Unless you’ve been living under a rock the past 5 years (or, simply trying to figure out how to use an Android smart phone), you know Apple’s rags to riches story.
Apple launched the personal computer revolution, saved the music business, reinvented the smartphone and tablet, and along the way made people a lot of money with a high flying stock price. What goes up, must go down, right?
Who’s To Blame For The Down?
As Apple disrupted industry after industry, and as revenue and profits continued to grow, so did the value of Apple’s stock.
Quarter after quarter Apple would offer conservative guidance for future financial performance, and then blow through those numbers with record revenue and profit.
Unfortunately, something akin to the law of large numbers took over and Apple, once the most wealthy and most valued technology company has fallen on hard times.
Stock market analysts following Apple would predict Apple’s next quarterly numbers, and Apple, though it managed to exceed their own guidance, missed those expectations and the stock has been pummeled.
Who is to blame for Apple shedding tens of billions of dollars in market value while putting up the most profitable year ever for a technology company?
Can we blame Apple?
Why? How? Apple simply provides conservative guidance every quarter, then exceeds– either greatly or modestly– their own guidance on the way to breaking their own previous records.
How do you blame Apple for that?
In the past six months there’s been a growing rumble among the technorati elite that Apple, under CEO Tim Cook, no longer innovates, only plays it safe and conservative, and is at risk of being passed by Samsung, Google, Amazon, or even Microsoft.
Is that a fair assessment? Is Apple done disrupting markets? If so, where are the numbers which display a weakness? If not, why doesn’t the market cut Apple some slack?
A number of events are running in parallel here. First, there’s the crazy expectation that Apple disrupts new markets every year, and it’s been three years since the iPad turned the tablet industry upside down.
Yet, Apple’s record of market disruption isn’t an annual event, and seldom disrupts with an immediate impact. Relative to PCs, the Mac, innovative and disruptive, was never a big selling.
In 2001 the iPod was laughed at as too expensive and Mac only. In 2002 the iTunes Music Store was derided as being too little, too late, Mac only. In 2007 the iPhone was criticized heavily for style over substance, and lacking hardware chops to compete against Microsoft, Palm, et al.
In 2010 the iPad was considered less disruptive because, well, you know, it’s nothing more than a big iPod touch. With the iPad mini, Apple was criticized for copying the smaller form factor of competitors (although, if it was just a larger iPod touch, who was being copied since no other competitor has an iPod touch-like product?).
That doesn’t look like annual market disruption to me.
In business, as in life, perception is reality. Apple is perceived in the market place– analysts, investors, media charlatans, critics– as being, well, Apple. Apple, the flash in the pan company. Apple, the style over substance company. It’s Apple, so whatever they do won’t last.
This kind of criticism which is based on perception and not facts or numbers flies in the face of reality. Many will say that Apple is just being Apple and if there’s anything that’s changed since Steve Jobs left the scene, it’s not visible. Apple does what Apple does the way Apple does it.
Apple is and always has been a lightning rod for negative energy. From everyone and everywhere except the growing line of customers, which now numbers into the hundreds of millions. It was easy to define Apple as a cult favorite when the company sold only a few million Macs a year, but an Apple that outsells and outprofits industry giants in PCs, media players, smart phones, tablets, applications, and ecosystem, for critics, is simply beyond belief.
The blame for Apple’s recent stock slide must be placed squarely upon critics and market analysts, the technorati elite who sit upon their thrones, ruling from on high, who often do not even use the products they criticize, and who indulge in emotional fantasies about Apple’s impending doom yet have difficulty finding facts and figures to back up their endless drivel about why and how Apple is failing.
Failing? Where are the numbers to support such a premise? An insightful analysis reveals that Apple is chugging along, somewhat oblivious to the competitive world around, constantly focused on doing two things better than anyone else– building products that customers want to buy, and making a boatload of profit while doing.
All Apple has done is transfer the Mac experience to the iPod, the iPhone, and the iPad. What other technology company executes with that kind of precision and regularity?
Check out ‘Historically, This Is Apple’s Biggest Problem And It’s Haunting The Company Yet Again‘ for another perspective on what’s driving Apple down.
About Kate MacKenzie
I’m curious as to who is buying Apple stock when the price plummets and did they have a hand in the alarms over Apple’s so-called impending doom. If it’s not illegal in the USofA it bloody well should be!
Nice to hear some sanity about Apple. I have been following Apple for over ten years, and very early on I learnt what idiots most of the ‘expert’ analysts were. And what short memories they all have! Like you say, At practically every stage Apple was ridiculed – Even after the iPhone came out they were saying it didn’t stand a chance of selling the 10 million YEARLY(!) target because it didn’t have this or that technical feature. They just don’t get it!
Investors are stupid. Stock brokers and analysts just egg them on. Investing today is more akin to gambling in Las Vegas, and has nothing to do with performance, track record, or balance sheet.