Almost from the very first day that Tim Cook officially became Apple’s CEO, the critics were calling for his head. He’s an operations person, not a marketing person, or someone with a “vision,” and thus hasn’t a clue how to manage a large multinational corporation. Since then, anytime Apple reported something that was less than what those so-called industry analysts expected, it was all about Cook.
But even when Cook was officially named to the top spot at Apple, he wasn’t new to the job. In fact, he had already spent months as an interim CEO during the extended absences of Steve Jobs. While he was largely acting as Jobs’ lieutenant, it was a great opportunity for some direct on-the-job training, since he was far more ready to take control when he officially got the job.
Predictably, when iPhone growth slowed in the December quarter, and dipped by a fair amount in the March quarter, the “off with his head” demands returned in full force. The theory has it that, if Apple ever suffers from declining sales, there can be no second chances. The CEO has got to go. Forgotten is the time when Apple shed red link under Steve Jobs, and he wasn’t let go.
The headlines are all over the place. One down quarter, with the threat of another, is sufficient to recycle all the doom and gloom arguments. The iPhone is dead, the iPad is dead, and the Mac is surely dead. How can a company fail to match or exceed a year-ago quarter and not be pronounced an utter failure? That Samsung has had down quarters isn’t on the radar. Apple isn’t permitted to fail — ever.
But that assumes it’s a failure, and not just a reflection of changed market conditions. Apple cannot control the state of the world market. Apple can only go so far to persuade people that they must upgrade their iPhones, iPads and Macs if they aren’t so inclined. It doesn’t matter how many fancy new features are introduced.
The old “iterative” argument is back in full force. Each year, Apple’s new products have minor improvements, and that can’t be enough. The iPhone 7 will not be good enough, even though there will be no official announcement of its features until September if the past is prolog. As of now, it’s all about guessing and hoping for something unimpressive.
Forgotten is the fact that Apple usually releases minor refreshes of an existing product, and only after a few years launches a major upgrade — or something altogether new. So why isn’t it happening now? What’s more, how does Apple have the temerity to force the Apple Watch upon us when there’s no killer app?
It doesn’t matter that Apple claims first year Apple Watch sales were higher than those of the iPhone in its first year. But don’t forget that the iPhone’s arrival was equally met with skepticism, and, every single year since, particularly after Android smartphones appeared, the iPhone was pronounced in danger of being replaced by commodity products.
That’s been happening in recent years for the iPad, with claims that people can get something nearly as good for far less money to watch Netflix and manage the Internet and email access. That may be true to some degree, but Apple offers a wider range of tablet-optimized apps than other companies, and it has a far greater penetration into the enterprise, along with iPhones and, at long last, Macs.
One article I read the other day referred to Apple’s “on again/off again” enterprise initiatives. That seems long ago and far away in light of that 2014 deal with IBM. You know, the one where new enterprise apps would be developed, and Apple gear would become available to IBM employees and would be pushed by the company’s large sales force. You know, the one where IBM employees are now given the opportunity to use Macs and thus save the company $275 on each computer compared to a Windows box.
In his appearance this week on Jim Cramer’s TV show on a financial channel, CNBC, Cook was criticized for not being specific enough in responding to questions about Apple’s dismal quarter and its future. Predictably, Cook conveyed optimism that the company would turn the corner. In part, he also blamed some of the sales slowdown on the grounds that more people upgraded their gear last year, so fewer numbers are upgrading this year.
Besides, Apple’s revenue and profits were pretty much in line with the company’s predictions for the March quarter. The guidance is always conservative, and Apple often exceeds those numbers. A company that can deliver such numbers accurately ought to be praised, not attacked. It demonstrates highly qualified leadership.
Unfortunately, Wall Street pundits barely pay attention. They prefer their own numbers, which are based on tea leaves, psychic powers, or whatever suits their fancy. If the estimates are met or exceeded, a company had a good quarter. If they aren’t met, despite the company meeting its own expectations, that’s bad news. They know better even if the figures are hardly realistic.
Now Apple will not magically disappear if sales continue to drop for a while, while profits are at high levels. If the decline continues for a few quarters, that might be a source of concern. If the there’s red ink, that would be a greater reason for concern. But not now.
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