Apple and Waiting for the Other Shoe

November 19th, 2015

One thing is certain: There are commentators and industry analysts who appear to be spending unreasonable amounts of time waiting and hoping for Apple to fail. It has become an imperative to some who still cannot believe the company can continue to report higher iPhone sales, or even higher sales of Macs for that matter. Record sales and profits? Just a blip, and soon the company will return to — something or other.

This mantra has been repeated year after year, and you wonder whether some of these people are actually interested in talking down Apple’s stock to engage in some shady transactions. Not that I’m asserting that to be true, but it seems curious that Apple is getting more scrutiny than other large companies, and is taken less seriously. Compared to Google? Microsoft? Isn’t Apple doing better when it comes to revenue?

Google earns more than 90% of its revenue from one service — targeted ads — but Apple is still regarded as essentially a one product company since the iPhone delivers over 62% of revenues according to the last quarterly financials. But even if you subtract the iPhone from the mix, Apple is still larger than Google.

A main argument is that, even if Apple stays on a growth curve, the rate has to decline. There’s no way around that, as only so many people can afford a premium smartphone, and only a portion of those will choose Apple and iOS over Android. I’m omitting the other platforms since they are largely irrelevant in the scheme of things. That must be troubling to Microsoft, which has rejiggered its mobile phone strategy several times, and little seems to be happening even though Nokia smartphones are actually pretty good overall.

To some degree, this attitude is the result of what Apple actually did — 20 years ago — which nearly destroyed the company. No doubt most customers of Apple gear didn’t do business with them in those years. The iPod, the iPhone and the iPad brought tens of millions of new customers to the company. It’s fair to suggest that if Apple hadn’t made changes that started with the purchase of NeXT, and the return of Steve Jobs to the company in late 1996, there might have been no Apple to kick around anymore. We’d mostly be using Windows PCs and BlackBerrys.

What is most curious is the way some demand that Apple fire Tim Cook because of his alleged shortcomings in running Apple. What is conveniently forgotten that Cook has basically run Apple for years. Yes, he formally assumed the CEO spot in 2011, but he had been working on and off as a temporary CEO for several years prior to that due to the ongoing illness of Steve Jobs. During that period, Apple achieved its greatest successes, which included becoming the largest tech company on the planet.

You see the disconnect. How can you successfully argue that the person who headed the company during its most successful period is not competent to do the job? Just about any other tech company would love to have someone at the helm with that record of “failure.”

Beyond the financial successes, the typical arguments made against Cook are that he is introducing products that Jobs would never have accepted. They base that, in part, on comments Jobs would make from time to time disparaging a product or a specific feature. So when Apple released the iPad mini, you recalled Jobs’ comments about needing to sandpaper your fingers to work on a tablet with a small display. But the smaller iPad’s 7.9-inch display offered a lot more screen real estate than the typical 7-inch tablet. Remember, too, that Apple uses a standard 4:3 aspect ratio rather than widescreen. The advantage is especially important when it’s used in landscape mode.

When the Apple Pencil was introduced, the critics wanted to remind you that Jobs said that the need for a stylus on a touchscreen was evidence of a design failure. But the iPad Pro is still designed for you to interact with your fingers. The Apple Pencil is a precision device that is used for marking and drawing in ways you cannot do by finger painting. Recent interviews with Jonathan Ive have indicated as much. To Apple, it’s a logical extension of the abilities of a tablet, particularly for architects and other content creators.

I do recall a financial conference call back in, as I recall, October 2004. Apple executives were asked about making a cheap Mac. The response was sharp. Apple doesn’t build cheap gear.

Maybe that was fundamentally true, but the Mac mini, selling for $499, was introduced at a Macworld Expo keynote the following January. So was Apple lying, just misdirecting us or competitors about the real plans, or was the Mac mini simply not considered to be in the same class as other PCs?

The argument that Jobs was always perfect and Cook not so, particularly in light if chronic iCloud failures and lingering bugs in iOS and OS X, is misleading  Operating system upgrades have always been troublesome — for any company — and it often takes a few updates for things to calm down. No, it’s not specifically Cook’s fault any more than it was Jobs’ fault for problems that occurred on his watch. Either way, Apple could and should do better, but that’s no reason to fire the CEO.

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