama in Washington.

It has been a bad few weeks for the US President.  More than one in 10 Americans is unemployed and Obama has used up much of the goodwill that catapulted him into office on a controversial health reform program.  His first State of the Union address was hoped to put some fire back into the US economy.

From the World Economic Forum meeting in Davos, to Washington, to Pretoria, job creation – and the means to bring it about – is frustrating the politicians who made so many promises about delivering them.

Governments are spending billions of dollars on make-work programs.  Tax relief to companies who offer new jobs abound.  Banks are threatened with defenestration unless they start lending to small businesses.  Everywhere the frustration and exhaustion of ordinary people is testing their patience while waiting on others to create those jobs.

Job creation relies as much on market sentiment as does the conditions of any stock exchange.  If ordinary people are happy, positive and excited, then they are more exuberant in their spending habits.  Stock prices rise. Tills ring in cacophonous symphony as shoppers throng.

This doesn’t mean people double their spending.  Bull runs are set on the margin.  If you cut your spending by 5% then that is spread over a wide range of businesses. 

A factory that produces 5% fewer goods may close down entire production lines.  A retailer that sells 5% fewer goods may close down marginal stores to preserve their cash flow.  All of that translates into empty restaurants, shuttered stores, and a hollowing out as big retailers and manufacturers shed staff.

Sadly, this creates a negative feedback loop which further depresses individual behaviour.  None of this is helped by panicky demands from politicians that banks and big businesses make something happen.

What exactly?

This state of despair goes some way to explaining the almost religious mania which swept up even the most impious of shoppers as Steve Jobs rose to speak at the Yerba Buena Centre for the Arts in San Francisco on 27 January.

Since the relaunch of Apple in 1998, and their non-stop run of hit products that started with the release of the now ubiquitous iPod music player in 2001, Apple’s media events have had the capacity to enthral like no other consumer events.  And with good reason.

220 million iPods have been sold since October 2001.  6 billion songs have been sold.  34 million iPhones have been bought since 2007 and over a billion software applications have been downloaded onto these phones.

The spin-offs to such a successful basket of products are there in the numbers.  All of these millions of devices had to be made, employing millions of factory-workers, distributors, designers and engineers.  Hundreds of thousands of musicians and programmers have benefited from sales of their products to a hungry and devoted Apple fan-base.

Innovation that results in the sale of shiny new things is where the foot meets the accelerator; the place where job creation happens.

And so there are tremendous expectations around the release of a small, tablet computer called the iPad.  Steve Jobs claim it is “a third category of devices.”  The third category, as far as I’m concerned, is a pen and paper.  It is what I use when I am between my smart phone and my computer.  It is a flexible, rapid and highly customisable tool.  And the iPad is not.  It is a proprietary and expensive media player.  It is a toy, not a tool.

I’m sure that Apple’s fans will love it.  But it will not revolutionise consumer electronics and work the way the iPhone did.

Job creation is going to have to wait on another hero.  Pity for all of us.