Over the years, the US-based technology giant Apple Inc.

(Apple) have earned the reputation for its innovative products and for its ability to create a huge amount of hype surrounding its new product launches. Experts felt that its success was, in part, due to the mystique surrounding Apple and its products which has been created by the company by maintaining a veil of secrecy. So much so, that secrecy has become one of the key elements of Apple's corporate culture. Critics contend that this aspect of Apple's culture also has a dark side. Apple imposed harsh sanctions on employees who violated rules by sharing information. Due to its obsession with secrecy, Apple sued bloggers, online journalists and former employees for disclosing confidential details about upcoming products. In 2009, the company also attracted criticism for failing to disclose vital information regarding CEO Steve Jobs' health to its shareholders. Some critics opined that this strict insistence on absolute secrecy was robbing Apple of its humanity and has also become morally and ethically untenable.

Issues:
Study how Apple maintained a culture of secrecy at the company. Understand why this culture of secrecy maintained at Apple, which supposedly gave Apple a competitive edge, have also attracted criticism for the company. Discuss whether the Apple's actions were ethical. Discuss whether there should be a change in the company's policy in this regard. The thing that that's often missed is the power of secrecy and how it turns into incredibly exciting launches at the end of the day. When you let details trickle out, people say I know about that already but if you maintain that aura of what's coming, that generates more interest from people and that's good business."1 - Bob Borchers, senior director of worldwide product marketing for the iPhone, in 2009. "Apple is one of the world's coolest companies. But there is one cool-company trend it has rejected [...] Few companies, indeed, are more secretive than Apple, or as punitive to those who dare violate the company's rules on keeping tight control over information [...] Secrecy at Apple is not just the prevailing communications strategy; it is baked into the corporate culture."2

- New York Times3, June 22, 2009

Cost of the Secrets Behind Apple's Success

In January 2010, as the US-based technology giant Apple Inc.(Apple) was believed to be days away from unveiling its tablet personal computer (PC), the company turned to its lawyers to ensure that secrecy would be maintained about what analysts believed to be its biggest product launch since 2007. Like its earlier blockbuster products, the tablet PC was developed maintaining absolute secrecy and the company had maintained a stony silence when faced with any queries about the product Apple's lawyers sent a warning letter to a website that offered money for photos and videos of the device before the product was due to be unveiled. After scores of predictions over the name of its most anticipated offering, Apple finally introduced the product as 'iPad'4 on January 27, 2010. Earlier in 2009, while Apple continued to earn kudos for its innovative products and strong business performance, it also drew criticism for maintaining a culture of secrecy at the company. Apple topped Fortune Magazine's5 "Most Admired Companies" list for the second consecutive year.6 The company was given a top rank in innovation as well as people management. On Apple's achievement, Forbes7 journalist Alyssa Abkowitz wrote, "It's been a rocky year for Apple: CEO Steve Jobs' health made headlines, and critics said Cupertino wasn't being open enough about it. But customers remained loyal to the brand that made white ear buds cool. As much of the computer industry struggled, Apple shipped 22.7 million iPods during its first quarter (up 3 percent from last year), 2.5 million Macs (up 9 percent), and 4.4 million iPhones. No wonder Apple tops our Most Admired list for the second year in a row."8...

Background Note
Apple was founded by Steve Jobs, Stephen Gary Wozniak (Wozniak), and Ronald Gerald Wayne (Wayne) on 1st April 1976. Working at Jobs' garage they designed a personal computer (PC) that was sold as Apple I. The company was incorporated as Apple Computer, Inc. on January

3, 1977...

The Mystique Surrounding Apple and its Products

Experts felt that Apple had achieved unprecedented success with its products not solely due to its technological prowess, but because of its culture that fostered innovation. It was considered the most innovative company and also topped the list of 'Most admired companies in 2008 and 2009 (Refer to Exhibit III for a list of world's most admired companies; to Exhibit IV for industry rankings of Apple; and to Exhibit V for the list of top 10 most innovative companies in the world)...

How a Culture of Secrecy was Maintained

Employees and Developers Apple placed a number of constraints on its employees and developers. The implications of not complying were severe as Apple was known to take strict action against employees who violated the company's edict on not sharing information. Employees were fired for leaking news to outsiders...

Implications
Some analysts felt that maintaining a culture of secrecy provided Apple with a competitive edge. It served as a vital component in the company's advertising strategy. Experts were of the view that Apple benefited by being secretive about its products. Withholding information about upcoming products built more anticipation and buzz and generated a lot of excitement around product launches...

Time for a Change?

Apple emerged as one of the most powerful brands in the world mainly because of its innovative products and good user experience. In order to continue being innovative and to maintain a competitive edge, Apple should leave its history of secrecy behind and become more open, experts said. The company should follow its

competitors who were increasingly taking advantage of social media tools to strengthen their brands and to connect directly with consumers...

Exhibits
Exhibit I: Apple-Product Timeline Exhibit II: Financial Summary of Apple Exhibit III: Apple Inc- Quarterly Performance: Q3 2008 - Q2 2009 Exhibit IV: World's Most Admired Companies: 2009 Exhibit V: Apple -Industry Rank: 2009 Exhibit VI: The Top 10 Most Innovative Companies: 2006 -2009