It has also made some strategic missteps - the word mistake should always be used carefully when referring to this company - as the following article explains. But just as its meteoric rise may have overstated both its importance and its growth prospects, so its precipitous decline may have overstated its problems.
Two things happen to iconic companies: they become the repositories for an entire cultures' hopes, dreams and fantasies. And the Law of Big Numbers catches up with them. By which we mean that it becomes harder and harder to meet the financial expectations of those who invest in such stocks. The reason being that the performance required to provide the kind of upward trajectory that the entitled demand become, at some point, unattainable. Unless, of course, legions of eager consumers are found on Planet Xercon in the 25th Galaxy beyond this one.
The reality is that the company continues to post numbers that are the envy of most others in any sector. It's products remain iconic and its reputation is relatively unsullied. But it is not perfect. It may well be arrogant, it may not learn well from others, the go-it-alone strategy to which Steve Jobs clung may no longer be realistic - and his departure may well have created unseen management problems (for instance, some reports suggest that the design team under Jon Ive, without Jobs to rein them in, may be responsible for recent manufacturing snafus by insisting on product features that are too difficult to produce - an historic sore in many corporations but one that had not been heard much about at Apple until recently).
All of that said, this is a time of transition, and those predicting either imminent decline or untrammeled growth might benefit from a self-imposed period of contemplation. JL
Kontra comments in Counternotions:
It’s hard to like Apple. To the dismay of conventional thinkers everywhere, the fruit company sambas to its own tune: makes the wrong products, at the wrong prices, for the wrong markets, at the wrong time. And, infuriatingly, wins.Some of Apple’s ill-advised moves are well known. When other PC companies were shuttering their retail stores, Apple opened dozens in the most expensive locales. During the post-dotcom crash, instead of layoffs, Apple spent millions to hire and boost R&D. To the “Show us a $500 netbook, now!” amen corner Apple gave the un-netbook iPad, not at $999 but $499. The App Store and iTunes are still not open. Google hasn’t been given the keys to iOS devices yet…Clearly, this is a company that hasn’t learned the market-share-über-alles lesson from the Wintel era and is repeating the same mistakes, again. Like these:
• Media company — The slick design of Apple gadgets wouldn’t be nearly enough if it weren’t for the fact that Apple has quietly become the world’s biggest digital content purveyor. The availability of a vast library of media, coupled with the ease of purchase and the lock-in effect these purchases create, could easily tempt a lesser outfit to fashionably declare itself a “media company”. After all, Macromedia tried that with its AtomFilms purchase in 2000. Real and Yahoo dabbled in various forms media creation, acquisition and distribution. Microsoft fancied itself a part-media company with investments in publishing (Slate) and cable (MSNBC, Comcast). Amazon has several imprints of its own. Netflix is now an episodic TV producer. Google is investing hundreds of millions in original material for YouTube. Apple, on the other hand, has always resisted creating and owning content, because…
• Indies — … Apple plays for the fat middle part of the bell curve. Once a bit player in computers and consumer electronics, Apple’s now a giant. Whether it’s music, TV shows, movies or ebooks, Apple targets the mainstream, and the mainstream demands the availability of mainstream content from top labels, studios and publishers. It’s very tempting to urge Apple to sign deals right and left with independent producers in entertainment and publishing, to bypass traditional gatekeepers and ‘disrupt’ their respective industries, on the cheap. Unfortunately, beyond modest promotional efforts with indies, it doesn’t look like Apple’s likely to upset the mainstream cart from which it makes so much money.
• Multitasking — ”One device. One account. One app. One window. One task.” seems to be Apple’s current approach to Post-PC computing. If iPads are going to cannibalize PCs in the workplace or schools, iOS workflow patterns will have to evolve. Bringing multiple user accounts to the same device, showing two windows from two different apps in the same view with interaction between the two or letting all/most apps work in the background would necessitate quite a bit of user re-education in the iOS camp. It’s not clear for how long Apple can afford not to provide such functionalities.
• PDF replacement — Apple’s tumultuous love affair with PDF goes back nearly 25 years to Display PostScript during its NeXT prequel. PDF may now be “native” to Mac OS X and the closest format of exchange for visual fidelity, but it’s become slow, fat, cumbersome and not well integrated with HTML, the lingua franca of the web. While PDF is too entrenched for the print world, ePub 3.0 seems to be emerging as an alternative standard for interactive media publishing. Apple does support it, even with Apple-created extensions, but composing and publishing polished ePub material is still a maddeningly complex, hit-and-miss affair. iBooks Author is a great start, but its most promising output is iTunes-only. If Apple has big ideas in this space, it’s not obvious from its available tools or investments.
• HTML 5 tools — While iBooks Author makes composing app-like interactive content possible without having to use Xcode, Apple has no comparable semi-professional caliber tool for creating web sites/apps for the browser. Apple has resisted offering anything like a Hypercard-level tool for HTML that sits in between the immense but disjointed JavaScript/CSS open ecosystem and the powerful but hard-to-master Xcode. It has killed iWeb and still keeps iAd Producer mostly out of sight. Clearly, Apple doesn’t want more apps but more unique apps to showcase the App Store. HTML isn’t much of a differentiator there and until the ROI in HTML 5 vs. native apps becomes clearer to Apple, such tools are unlikely to arrive anytime soon.
• Discovery tools — Yes, Apple has Genius, but that’s a blackbox. Genius is simple and operates in the background silently. It doesn’t have a visual interface like Spotify, Aweditorium, Music Hunter, Pocket Hipster, Groovebug or Discovr Music, allowing users to actively move around a musical topology visually, aided by various social network inputs. With its Ping attempt and Twitter and Facebook tie-ups, Apple has shown it’s at least interested in the social angle, but a more dedicated, visual and fun discovery tool is still absent not just for music but also for TV, movies, books and apps.
• Map layers — Over the last few years Apple has acquired several map-related companies, one of which, PlaceBase, was known for creating “layers” of data-driven visualizations over maps. Even before its messy divorce from Google, Apple has chosen not to offer any such map enhancements. When properly designed, maps are great base-level tools over which lots of different kinds of information can be interactively delivered, especially on touch-driven mobile devices where Siri also resides.
• iOS device attachments — One of the factors that made iPods and iPhones so popular has been the multi-billion dollar ecosystem of peripherals that wrap around or plug into them. However, besides batteries and audio equipment, there’s been a decided dearth of peripherals that connect to the 30-pin port to do useful things in medicine, education, automation, etc. Apple’s attention and investment in this area have been lackluster. Perhaps the new iPad mini coupled with the tiny Lightning Connector will rekindle interest by Apple and third parties in various domains.
• Wearables — Google Glass is slated for production in a year or so, Apple’s known assets in wearable computing devices amount to a few patents. There’s much debate as to how this field will shape up. Apple may choose to augment iPhones with simpler and cheaper devices like smart watches that work in tandem with the phone, instead of stand-alone but expensive devices like Google Glass. So far ‘wearables’ doesn’t even register as a hobby in Apple’s interestgram.
• Stylus — Apple has successfully educated half a billion users in the art of multitouch navigation and general use of mobile devices. That war, waged against one year-old babies and 90-year old grandmas, has been decisively won. However, until Apple invents a more precise method, taking impromptu notes, sketching diagrams and annotating documents with a (pressure sensitive) stylus remains a superior alternative to the finger. Some may consider the notion of a stylus (even one dedicated only to the specialized tasks cited above) a niche not worthy of Apple’s interest. And yet not too long ago 5-7 inch mobile devices were also considered niches.
• Games — Apple’s on course to become the biggest gaming platform. This without any dedicated game control or motion sensing input devices like the Xbox 360 Kinect and despite half-hearted attempts like the Game Center. Apple has been making steady progress on the CPU/GPU front on iOS devices and now the new Apple TV is also getting an A5X-class chip, capable of handling many console-level games. It remains unclear, however, if Apple has the desire or the dedicated resources to leapfrog not just Sony and Nintendo but also Microsoft in the games arena, with a strategy other than steady, slow erosion of the incumbents’ base.
• iOS Pro devices — Apple has so far seen no reason to bifurcate its iOS product line along entry/pro models, like MacBooks/MacBook Pros. iOS devices sell in the tens of millions every quarter into many complex markets in over 100 countries. Further complicating its SKU portfolio with more models is not the Apple way. More so than iPhones, an iPad with a “Pro” designation with specs to match has so far been not forthcoming. And yet several hundred million of these devices are now sold to business and education, where better security, provisioning, app distribution, mail handling, multitasking, hardware robustness, cloud connectivity, etc., will continue to be requested as check-mark items.
• Money — Apple hasn’t done much with money, other than accumulating about $140 billion in cash and marketable securities for its current balance sheet. It hasn’t yet made any device with NFC, operated as a bank, issued AppleMoney like Amazon Coins or Facebook Credits, offered a branded credit card or established a transactional platform (ignoring the ineptly introduced Passbook app). It has a tantalizing patent application for a virtual money transfer service (like electronic hawala) whereby iOS users can securely send and receive cash anywhere, even from strangers. With close to half a billion credit card accounts, the largest in the world, Apple has the best captive demographics for some sort a transactional sub-universe, but it’s anybody’s guess what it may actually end up doing with it or when.
Half empty or more to fill?
It would be easy and fun to spend another hour to triple this list of Things-Apple-Has-Not-Yet-Done. While not all of these would be easy to implement, none of them would be beyond Apple’s ability to execute. Most card-carrying AAPL doomsayers, however, would look at such a list and conclude: See, Apple’s fallen behind, Apple’s doomed!
There’s, of course, another way of interpreting the same list. Apple could spend a good part of the next decade bundling a handful of these Yet-To-Be-Done items annually into an exciting new iOS device/service to sell into its nearly half billion user base and beyond. Apple suffers from no saturation of market opportunities.
Apple will inevitably tackle most of these, but only in its own time and not when it’s yelled at. It’ll likely introduce products and services not on this or any other list that will end up rejiggering an industry or two. Apple will do so because it knows it won’t win by conventional means or obvious schedules…which makes it hard — for those who are easily distracted — to like Apple.
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