Maybe it’s the political silly season wreaking havoc on my patience and altering my perception gene for the worse, but color me jaded. I’ve grown tired of talking heads with an opinion on everything today that turns out to be wrong tomorrow.
Regardless of your political leanings, let’s try to keep our assessment of Apple Inc. within the realm of common sense. Wednesday treated me to an article in my RSS reader about poor old Apple’s recently disappointing quarterly financial numbers which managed to exceed expectations again. Shame on Apple. How will the company ever survive?
They. Said. That.
The most recent headline that caught my eye and inflamed my Apple curated sensibilities was this one from Scott Gamm in The Street.
Why Apple Must Diversify Its Revenue
And, the required sub-head:
Eventually, Apple needs to rely less on the iPhone
No. No Apple does not. If Apple’s financials stayed exactly as they have the past year, no better or no worse, the company would continue to be the most profitable, richest company on planet earth, exceeded only by nobody’s company ever.
Apple’s revenue and profits are among the most diversified of any major technology company; better than Google, better than Microsoft, better than Amazon, better than, well, can you name another tech gadget company that is better diversified?
Samsung, you say? Puhleeze. I hear they’ve recently diversified into fire containment bags. Those Samsung Galaxy fires were all a ploy to prop up their new fire suppressant division.
Apple’s problem is the iPhone was such a monster hit that it seems to overshadow other Apple products which could be Fortune 500 companies on their own. Mac. iPad. Watch. Services. All are enormously profitable and at the top of their respective industry segments. Unfortunately, they seem to live in the iPhone’s giant shadow, which explains why nobody looks at Dolly Parton’s great feet and hot shoes.
Analyst Angelo Zino:
They need to eventually come out with something outside of the iPhone
Apple did. It’s called the Watch. The problem with that statement is the expectation that there’s another iPhone-like product after the iPhone. Get over it. There’s not. At least, not until Apple starts selling brain implants which turn humans into Stephen Hawking intellect clones sans the wheels.
But when we look at the company today and over the next two years, we continue to think they are well positioned with the current iPhone 7 launch as well as the next generation device amid the 10-year anniversary of the iPhone next year.
Of course they are. Everything Apple makes owns the profit end of the premium product spectrum. The company sits on more than $150-billion in cash (after accounting for debt). Apple cannot give away money fast enough and despite all those extra billions will not be able to repeat the iPhone’s magic growth period for years to come.
The problem with Apple and AAPL is two-fold and has nothing to do with diversification or fear of survival. First up, the iPhone itself is an outlier product, not likely to be repeated any time soon. Secondly, Apple has become so successful so quickly that any kind of a downturn– even during an overall economic malaise of sorts– is considered anemic performance which brings out the armchair quarterbacks who know exactly what Apple must do differently to survive the future.
Since the iPhone launched in 2007 Apple has literally become the owner of industry profits for smartphones, tablets, TV add-on devices, digital Services (iTunes, App Stores, Apple Music, accessories, et al), and the entire watch industry.
If there is a problem with Apple, and I think there is; not many are talking about it, either, because it has little to do with profits. Apple had grown too big and too conservative which translates into a slow moving monstrosity, and you can blame that on CEO Tim Cook because he’s an engineer who does not operate with the same sense of enthusiasm or urgency as co-founder Steve Jobs.
When was the last time Apple really, truly, madly, deeply failed at something?
No, Apple Car isn’t a failure because there is no Apple Car. Apple’s last failures came under Steve Jobs. Which, come to think of it, is exactly when Apple was dreaming up and building its greatest products. For Apple to survive the future without resting on its laurels or coasting for a Steve Ballmer-like and Rip Van Winkle-inspired tenure for a decade or so, it needs another Steve Jobs.
Is there another Steve Jobs?