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  • The Apple “Must” Report

    February 28th, 2014

    Did you hear that Apple may descend into irrelevance real soon now if they don't make some big changes? But how could that be? After all, wasn't Apple just named, for the seventh year in a row the "World's Most Admired Company" company in a Fortune magazine survey? What a disconnect.

    But that doesn't stop some tech pundits from assuming they know more than the "World's Most Admired Company" when it comes to products, product strategy, and product pricing.

    Forget for the moment the faux controversy over the alleged delay in producing a fix for the SSL bug. We don't know there was any delay other than the normal time it takes to make even a simple update, and test it before being deployed around the world. It's not as if there are reports that millions of iPhones, iPads and Macs are suddenly self-destructing as a result, so the updates appear to be successful. And it's not been disclosed that people were actually compromised by what was clearly a very serious security leak.

    So let's move on.

    There's a report this week that repeats an oft-repeated meme, that Apple has lost the ability to innovate. One alleged reason is that Google is buying more companies than Apple, or at least more high-profile companies, as if you cannot innovate without a checkbook.

    I wondered, in passing, whether the writer in question ever heard of Motorola Mobility, and how Google had to sell it at fire sale prices — some $3 billion — to Lenovo — thus leaving a company with a long pedigree in the mobile handset industry in the hands of yet another owner. This came after quarter after quarter of red ink, but you wonder why the media hasn't made a huge deal about this abject failure. Instead they quote the promise by Lenovo that Motorola handset sales are going to exceed those of Apple and Samsung. Right, sure!

    Well, there's always the next company.

    So, among Google's recent acquisitions, curiously for $3 billion, is Nest, a company co-founded by former Apple iPod executive Tony Fadell. Aha! He worked for Apple and was instrumental in the iPod's unexpected success, so why doesn't Apple want to make intelligent thermostats and smoke detectors?

    Besides, how would Apple magically become innovative from buying Nest, unless they  rejiggered the product in some major way so it took on new markets? What's more, how many companies did Google acquire that never resulted in some trend-setting product, or set the tech world afire?

    There is Android, of course, and nobody denies the success of the number one mobile platform on the planet, but was it innovation that convinced Google to build an OS in the image of Apple's iOS, and for licensees to build cheaper and cheaper gear to spread smartphone joy to the masses? Profits? Well, Google earns money from the targeted ads, which is what they've always done. Is that innovation? As far as the handset makers are concerned, only Samsung, among all Android licenses, is making good profits.

    When Apple acquires a company, it's primarily to bring new technology in-house that will later appear in an Apple product or service. We all know about Siri, and PA Semi is one of the developers of Apple's A-series mobile chips. The Touch ID fingerprint sensor came as the result of buying yet another company, AuthenTec. So you can see honest-to-goodness advantages in these acquisitions. But you may not see the fruits of other acquisitions until some time in the future.

    But to some, they just aren't flashy, as if flash equates with innovation. Maybe Apple should buy out the Tesla electric car company and build $70,000 battery-powered motor cars. Sure, a Tesla is a well-reviewed product, with high safety ratings, and there will be cheaper models in the next few years. But is Apple's next success the car business? Besides, how innovative would it be to buy out Tesla, which Apple could do quite easily if CEO Elon Musk was amenable?

    To be fair, Apple has reportedly had conversations with Tesla, though some suggest it's about making deals about future battery technology, which would benefit both companies.

    Beyond making flashy acquisitions for some purpose or other, there is the constant demand that Apple build cheaper gear, or at least cut the prices of exciting products. The argument goes that Apple will make up the difference in high sales, not realizing that the stock market will freak if Apple sacrifices profits. And if sales don't increase enough to make up for the difference, where does that leave Apple? It's not as if it would be convenient to just restore prices back to where they were without any potential customer impact.

    If you think some might be upset Apple's prices are too high, what if they cut those prices and then changed them back to what they were? Talk about destroying customer goodwill.

    Today, you know where Apple stands. Well, many do, if not some members of the tech and business media who believe that Apple is losing credibility because of not buying as many companies as Google, or because there are no $200 unlocked iPhones to be had.

    Yes, if Apple sales really and truly suffered, rather than flatten, you can bet the company would find it necessary to take appropriate measures. But record sales and continued high profits don't define a company that's in trouble, except for those who wish otherwise.



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    2 Responses to “The Apple “Must” Report”

    1. […] “The ‘Apple Must’ Report: Did you hear that Apple may descend into irrelevance real soon now if they don’t make some big changes? But how could that be? After all, wasn’t Apple just named, for the seventh year in a row the “World’s Most Admired Company” company in a Fortune magazine survey?” — Read the article on technightowl.com > […]

    2. DaveD says:

      I wish that those writers who tell Apple what it should do get another line of work. Their words are worthless.

      I see Apple that was beleaguered twenty years ago now takes in more revenues and profits than either Google or Microsoft.

      Google and Microsoft have done many, many acquisitions.

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