Apple is sitting on many tens of billions of dollars in cash and that hoard of riches begets all sorts of ideas for what the company should do with the money.
Historically, Apple’s acquisitions have been strategic in nature– bringing in needed technology or talent– rather than historic; say, by buying a company like Adobe. Apple’s history and current methodology is obvious. The company is a premium brand, so why would Apple buy a company that is already dying?
Not Now, Not Ever
A recent analysis suggested that Apple needs to expand the customer base by selling products for less; making affordable products below the iPhone and iPad.
The example given was that Apple should buy BlackBerry’s brand. After all, the brand is well known, the price would be low (as in bargain basement), and, well, I can’t see any other reasons.
A Bizarro Apple could sell BlackBerry branded smartphones and tablets with iOS and expand the company’s domain into the mid-tier of smartphone and tablet makers. Or, so the story goes. You know, because Android is winning.
Buying BlackBerry (or the name ‘BlackBerry’) is a perfect example of what Apple absolutely will not do ever. Stick that idea into the same festering landfill where licensing the Mac OS, or selling a cheap iPhone reside. It won’t happen.
In fact, there isn’t much of a history of success with other such ventures in the tech world. Recently, Google bought Motorola. How’s that working out so far?
Learn From The Past
Remember HP and Compaq? Or, HP and Palm? Who? Yahoo bought GeoCities. Who? Exactly. AT&T spent $100-billion on cable company TCI. Who? Microsoft pent $6-billon on aQuantive to compete with Google’s DoubleClick purchase. How’d that work out? Yahoo also spent $5-billion on Broadcast.com so Mark Cuban could buy some expensive toys, otherwise that was a major bust. Remember AT&T’s buyout of NCR? How about AOL and Time Warner?
To be fair, some buyouts work out, and some look good but are not– and one of them involved Apple. In late 1996 the company bought Steve Jobs’ NeXT and that acquisition brought with it untold riches and prominence over the next 25 years. Then again, Google spent about $50-million to buy Andy Rubin’s Android, now the world’s largest smartphone platform, and officially the tech industry’s largest and most expensive albatross.
Why Bother With Road Kill?
Should Apple buy BlackBerry’s carcass? Why? What’s the compelling reason for Apple to part with a few billion dollars on a company with little value, either technologically, or in the marketplace? For BlackBerry, it’s all over but the funeral. A mid-tier market of less expensive iOS-based smartphones and tablets means lower revenue and profit per device, which would simply cannibalize Apple’s bread and butter for revenue and profit, exactly the same way that licensing Mac OS back in the 1990s almost brought the company to bankruptcy.
Who among us would not want a BMW 6 or 7 series at a Toyota Corolla price? Or, a Tesla at the price of a Prius? The desire is obvious, but the reality is math. All the wishing and hoping and dreaming in the world won’t make it happen. Apple builds premium products and changing that formula for the sake of market share won’t make Apple more profitable or more competitive.
Constable Odo says
It seems Wall Street seems to highly value companies that put out low cost products otherwise why are analysts always saying Apple should sell cheaper and cheaper products to keep up with Android constantly growing market share. Analysts shouldn’t be saying anything like that. It seems as though they want Apple to produce both high cost items and low cost items like Samsung does. Currently, there are analysts claiming that Apple is pricing itself out of the tablet business with the expensive iPad Air line.
There is a general belief that if Apple doesn’t sell low-cost tablets, Apple will simply continue to lose the all important market share race where only the company with the highest market share will be the most valuable. As Apple loses market share, so does Apple’s share price lose value. As a shareholder, I don’t like it and I’m sure neither do potential big investors. I don’t want Apple’s share price to keep dropping but then again I’d rather Apple start other businesses to hold up its falling revenue instead of building cheaper products.
taojones says
as an ex tiffany employee i can tell you tiffany has no competition. you give a girl a blue box she is much happier than the girl that got the same thing from the mall.Apple is the tiffany experience in a smart phone. a hot dog vendor in new york may sell 300 “dinners” a day but Sardi’s makes more on 1 dinner than the dog salesmen sees in a week should sardi’s go after the dog carts “market share” ? android is not a phone manufacturer it is a free system for budget hardware sellers to get phones to run with out paying for the operating system. the market share android is “taking” is split into so many pieces .the only one benefiting is google by gaining data from the phones user as google does with the “free” g mail as a mac user i chose to not participate in googles data mining enterprise. sales with no profit is like eating soup with a fork . apples profit share of the market is the only thing that investors should care about .even if it is declining precent size the overall market is larger and the cash keeps piling up. I do not see the wisdom in buying shares in companies who’s claim to fame is they lost less money than last year.
Kelly Ng says
Talk about your brain dead ideas. Let’s assume that Apple bought the BlackBerry name (about the only thing of value in the BlackBerry company), and stuck iOS into a smartphone with a mid-range price.
What would happen?
Would sales take off? Probably, but not as much as Android smartphones (which are still cheaper). What would happen to iPhone sales? They would plummet because Apple’s customers would flock in large numbers to the BlackBerry brand to save money. After all, they’re getting an iPhone with iOS and apps, but now with a BlackBerry name.
How stupid is that?
Apple would end up with lower iPhone sales, lower gross margins, and the losses would not be made up by increased sales of the BlackBerry iOS smartphone.
Seriously, whoever came up with that idea has no idea how the world works. And, judging by the reader comments on MDN, readers don’t think much of the idea, either (I’m being kind– they castigated the whole idea en masse).