What’s the problem? Success. That’s right. Success. It’s a massive problem that every technology competitor would love to have. Apple’s success has grown faster than the company’s ability to create comparable innovative new products and successful new product lines.
End Of The Line
Way back when Microsoft was sitting on tens of billions of dollars in profits, even after a couple of decades of throwing away tens of billions of dollars on bad investments and losing ventures, all the company’s executives could figure out what to do with the money was to give some to shareholders.
Maybe the company was desperate to do something to the stock price. After all, it had flatlined for a decade under CEO Steve Ballmer’s rule, so shareholders wanted some blood to go with a rising stock price.
The tens of billions of dividends that Microsoft doled out were nice, of course, but the stock really took off when Ballmer himself took off (became fired).
History has this strange way of repeating itself, but in strange ways. Let’s take Apple as an example. Microsoft was never so profitable or successful as Apple is now.
Where Microsoft could not diversify itself beyond Windows and Office, Apple has made the Mac the world’s most profitable PC line, the iPhone commands most of the smartphone industry’s profits, the iPad is profitable, the somewhat moribund iPod is profitable, as is everything else Apple’s executives stick an Apple logo upon. Apple TV, Apple stores, iTunes, app stores, accessories. It all makes money. Even the money makes money.
Unfortunately, Apple seems to have a variant of the disease that afflicted Microsoft. The iPhone maker has so much money that it appears to have lost the ability to find and conquer new product markets. There is still no Apple television. Why not? Apple cannot conquer the television industry. It’s fragmented and Balkanized beyond Apple’s ability to repair. Apple Watch appears destined to be a hit, but not a home run in the vein of iPhone or iPad.
Apple spent about $3-billion to buy Beats Electronics but, so far, has little to show for the investment, and the most recent iTunes revamp needs yet another revamp. Apple’s famous competence in hardware manufacturing remains, but software has become a soft spot for quality aficionados, and criticism is mounting. Apparently, but, unlike greedy shareholders clamoring for a cash fix for their drug of choice (money), fixing software bugs isn’t something you can do simply by throwing lots of money at the problem.
There’s a danger in maintaining the status quo while the rest of the world changes. Apple’s most massive problem these days isn’t hardware or software or criticism. It’s success. The company doesn’t know what to do with all the riches, so instead of re-inventing the world, Apple keeps on keeping on the Apple way, leveraging one product line to bolster another, reaping even more profits, which get ground up, repackaged, and given away to shareholders who are not content with a stock price that has brought fortunes to many.
Yes, I know shareholders love their dividends, but I’d rather see Apple take another ‘bet the farm‘ risk or two on some new technology, or re-invigorate a tired old product line with a new approach, rather than admit the failure of imagination with no guts and repeated glory, and merely give money away by the billions.
Where’s the thrill in that?