Narrative: Apple is Doomed

Each narrative page (like this) has a page describing and evaluating the narrative, followed by all the posts on the site tagged with that narrative. Scroll down beyond the introduction to see the posts.

Each post below is tagged with
  • Company/Division names
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  • Narratives
  • as appropriate.
    Why Apple Is One Of The Most Innovative Companies Of 2017 – Fast Company (Feb 16, 2017)

    I’ve never been a big fan of these kinds of ranking exercises – they’re often arbitrary, designed to make news as much as come up with the right answer, and basically meaningless in the real world. So why am I including this item here? It’s about the specific reason why Apple was chosen here: its silicon chips. This is so overlooked as a source of leadership and differentiation for Apple and yet it’s absolutely critical. It took the acquisition of PA Semi and lots of other work besides, but Apple has spent years perfecting its chip design and it now pays off in massive ways for the company. No wonder you see Xiaomi and others pursuing their own chip strategies, but no-one should assume that’s a straightforward or quick process.

    via Fast Company (you might also be interested in this episode of the Beyond Devices Podcast, in which we did a deep dive on Apple’s A-series chips)

    Apple Vowed to Revolutionize Television. An Inside Look at Why It Hasn’t – Bloomberg (Feb 16, 2017)

    I think the shorter version of this story is that Apple hasn’t been able to revolutionize TV because the traditional TV industry isn’t willing to let it, at least not yet. More than in any other industry, the traditional players still hold pretty much all the cards when it comes to future services from a licensing and content perspective, and until that starts to break down, no outside player is going to make a meaningful difference. That means we’ll continue to have a mosaic of partial replacements for pay TV, mimicking some of the features and content but not others, and leaving users to pull it all together in custom bundles. Apple is part of that aggregation layer today, but doesn’t really play anywhere else – the Apple TV box and the TV app are partial solutions for the fragmentation problem, but are incomplete – you still can’t watch a full slate of traditional pay TV on your Apple TV, and the TV app excludes Netflix among other content providers. Both the box and the app are still useful, but they’re not revolutionary, and the intransigence of the old guard is the single biggest reason. In music, Apple was able to get the labels on board because they were panicking about Napster and file sharing, but the TV industry isn’t yet at that crisis point. In the next couple of years they’ll get there, but in the meantime Apple either has to continue to tinker around the edges or do something that looks less like a pay TV replacement and more like something different, a la Netflix.

    via Bloomberg

    Apple Struggles to Make Big Deals, Hampering Strategy Shifts – Bloomberg (Feb 15, 2017)

    This is well trodden territory, but what’s new here is really the sources connected to various entities Apple has had negotiations with in the past, who suggest that its negotiating tactics are a major factor in its ability to get big deals done. But I still think this article is missing the single biggest factor when it comes to Apple and major acquisitions: cultural fit. Apple’s culture is unique and arguably its single biggest asset, but almost every company Apple might consider buying will have a different culture. When it’s a tiny acqui-hire, that doesn’t matter so much – it’s more akin to hiring new employees, and you can both test each one for fit and train them appropriately. That’s much harder to do on a scale of hundreds or thousands of employees, which is why Apple tends to make small technology acquisitions, often in the early stages of their business, rather than big buys. Even Beats, its biggest acquisition to date, was actually a fairly small team, since manufacturing was outsourced, and fit largely into two small pockets within Apple rather than having to be integrated into the company as a whole. To my mind, it’s this issue of cultural fit rather than the price tag or the negotiating tactics that prevents Apple from making bigger acquisitions, and it’s the single biggest question everyone should be asking if Apple ever does pull the trigger on a really big one.

    via Bloomberg

    Apple Shares Hit All-Time Closing High as Investors Await Next iPhone – WSJ (Feb 13, 2017)

    I’m tying this story to the Apple is Doomed narrative because it would be easy to see today’s news as evidence that investors don’t think Apple is doomed at all. But if you take that approach, you’d also have to say that investors did think Apple was doomed nine months ago when its stock price fell to two thirds its level at today’s close, when in reality that movement tells you a lot more about investor skittishness than Apple’s actual prospects. Apple continues to be massively undervalued relative to major peers, and that reflects an ongoing skepticism that Apple’s ability to sell massive numbers of devices is about more than just smoke and mirrors. Apple is the exception in the consumer electronics market, which is otherwise characterized by low single digit margins at best, and I always suspect that some financial analysts think this is the result of some kind of sleight of hand that will eventually be exposed – there’s really no other explanation for the ongoing under-valuation. The massive swings in Apple’s stock price over time – its 12 month range goes from $89 to the $133 it hit today – are much more about investor skittishness than underlying performance. Certainly there was nothing in Apple’s last earnings that should have triggered such a significant change in sentiment – they were decent results, but guidance for the next quarter wasn’t great, and as usual there was nothing concrete about the company’s longer-term trajectory from management. I continue to be very bullish on Apple in general, but I certainly don’t base that conclusion on what’s going on with the company’s stock price.

    via WSJ

    Making More Outside The Mac App Store – Rogue Amoeba (Feb 10, 2017)

    Some interesting data points here from Rogue Amoeba, one of the medium-sized Mac app developers which has recently pulled the last of its apps from the official Mac App Store, and has seen roughly similar unit sales and slightly higher total revenues as a result. Although the iOS App Store continues to be the only way to get apps onto an iPhone or iPad, that’s not the case with the Mac, and frustrations over sandboxing, limited business model options, and the lack of formal upgrade mechanisms among other things have driven a number of prominent developers to eschew the MAS for direct sales. It continues to be fascinating how Apple’s approach to the Mac App Store has been so much less successful, in part due to the longstanding existence of alternatives, but in part also due to Apple’s inflexibility and lack of support for key developer requests. For all Apple’s strength and success with developers broadly, its Mac developer story is a lot less compelling.

    via Rogue Amoeba

    Here’s Why Apple’s 10th Anniversary iPhone Will Likely Cost More Than $1,000 – Fast Company (Feb 8, 2017)

    The headline is focused on the price, but there’s some interesting detail in the piece that’s in some ways more important (and likely more accurate). Some of this confirms earlier reporting about OLED edge-to-edge screens, and a home button integrated into the screen. There’s some new information in there too, though, about an integrated 3D sensor, though it’s not clear what it’ll be used for (AR is one obvious bet given Tim Cook’s enthusiastic remarks about the technology). The point here is, though, that the $1000 price point is fully $230 above the base price for today’s 7 Plus, and so it would have to incorporate a lot of additional wizardry to justify that premium. I think it’s far more likely we see another roughly $100 step up from the Plus to $870, though of course with the right storage configurations that’ll easily rise over $1000.

    via Fast Company

    Apple Hires Amazon’s Fire TV Head to Run Apple TV Business – Bloomberg (Feb 7, 2017)

    Two things worth noting here: firstly, this is one of a relatively small number of senior hires at Apple in recent months amid what has seemed like a larger number of departures from the upper echelons there (including one earlier today). In and of itself, the numbers don’t mean much – Apple is a massive company and many of those poaching its employees are smaller (notably Tesla) such that the balance will always be lopsided in favor of the smaller companies, where promotion opportunities will also be greater. Secondly, and perhaps more importantly, this hire itself is into a hardware product role, but it frees up the guy who had been running the Apple TV product to focus on content negotiations, which is arguably where Apple really needs to be putting its investment right now. I continue to maintain that this is the year when Apple finally launches its own subscription video service – the pieces are in place with the Apple TV and the TV app it launched last fall, and the market is getting to a tipping point where an over-the-top pay TV alternative is both more feasible and more needed than ever. This move will hopefully help move Apple along in its pursuit of that goal.

    via Bloomberg

    Apple exec for business sales departs – Reuters (Feb 7, 2017)

    John Solomon certainly isn’t a high profile figure outside of Apple, but he’s been managing an important aspect of Apple’s overall business: enterprise sales, which make up around 10% of total revenues. His appointment was met with some raised eyebrows among the Apple faithful – a printer salesman as Apple employee? – but the key here isn’t product expertise but knowing how to navigate the enterprise procurement world, which Solomon no doubt understood well. The point is, there are lots of people that understand that world, so he shouldn’t be too hard to replace, and Apple could probably use some fresh help here in supporting their recent partnerships with IBM, Cisco, Deloitte and others with a really solid sales approach.

    via Reuters

    Apple’s “new” UAC port wasn’t made by Apple, and it isn’t new – Ars Technica (Feb 7, 2017)

    An update on an item from a couple of days ago. The headline kind of says it all, but here’s just a little more detail: the “new” UAC connector Apple added to the MFi program isn’t actually new – it’s an existing connector (though Apple gave it a new name), and Apple added it to the program because licensees were asking for it. So we can all move along now.

    via Ars Technica

    Apple plans new smaller Ultra Accessory Connector (UAC) for Made-for-iPhone accessories – 9to5Mac (Feb 6, 2017)

    This is one of those reports where we have the alleged what, but not the official why. The last big example of this was the pervasive rumors of the demise of the 3.5mm headphone jack before the iPhone 7 launched. The rumors turned out to be accurate, but none of them came with an explanation, which meant that for months we had screeds about Apple’s anti-consumer stance without any kind of input or defense from Apple, which hadn’t even announced a change yet. With that in mind, though it’s tempting to complain about yet another new connector technology from Apple (on top of USB-C in MacBooks and Lightning in almost everything else), we don’t know yet exactly what it will be used for. At some point this year, Apple will no doubt give us an explanation, and we’ll have to decide whether it’s a sign of courage, user-hostile, or something in-between. (For what it’s worth, I was pretty positive on Apple’s headphone jack transition.)

    via 9to5Mac