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Wall Street (among other people) has this belief that Apple products are a temporary fad. Their argument is that at some unspecified point in the future, popula

• rorrr 14y ago
  Apple has many problems now. Android and Windows phones/tablets being a massive one. Android is now 75% of the new phones (as of Q3 of 2012), 41% of the tablet market. Google is eating Apple's lunch as we speak. Microsoft is about to take a bite of their pie as well. Another big problem is - Apple hasn't invented anything in a while. They are riding the old wave, doing only incremental changes. Their OS is super stale and is sooo far behind Android. They did increase the resolution of the tablets/phones, but they don't manufacture the screens, and so now everyone has high resolution displays. From my perspective, Apple is done, unless they come up with something new and exciting. They understand it too. That's why we see lawsuits instead of innovation.
  • arrrg 14y ago
    Does Apple need large market shares? Do they have to sell a phone to everyone? Do they even want to? Also, your line about Apple not having invented anything makes it pretty obvious that you know next to nothing about Apple’s modus operandi during the last decade. Apple does something really new every five years or so and spends the rest of the time polishing (i.e. making incremental changes). Apple was also always litigious. The lawsuits don’t have anything to do with anything. At the moment Apple’s biggest problem is that they can’t make as many iPhone 5s as the market demands. They let massive amounts of money on the table. That’s a problem, however not one that usually indicates a company being doomed.
  • crayola 14y ago
    Another element is that, unlike Google or Amazon, Apple need big margins on their products as that is their main revenue stream. They clearly never competed on price, but that position is about to get more complicated with the new Google lineup. On another note, I admire how you avoided the (too) easy plays on words here around eating / taking a bite of the apple. "Google is eating Apple's lunch as we speak." "Microsoft is about to take a bite of their pie as well."
  • rimantas 14y ago
    > Another big problem is - Apple hasn't invented > anything in a while. They don't invent, they reinvent. We got iPhone in 2007, iPad in 2010. Do you want to bring completely new product every year? What company does that? > Their OS is super stale and is sooo far behind Android. It's mature, not stale. I won't go into "sooo far behind", because we both know how it really is. > but they don't manufacture the screens, True. Does Google manufacture screens? Does Microsoft? > and so now everyone has high resolution displays. Not really true. > From my perspective, Apple is done From your perspective (applying the same criteria) Google and Microsoft are even more done.
  • dasil003 14y ago
    It seems like you're suffering from Apple expectation inflation like so many pundits. When did Apple stop innovating exactly? I mean the iPad is still less than 3 years old. It's perfectly reasonable that they would be iterating on their tremendously successful product lines. It's true that Android has caught up and has advantages in some key areas, but they are selling on such razor thin margins to compete with Apple and even with much cheaper prices it doesn't seem to be hurting Apple's sales much (more like extending into the feature-phone market). Windows tablets? Well, Windows 8 is not exactly lighting the world on fire yet, it remains to be seen what kind of traction Microsoft is going to get and how long they'll have to hammer away at it for an XBox-style success. Despite Apple looking relatively more assailable, they continue to push an impressive product line forward. It's a lot harder to invent a blockbuster new product when have a suite of computing devices that already cover the range of use cases covered by Macs, iPhones and iPads. I don't understand what people expect from Apple.
  • nicholassmith 14y ago
    Except Google isn't eating Apple's lunch. It's eating a segment of the market where Apple is less concerned about competing, if you're going to buy an Android phone it's unlikely you were going to buy an iPhone. Very few companies invent anything, they mostly work off existing concepts and bring them to market. Then make them better incrementally. A company getting ultra-high resolution laptops out to consumers? That's exciting. That'll push the state of the art forward. Everyone seems to go "They've not made any changes in the iPhone for AGES! BORING!", but they've got a pretty diverse portfolio of products that get very strong refreshes cyclically.
• andyjohnson0 14y ago
  "Their argument is that at some unspecified point in the future, popular sentiment will do a 180, and the company will fall off the face of the planet like they're the Crocs of the tech world." I think there is a lot of truth in this argument, and you didn't persuade me otherwise. Many (perhaps most?) of Apple's customers buy their products for lifestyle reasons: because they're "cool" and its fashionable to have them. Such customers are often fickle and easily influenced, and the herd can move on to the next shiny thing very quickly. If Android became the fashionable choice then it would be just as vulnerable. I'm not saying that all Apple users are fashion victims. Apple make some good products and deserve their success. If you're developing with ruby/java/etc and want a high build quality laptop running Unix then a mac is a good choice, for example, but that's not why most people buy macs. I think that Apple's near future will look like the recent past of Nokia and RIM.
  • coob 14y ago
    You're completely ignoring Apple's best in class customer support.
    • andyjohnson0 14y ago
      Maybe. I don't use Apple products, so I'm not sure how much their customer service contributes to the strength of their brand outside their hardcore/loyal customers. I'd be interested in your opinion on that. My view is that if you live within travelling distance of an Apple Store with a genius bar then the support is excellent. Otherwise, its not significantly better than Google's (poor) support, and adds little to the strength of their brand. Most people don't live near an Apple Store [1]. [1] http://en.wikipedia.org/wiki/Apple_Store#Locations http://en.wikipedia.org/wiki/Apple_Store#Locations
  • simonh 14y ago
    > I think that Apple's near future will look like the recent past of Nokia and RIM. Those companies were rendered irrelevant by radically new products they couldn't compete with. I can't see that happening to Apple. Even if Android or Windows devices achieved quality and feature parity, or even pushed past Apple's devices, Apple still have oceans of room to compete on price to retain market share. That combined with their best-in-class supply chain management would keep them competitive for years to come. So IMHO the worst case is they become just another device manufacturer in terms of profitability and their design and software chops contribute nothing to their ability to compete. That seems unlikely.
• wisty 14y ago
  As I've said before, Scott was probably pushed out because he wanted Apple to go head-to-head with Google in search and mapping. Siri is search. Maps is mapping. They are Google's strongest products, and Apple is nuts to compete. All they'll accomplish by keeping Google off the iPhone is giving Android a competitive edge, and will have to spend a huge amount to be remotely competitive. It's iWork all over again. I'm pretty sure Google wants Google Maps and Google voice search on the iPhone. I'm pretty sure Apple said no, to retaliate against Google's work on Android. (Yes, there's no turn-by-turn, but that's in Apple's own app using Google data - a Google Map app would probably have the same features as Android). The only reason Google made Android is to have more people run Google Search, and Google Maps, and click on the little blue text ads. Apple can compete with Android, as long as they don't block good apps. Having a good relationship with Google is a pretty good start. Lots of people will pay a 30% premium for an Apple desktop, despite Windows being the dominant platform. I'm pretty sure they'd pay a premium for an Apple phone / tablet, especially when iOS is the dominant mobile platform. I can't see iOS remaining as dominant as the iPod was, but I don't see it being an also-ran like OSX.
  • dasil003 14y ago
    That theory also jives with Jobs' traditional (perhaps slightly irrational) fear of being dependent on any other company after being held hostage by Adobe back in the 90s and early 00s.
  • arrrg 14y ago
    I don’t think iWork was every intended to compete with Office. It’s a different product. I take it as Apple’s insurance, showing Microsoft that they could if they wanted to, decreasing their complete dependance. Apple doesn’t want to lose Office.
• deleted 14y ago
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• danmaz74 14y ago
  Maybe, more simply, Wall Street today believes that the insanely big profits that Apple is making - and that made it the most valuable company in the world in Wall Street itself - aren't sustainable in the long run. And the bullish speculation on Apple shares that came out of the continual growth of those profits may be reversing itself.
  • dasil003 14y ago
    It wasn't really bullish speculation at that P/E.
• pedalpete 14y ago
  It doesn't have to be considered a temporary fad, I think Wall Street maybe doesn't believe that the company is continuing to uphold it's brand. Though let's be honest here, the article says that Apple didn't loose as much as the rest of the market, so that is actually somewhat positive. I had to go to the Apple store today because my iPhone broke after only 5 months (hardware button stopped working). The customer service was pretty average, and I was told to sign myself up to book an appointment with a genius. The store was fairly empty, so I kinda expected the guy I was speaking to to do it for me. I walked by all the new iPad minis, and iPhone 5s, and I'll admit, I picked up an iPad mini to see how it felt. But beyond that, I had zero interest in any of their products. Now, if you had shown me a bunch of android devices, I doubt I would have been much more interested (I have a Sony Xperia S). If you had shown me a Microsoft Surface or Nokia 920, I would probably be more interested. Of course, I'm only one data point, but Apple had a combination of cool products and apparently customer service (never really experience that myself). If people aren't intrigued and excited about the products, and if everything becomes self-serve like the grocery checkout (how many of us are excited about those monstrosities?) that is where they'll loose. It isn't about a fad, you've ALWAYS got to be improving your products, not just your bottom line.
• pja 14y ago
  There's another case to be made that Apple's income in the US is coming predominantly from a relatively affluent youthful buyer population, who in turn is getting their income from student loans. The student loan situation looks like the next iteration of the serial credit bubbles that the US government has been busy blowing ever since the dotcom collapse: no-one can say when a bubble will burst (and indeed, some things that look like bubbles turn out not to be) but if / when it does, spending on Apple kit will nosedive. It is of course possible that Apple can compensate with greater foreign sales to make up for any such drop, but if the only thing holding US M4 growth up (ie student loans) falls away I can't imagine that US imports of consumer goods will respond positively. You could argue that Apple is really a levered investment on future consumer spending: if you're bullish about the world economy, you should be even more bullish on Apple & vice versa. This is the price of Apple's huge growth: if you're small, you can grow simply by being excellent. Once you're huge, macro effects start to dominate, no matter how good your products are.
  • thewarrior 14y ago
    I'm surprised that this post dosent have more upvotes.
• pja 14y ago
  Wall Street (among other people) has this belief that Apple products are a temporary fad. I don't think Wall Street thinks (if any conglomeration of people like "Wall Street" has a single view of course!) that Apple products are a temporary fad, but rather than Apple's massive margins must be temporary. Apple has stunning margins on their products, and the history of technology is that huge margins don't last: eventually competitors come in and work out how to undercut you. Now, Apple has historically managed to maintain it's huge margins because they not only had the best products that they could sell for a premium price, they also had the most efficient supply chain in existence: look at how no one else could even make a competitor to the iPad or the MacBook Air for years and make any money at the prices Apple was charging when Apple was making a 40% margin on them! Regardless, the Street view is that 40% margins don't last forever, and the iPad mini is the first real sign of this. If you follow this line of thought, then the fact that Apple is trading at 10x today's earnings is irrelevant: if Apple have to cut their margins in half (which would still probably leave them with bigger margins than all their competitors!) then going forward that share price is 20x earnings (unless they can improve sales), which doesn't look so tempting. Of course, the Street is often wrong & Apple may maintain their margins & sales, in which case you should load up on Apple stock right now, because it's obviously significantly undervalued! Choose your poison :)
• saiphul 14y ago
  I think for a lot of Wall Street, Apple remains a loser, starting with their historical loss against Microsoft. So, this winning streak, for a lot of people, is an aberration. After all, how can someone so uncompromising with viewpoints and products be a successful company. Plus the fact that Steve Jobs has been the one associated with all the success that Apple has had. Of course, the real impact of an approach stays within organizational cultures for far longer, but then, perceptions are seldom based on facts. And this constant harking back to 'how would Jobs do this' can't be healthy for 'objective' thinking among investors.