In the wait for Apple's announcement over a fourth campus, the debate is heating up over where Apple is going. To create the out-performance the company is looking for, they'll need to pick a market that is ready to serve today and has the bones and ambition for global scale.

Apple is a 123,000-person employer that already has 6,000 people in Austin and hundreds in Arizona with its data center operations. Bloomberg, which is headquartered in New York, believes Apple's new campus will lean into the mid-Atlantic or the Northeast. 

That perspective doesn't jive with the core values of Apple CEO Tim Cook.

Here's why. Last week, Cook, who earned his business degree from Duke in 1988 and serves on the university's board of Trustees, gave the Duke commencement address. In those moments in the misty Southern heat he was raised in, he shared he's deeply shaped by his early experiences in the South. Born in Mobile, Alabama, he studied industrial engineering at Auburn. For Apple under Cook's leadership, a Southern headquarters is not just business sense, it's cultural coming of age, and perhaps even homecoming.

Cook shared,  "Whatever drives your passion, be the last to accept the notion that world you inherit cannot be improved. Be the last to accept the excuse that that's 'just how things are done here.'" Can you hear the Southerner in that? I sure can.

As for how things are done in the South, Apple can create considerable positive change. And it should.

"Steve's vision was that great ideas come from a restless refusal to accept things as they are, and those principles still guide us today," Cook shared. He called out some of the issues as he sees them, including highlighting the inequality in schools and communities. "We are not powerless in the face of these problems. You are not powerless to fix them," he urged. 

Choosing Atlanta is a double win: both business and cultural leadership

The South has 40 percent of the United States population and is the fastest growing region of the country. It's one of the reasons Atlanta ranks high on Amazon's HQ2 list. There's no doubt Apple's products and services can find more customers here. While the news outlets in Raleigh-Durham lit up after Cook's visit last week, Apple's business objectives and cultural leadership would be better served with the logistics infrastructure around Atlanta, rather than the hilly North Carolina Research Triangle. (Apple did spend $11 billion last year in research, but it was centered in California.)

How does a Southern headquarters stack for growing Apple's services core?

Apple's services business led with 23 percent growth last year. Apple harvested about $30 billion in services revenue alone--13 percent of their sales. That's more than they made on Macs ($25B) or iPads ($19B). To continue growing services, which is the mandate for the new campus, Apple will need:

  • Easy airport connectivity to its other campuses for its own team and its suppliers
  • A steady stream of diverse talent from schools like Georgia State, Georgia Tech, UGA, Mercer, Emory, SCAD, and more.
  • A transportation hub capable of supplying and scaling repairs and refurbs. With Delta and UPS headquartered in Atlanta, it's a clear logistics leader.
  • International capacity not only through air, but also overseas. The largest single container terminal in North America is Port of Savannah, which also boasts the largest concentration of import distribution centers on the East Coast.
  • Creativity--Apple's services core is fueled in part by cloud services, which are supported by music, video, gaming, AR and other digital creativity so core to Apple's unique elan.
  • A business-forward political structure ripe for becoming more progressive, as evidenced by Georgia just tapping Stacey Abrams as the first black woman governor's candidate in the country.

For these business drivers, Atlanta stands apart for Apple's fourth campus.

The international hub airport and international port create compelling long-term advantages for Apple's business, which is still 63 percent embedded in the U.S. and has considerable international expansion opportunities. Atlanta also has a better cost of living and wage base than Raleigh, Orlando and other southern capitals. The average salary in Research Triangle is $56,113, according to Payscale. In Atlanta, it's $46,440.  (I don't like it, but it's true.)

As far as other long-term drivers, Georgia's creative class leads nationally. Apple tapping those students and those artists should usher in more revenue than any other next campus could. Georgia is the number 1 place in the world to film, according to Film L.A. The Georgia movie business has a $10 billion annual impact--and that's not counting the synergistic support of Atlanta institutions like DragonCon and the related gamer scene and music scene. This leverage would help Apple grow its nascent tv production and content service business at a different cost basis than its West Coast competition.

Speaking of growing Apple's top line and bottom line both, Apple's new driverless car relationship with Volkswagen also points to the synergies of a hub in Atlanta, where Porsche North America is headquartered. Volkswagen's manufacturing headquarters in Chattanooga is a two-hour drive from Atlanta. It literally takes longer to get from Chattanooga to Nashville than it does to Atlanta, no matter who (or what) is driving.

Purpose over applause

"Fearlessness means taking the first step even if you don't know where it will take you. It means being driven by a higher purpose rather than applause. It means knowing you reveal your character when you stand apart, more than when you stand with the crowd," Cook said to last week at Duke. I'm looking forward to seeing Apple's expansion in the South as further proof the company stands apart. Choosing Atlanta would be a uniquely powerful choice in its pursuit of business excellence--and cultural relevance.

Published on: May 24, 2018