Full disclosure. That’s a trick question in the headline. Whether Apple goes wrong, or where Apple goes wrong, if ever, is highly dependent upon your perspective as a customer, member of the technorati elite proletariate, shareholder, market prognosticator.
If we’re to judge Apple by revenue growth, profits, dividends, and stock price over a long period, then Apple isn’t doing much wrong at all. But as a shareholder who wants more dividends and a growing stock price, Apple has some issues.
Perspective Is Reality
No technology company is immune from market-based problems, including Apple. No technology company comes under public scrutiny like Apple, either. The two combined could easily shipwreck a lesser company, yet Apple continues to roll along with growing revenue and profits.
In fact, almost everything Apple does is profitable. Highly profitable. Mac, iPhone, iPad, iTunes, Apple Stores, Watch. You name it. Apple leads the profit equation in every product segment.
So, where does Apple go wrong?
Actually, it may be that Apple isn’t actually wrong, but that perspectives of the company by stock market, by shareholders, by critics, and by customers, may be wrong. Very wrong. The latest impact on Apple’s flagging stock price is the iPhone. Sooner or later sales will saturate and drop, and the market is responding early with a dampened price. Why? iPhone represents too much of the company’s business.
So, if Apple shipped half as many iPhones would that put the product mix into a more acceptable balance? Of course not. If the iPhone represents nearly 65-percent of Apple’s revenue and profits, and the stock gets beat up accordingly, then why is Google’s stock on a roll while more than 90-percent of the company’s revenue and profits that come the old fashioned way– search engine advertising?
Doesn’t seem fair, does it? It’s not. That’s the game.
Critics hammered Apple’s new streaming music service as too little and too late to counter Pandora and Spotify, yet, here we are, just six months or so after Apple Music’s launch, and the total number of subscribers to the fledgling service is about half that of Spotify– which took six years to get the same number.
Looks like Apple is on a roll, but you’d never know it from the market or critics, right?
Even the Mac continues to sell in record numbers, even while every computer Apple sells these days– Mac, iPhone, iPad– outsells everything that says Windows. That’s right. iOS and OS X combine to outsell everything with a Windows PC or Windows Phone logo on it in total numbers. Apple says iOS 9 is on more than 75-percent of all iOS devices, a penetration rate for a single version of operating system that has not competition.
Yet, time and again, in headlines across the board, Apple is presented as a company in the process of failing and it will all happen soon because all the signs are there. Apple is just doing everything wrong, and nothing right.
The only sign I can see in Apples success formula is that old saying “What goes up, must come down.”
Here’s the real deal. Perspective is reality. But it’s always a perspective and not always representative of reality. The real reality. That real reality is this. Apple Inc sells computers, and those computers work in a well integrated ecosystem of services and applications and devices unlike any competitor. Not only does Apple sell more than 300-million such computers a year (finally topping anything with a Microsoft Windows logo on it) but the company sells only in the premium end of the product spectrum, which just happens to be the segment with the best customers and the most profits.
Finally, the real deal is also about product and company differentiation. Product differentiation is a key component to sales success. All Windows PCs are similar because they all run Windows, therefore, the differentiation is price. All Android devices are similar because they all run Android OS, therefore, the differentiation is price.
How does that stagnant model compare with Apple where, 1) hardware is differentiated by higher quality and durability, and 2) software is differentiated by OS X and iOS (both of which have similar underpinnings and history), and 3) the ecosystem is differentiated by a unique and seamless integration of data, applications, services, and files.
Please tell me again where Apple is going wrong, because in my perspective-is-reality world, it’s difficult to see.