Yes, this is a story that has repeated itself since Apple launched in Steve Jobs’ parents garage back in 1976. Apple is doomed, or so goes the internet meme of 2016, as every writer with an ax to grind or a headline deadline to meet disses on Apple’s future.
Apple doom-mongering is not a new sport. It’s also not a participant sport. It’s an armchair quarterback sport for those with no skin in the game and those with no knowledge of what goes on within the hallowed halls of One Infinite Loop in Cupertino, CA. Fortunately, Apple’s decade-long malaise is half over already.
The Grand Strategy
Here’s the problem. We only see Apple from the outside looking in. We cannot see what goes on within Apple’s executive circle, so we humans do as we’ve always done, we judge the book by the cover.
Andrew Uerkwitz, an investment analyst from Oppenheimer, thinks Apple has some structural problems.
We believe Apple lacks the courage to lead the next generation of innovation (AI, cloud-based services, messaging); instead will become more reliant than ever on the iPhone … We believe Apple is about to embark on a decade-long malaise. The risks to the company have never been greater.
The only thing I’ll quibble about here is the timing. Apple has always had and taken great risks– Mac, Apple Stores, iPod, iTunes Music Store, iPhone, App Stores, iPad, Watch– which have turned out to be profitable for the company and investors, but 2016, as it was in politics, seems different.
Apple’s revenue and profits are going down, not up, and critics howl that Microsoft has become the new Apple with more PC innovation and a more nimble approach to change. And for all the criticism from Oppenheimer and others, what has changed?
We believe its strong profitability, a cash hoard for protection, and one last ‘growth’ hurrah from the tenth-anniversary phone will keep investors interested in the company. Our Perform rating is unchanged for now.
What has changed should be obvious, and it has been discussed online ad nauseam for five years.
Steve Jobs died in 2011, five years ago, and Apple immediately began a decade-long malaise because, 1) Tim Cook is no Steve Jobs, 2) Jonny Ive is a designer, not a visionary, 3) Apple’s executive team has yet to produce a visionary product leader to replace Steve Jobs’ role at Apple, 4) Apple’s board of directors won’t realize this problem for a few more years, and then seek to replace Tim Cook with someone who has that vision thing and understands how to ship revolutionary products.
See? That wasn’t so hard now, was it? What Tim Cook has done is create a cash cow based on Steve Jobs’ product management and vision, and then for the past five years milked it dry. What has Apple launched since the iPad in 2010; arguably Jobs’ last hurrah?
Yeah, Watch is great. But what have you done lately is the rallying cry of critics, competitors, and investors and Apple does not have an answer (hint: no, Watch isn’t the answer). Fortunately, Apple has already started the last five years of that decade-long period of malaise, a technological doldrums which seems to afflict many companies in the industry, and has settled in on Apple. Again.
One day, probably five years or so from now, someone will arise from Apple’s ranks, or be brought in to replace an ineffective leadership, and that someone will have that special combination of technical chops, determination, some of the vision thing, and the ability to blend personal power with position power to move the company forward, and Apple will rise from the ashes. Again.