Apple's Environmental Alchemy


Five iPhone generations ago, Apple (NAS: AAPL) rewrote the book on smartphones. Now, every phone maker studies that book (some with more success than others). Next came Apple's iPad, which redrew the plans for what a truly portable computer could be. That design spawned the tablet computer industry with many Johnny-come-lately imitators.

Before the iPhone and iPad, of course, came the iPod, the iMac, and the original Macintosh, the all-in-one computer that incorporated a graphical user interface using a mouse for navigating the screen. The GUI/mouse technology wasn't invented by Apple, but it did popularize the concept by copying it from Xerox (NYS: XRX) before Microsoft (NAS: MSFT) could use it for the Windows OS.

So, I think its fair to say that Steve Job's vision and single-minded attention to detail, combined with Apple's adroit engineering and superb marketing campaigns have all thrust Apple into the forefront of the technological world. And I don't think its unfair to say the investing world has bowed down to Apple's success, making it one of the most profitable companies on the planet.

The view from Mt. Cupertino
Apple wields an enormous amount of power. It can have companies begging to produce its products, and the pricing power Apple has over mobile carriers is almost complete.

It also has quite a bit of power over the media. New Apple product launches throw a long shadow, with journalistic coverage eclipsing all other tech world events. And when Apple reports its earnings only rose 30%, say, rather than the 35% analysts anticipated, reams are written about the company's perceived missteps.

Apple also has, it seems, the mythical power to turn dross into gold. I am referring to the environmental brouhaha unleashed by its introduction of the Retina MacBook Pro. This upscale laptop debuted last summer to oohs and ahhs over its stunning display, one with four times the resolution of the older MacBook Pro.

It also stunned by failing to get a "Gold" rating from EPEAT, the Electronic Product Environmental Assessment Tool registry. A Gold rating indicates a product is environmentally friendly, according to the standards of EPEAT.

The Retina MacBook Pro failed because it was not "upgradeable with commonly available tools," including having the external enclosures "easily removable by one person," and was not able to have its "Hard disk, digital versatile disc (DVD), floppy [or] memory and cards ... changed or extended."

Instead, the Retina MacBook Pro, according to Kyle Wiens of iFixit, writing in Wired, "a product assembled with proprietary screws, glued-in hazardous batteries, non-upgradeable memory and storage, and several large, difficult-to-remove circuit boards would fail" the tests for environmental friendliness.

At first, Apple did not react like a company that has characterized itself publicly as environmentally conscious. In 2009 it toute the removing of PVC, brominated flame retardants, and arsenic from its new desktop products. The company emphasized that those products were rated EPEAT Gold.

This time, however, Apple made it clear it didn't care about EPEAT's Gold rating when it withdrew 39 of its products from the EPEAT registry. That action drew an immediate response from the City of San Francisco's Department of Environment, which declared purchases of Apple products by city agencies would "no longer qualify" for city funds.

"A" stands for alchemy
Funny thing, though, after San Francisco's Apple embargo, and after noting that 88% of all desktop computers, laptops, and monitors that the federal government bought in 2008 were EPEAT-registered, Apple had a change of heart. Bob Mansfield, Apple's VP of Hardware Engineering, put an open letter on Apple's website.

In part, it reads:

We've recently heard from many loyal Apple customers who were disappointed to learn that we had removed our products from the EPEAT rating system. I recognize that this was a mistake. Starting today, all eligible Apple products are back on EPEAT.

Give a point to the environment, right? Nope.

Apple did manage to get an EPEAT Gold rating for the Retina MacBook Pro, but not in a way that makes that computer one bit more environmentally friendly. Instead of complying with the standards that EPEAT set forth, Apple managed to get EPEAT to reinterpret (or, as EPEAT presents it, clarify) its standards to meet that laptop's specs. Just like that, the Retina MacBook Pro turned Gold!

In the words of Apple's Bob Mansfield, "Our relationship with EPEAT has become stronger as a result of this experience."

It certainly seems that way.

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Fool contributor Dan Radovsky holds no position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Apple and Microsoft. The Fool has stock on Apple. Motley Fool newsletter services have recommended buying shares of Apple. Motley Fool newsletter services have recommended creating a synthetic covered call position in Microsoft. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. The Motley Fool has a disclosure policy.
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