Apple’s massive Campus 2: ‘Mothership’ or ‘Death Star?’

“While much of corporate America is retrenching on the real estate front, the four most influential technology companies in America are each planning headquarters that could win a Pritzker Architecture Prize for hubris,” Bill Rigby and Alistair Barr report for Reuters. “Amazon.com last week revealed plans for three verdant bubbles in downtown Seattle, joining Apple’s circular “spaceship,” Facebook’s Frank Gehry-designed open-office complex and a new Googleplex on the list of planned trophy offices.”

“Historically, however, when a company becomes preoccupied with the grandeur of its premises, it often signals a high point in its fortunes. These fantastical buildings may end up as little more than costly monuments to vanity and a loss of focus on the core business that made for success in the first place,” Rigby and Barr report. “‘I’ve been thinking the Apple spaceship is going to get nicknamed the ‘Death Star’ because the project is so big and the timing is so bad,’ said hedge fund manager Jeff Matthews of Ram Partners. The building is coming to fruition just as Apple’s product cycles may be maturing, he explained. ‘It is such a classic contrary indicator that you just get the shakes.’ He no longer holds Apple stock.”

MacDailyNews Take: His and his clients’ loss. Trying to convince yourself that you made the right stock move in a Reuters article is sad. iPhone was released 5 years, 7 months, and 19 days after iPod. iPad was released 2 years, 9 months, and 5 days after iPhone. Tim Cook has been Apple CEO for 1 year, 9 months, and 6 days.

“Walter Price, who runs technology investment funds at RCM Capital Management LLC, shares the outlook: ‘When companies build big headquarters it’s usually when they’re doing really well and have strong outlooks, and that often coincides with a peak in their stock,'” Rigby and Barr report that, of the four companies, “Apple has the most ambitious idea, a 2.8 million square foot glass ring on 176 acres. It would be in part a monument to former Chief Executive Steve Jobs, who described it as like a spaceship and was closely involved in the plans before he died in 2011. The project, which could cost up to $5 billion according to reports, would house about 12,000 Apple employees.”

Read more in the full article here.

26 Comments

  1. Love the MDN take. Once again, reality trumps fantasy. Patience young children, the candy is coming, your crying and blubbering won’t make anything happen faster.

    1. What reality? Are you ignoring the price tag attached to these ridiculous corporate edifices?

      Time of official CEO tenure is irrelevant, anybody knows that a primary duty of the CEO is to maximize long-term value to investor, employee, and community. None of these buildings achieve that — and in fact they may reduce productivity of the poor employees that have to work in such asinine environs. I for one don’t see the point of making Apple employees walk around in circles in order to collaborate.

      1. Apple will save money and streamline its operationin the long run by bringing all its core staff under one roof rather than scattering them all over Cupertino plus, judging by the plans, it will almost be energy self-sufficient. If you truly believe what you write, I feel sorry for you.

        =:~)

        1. Get back to me after you’ve double checked the price tag for the oversized aerobie.

          Oh, OK, i’ll do the work for you: Apple’s folly is on the order of $5 billion — more than $1500 per square foot.

          Any graduate of Business 101 should be able to build office space for less than 1/3 of that, even in Silicon Valley.

            1. The point is any company willing to waste money on building a new corporate behemoth is just as likely to waste money on other fruitless misadventures.

    1. Gosh, when you listen to these pundits, you would think Steve Jobs was introducing a new, disruptive, insanely great product ever 6-9 months. What’s the matter with their memories? My diagnosis, Ego Inflated Reality Disorder.

  2. ’cause, you know that Pixar campus is just sitting there gathering dust right now.

    The Pixar campus was a strategic asset instrumental to their move from one film every 24 months, to then every 18 months, and now Avery 12-14 months. It was a smart buy that helped fundamentally enhance their capacity to deliver the future.

    Apple’s new campus will be no different.

  3. The reality is that it is true that many great companies built monuments to themselves when they should have kept their eyes on their primary business. And they paid a big price for this. Not to say this is the case here but history has a habit of repeating itself. I’d prefer they spend the 5 billion on the core business and not fancy office space that most likely will not contribute directly to the bottom line.

    1. I worked at Apple before, during and after the building of the current headquarters at 1 Infinite Loop. The synergy present when all the engineers are in the same location is amazing. When you’re having to either drive because buildings are far apart or walk across busy streets (De Anza Blvd) truly impacts both the speed of collaboration and the quality of it. When 1 Infinite Loop opened it was amazing, and I would argue coincides with amazing stuff coming out of Apple. As the company succeeded and grew and hired more, more and more functions got pushed away from 1 Infinite Loop to make space for more and more engineers. Apple is beyond that capacity now and needs to build the new, larger space to recapture that synergy that has been getting lost with the tremendous growth.

      I think it’s fair to debate the merits of what has become $5B for 12K employees, but it’s hard to ignore what 1 Infinite Loop did to the bottom line.

    2. A factory is where the magic happens in an industrial company, and a mine is for a resource extraction company, the studio for a media company, etc.

      For a company like Apple, their campus is the glue that holds together their diverse teams and facilitates the many complex interactions between team members. It’s not an office building, it’s a reactor vessel for ideas, and an a craftsman’s workshop for executing them. Nothing could be more core to Apple’s business.

    3. Apple is accumulating reserve cash at the rate of $8 billion every quarter, so I’d hardly think Apple is overextending itself with a $5 billion building. I don’t know the usual costs of new headquarters, but Apple certainly has enough cash to build a number of them. I don’t see why everyone is getting bent out of shape because Apple is spending some of it’s money. It should be very useful to have more employees under one roof working in a pleasant environment. I think that no matter what Apple does, the company will meet with criticism. No one seems to be making that big a stink about Amazon’s headquarter’s plans and Amazon doesn’t have nearly the cash or profits Apple has.

      Apple has been using its present headquarters for quite a number of years and it’s certainly time to expand if Apple intends to keep growing. I don’t understand what the main beef about the new headquarters are. Is it because they think it cost too much money or because they’re saying Apple is a dying company and has no need for new headquarters to house more employees?

      As a shareholder knowing that Apple has has a growing cash pile of $140 billion or so, I have no reason to get the shakes, not even for his classic superstitious reasons. I think that dude is just being overly dramatic, especially since he doesn’t even hold Apple. Every great empire has fallen at one time or another, but possibly for different reasons. I doubt building structures had anything to do with those falls.

  4. “While much of corporate America is retrenching on the real estate front”

    Back when the dot com bubble burst and companies were laying off folks and backing out of projects Apple, in the words of the execs of the time, “invested through the downturn.” They gave that reason as one of the factors in the slingshot Apple experienced ultimately leading up to the Post-PC era. That would suggest that it’s quite natural for Apple to:
    – Build when everyone else is “retrenching” and
    – Buy back stock when everyone is selling (for a loss, real or strategic)

  5. “[Apple is trying to win the] Pritzker Architecture Prize for hubris.”

    Like Abraham Lincoln once said, “It’s better to be thought a fool than open your mouth and remove all doubt.”

    Sincw the time of the Incas, Mayans, Egyptians, and (finally) the Romans, civilizations have built awe-inspiring structures. They cultivate greatness.

  6. I prefer Apple maintaining the same digs in Curpertino, but building an Area 51-type facility secreted in the desert patrolled by roving iKill autonomous robots, surveyed by aerial iDrones, and scanned by thousands of motion and infrared detectors.

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