AMITIAE - Sunday 24 June 2012


Crying Wolf Again: Apple Retail and the NYTimes


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By Graham K. Rogers


Apple and NYTimes


Even before I start reading a NYTimes article on Apple these days, my defences are up. I have seen a number of times in the past, the negative painting of Apple by NYTimes writers, especially when they examined (and reexamined) the Chinese operations, primed by Mike Daisey's questionable input, even though Wired had written on exactly the same subject several months before. The story of the boy who cried "wolf" is perhaps relevant here.


When I started reading this article by David Segal (who is no longer on Tim Cook's Xmas card list), I had already seen a headline (from an Apple-centric source) that suggested an air of negativity. Initially however I was hard pressed to find this. The opening paragraphs included a section comparing Apple's wages to other stores in the retail sector: the recent pay rises were mentioned too. Apple was higher than some, lower than others.

Just because it is around the same as other retailers is just not good enough for the NYTimes, even factoring in the pay scale change that was announced last week (perhaps, as Salvador Rodriguez in the LA Times suggests, to try and have the jump on the NYT).

Of course there has to be a spin. After quoting a figure for retail sales, we are told, "But most of Apple's employees enjoyed little of that wealth" which is the sort of argument one would expect from someone with an axe to grind. There are not many corporations that will share all of the take with all of the staff (this smacks of Communism), which is why the company chairman is ferried round in a big car and some staff take the bus.


I am not sure if their current beef with Apple is because the stores earn a lot of money, or Apple earns a lot, or if Tim Cook's remuneration seems disproportionate to what a member of the retail workforce takes home. That $570 million of stock options that is quoted is the current share price (initially valued at $376.2 million). Cook would only get that if he were to stay for 10 years, immediately diluting it to $57 million per year: still more than I get of course. Tim Cook's salary is $900,000 (see William Lazonick -- below -- on legislation under President Clinton).

The ten year period is because the board know how valuable he is, even if the press don't. The board wants him to stay. Results thus far suggest the board is on the right track. These results include the quarterly income and the phenomenal jump in the share price. Currently this is $582.10 (the NYTimes uses $576). When Apple announced the iPhone in 2007, the price hit $200 for the first time.

Without denigrating any of the staff in the stores, perhaps Cook gets more because he is worth a whole lot more to Apple (which took around $24 billion last quarter) as a corporate entity. Of course, the NYTimes does not seek to compare the figure (it is big and I am amazingly jealous) to other CEOs or to bankers. Let's see. . . .

According to a 2011 article from Scott DeCarlo at Forbes, the top (annual) earners are:

  • UnitedHealth Group chief Stephen J. Hemsley, with $102 million in total pay.
  • Edward A. Mueller of Qwest Communications, with $66 million;
  • Robert A. Iger of Walt Disney with $53 million;
  • George Paz of Express Scripts with $52 million; and
  • Lew Frankfort of Coach ($50 million).

Another article showing CEO compensation is available on USA Today (Matt Krantz and Barbara Hansen) who had a far wider look at CEO pay (they include Tim Cook in a more general picture) in the light of unemployment and better pay for those in work. William Lazonick on Huffington Post also has a broad look at executive compensation in the light of execs who do not perform: a political comment, it is nonetheless useful in this context.

And The Economist, in an article published only last week, fails to mention Apple at all in its look at overpaid bosses. They include Iger and Paz from the Fortune list (above) as well as Lew Frankfort of Coach, a bagmaker and Ray Irani of Occidental Petroleum, "a disappointing fourth with a paltry $47.1m". The Economist article also examined stock options, but still there was no mention of Apple.


The true reason that Apple pays so badly according to the NYTimes is that all people working in the stores are Apple fanatics and so are the customers. Therefore the staff will accept lower compensation. Then there is this leap of logic: "we find it offensive that Wal-Mart pays a single mother $9 an hour, but we don't find it offensive that Apple pays a young man $12 an hour". I can't quite get my brain round that comparison.

After a useful section outlining personal selection, training and resignations (often the pace is too much) the article brings in the early decision not to use commissions as a part of the compensation package. Yet, the article is full of information about why the mainly young staff loved working for Apple; although they were pleased when it ended and sad that there is no apparent career path (even though the article seems contradictory by including examples of promotions). I have had jobs like that: the day to day pressures and excitement are a stimulation in themselves, but when it is all over you are glad to walk away.


Go into an Apple store in the US and the next available staff member is there to help if needed. There is no pressure if you are just browsing. This has been the same for me in stores in the US and UK: I was free to look and someone was ready to answer my questions -- not push me into buying something -- at my pace. The iStudio stores here are a little different: some are understaffed and busy, while others are over staffed. In both cases it may be hard to get service, especially the quieter ones as it may be hard to draw a member of staff away from a gossip session.

There is good reason not to have a commission package. Try going into any department store in Bangkok, where the staff depend on commissions to make up their minimum wages, particularly the clothes outlets or (perhaps worse) electrical goods and car accessories. It is so bad that I only now normally buy my clothes from one outlet in a specific department store, where the staff know me and leave me alone until I want them. They know I will buy if I am happy with the product, but if I do not I will be back another day.


There are similar observations about the NYTimes article from Rene Ritchie on iMore who is disappointed with the approach here, while Matthew Panzarino on TNW is likewise unconvinced by the argument in the article.

Although the NYTimes has a job to do -- part of its job is investigative journalism -- they are more creating than investigating here: inventing a problem when there is none. The problem if it exists is not as critical as would warrant an article of several pages.

This is less investigation than opinion salted with anecdotes.


Graham K. Rogers teaches at the Faculty of Engineering, Mahidol University in Thailand. He wrote in the Bangkok Post, Database supplement on IT subjects. For the last seven years of Database he wrote a column on Apple and Macs.


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