Applesauce: All Things Apple
January 7, 2013

Applesauce: All Things Apple – January 6, 2013

Pity Apple.

How would you feel if the entire world was waiting for you to fail, daily predicting your demise, advising those nearest you to distance themselves? Lately, Apple’s stock has been in a slow decline, even kissing the ultra-low $500 mark a few weeks ago. (Where’s that sarcasm font when you need it?) Ever since their $700-ish high in September, Apple stock has seen an ebb and flow leading them down to below $550 over the past week. It’s true: Apple has seen a gradual decline over the past 4 months, and yet, they still closed out 2012 higher than they began. In fact, AAPL is still trading at higher prices than it was 2 years ago. Should this downward trend continue throughout 2013, and then perhaps investors should begin to worry.

This week, redOrbit featured a blog entitled “One Bad Apple” wherein Alan McStravick suggests Apple has all but ceased to innovate in the wake of Jobs’ death, thus triggering their 4-month slide.

Alan is a good personal friend of mine, so in the name of friendly debate, I’d like to discuss how very wrong I believe he is.

Let us not forget which company we are talking about, of course.

This is Apple, founded by Steve Jobs and Steve Wozniak, creator of the mighty iDevices, extremely profitable retail stores, and a rabid fan base. This is the company that enters into a market a few years late, completely dominates it, then moves on.

An army of innovative, beautiful and profitable products marching across the globe is not enough to satiate the naysayers.

Strike that…even the profitable and best-selling products, such as the iPhone 5 and iPhone 4S earn the ire of those who claim Apple no longer innovates.

The Innovation is Not Dead

Mr. McStravick cites one Byron York from the Washington Examiner who believes AAPL “will begin a slow slide as consumers realize that there are no more magic products coming from Apple after the death of Steve Jobs.”

A. McStravick then goes on to make the old and tired argument that Apple’s innovation died with Jobs, that Apple has yet to release another paradigm shifting device in the year or so since his passing.

“Apple seems to, post-Jobs, lost its innovative edge. Would Steve Jobs be running after Samsung and only settling when they promise not to hone in on the American market? Or would he have recognized that technology is only power when you stay at the forefront? I would like to think that Steve Jobs would have decided that his technology pervaded the market and so it was time to create the next as-yet-unknown “thing”.”

Let’s carefully unpack this quote. First, it’s important to note that Apple’s war with Samsung began with Jobs at the helm. It’s well known that these lawsuits are little more than suits against Google, suits which Jobs himself claimed he was ready to take to “thermonuclear” levels. Samsung even asked to have these angry Jobs quotes used against Apple during their trial last August.

Would Steve Jobs be running after Samsung? The answer is quite obviously: “Yes.”

McStravick also makes claims that Apple is no longer an innovative company and is, instead, a company in limbo, simply treading water and hoping to make a living on their existing products.

This is a common argument and one that I believe to be not only unfair, but a little gluttonous as well.

Steve Jobs signaled his triumphant return to Apple in the late 90s with the Bondi Blue iMac. It was a computer which changed everything about the way people saw computers.

You simply plugged it into the wall, plugged the keyboard and mouse into the computer, and the thing worked.

No OS install, no bloatware to remove, little to no configuration. It was a miracle.

Four years later, Apple released the iPod, the first product to set the company on the path to greatness. The appeal of the iPod isn’t the device alone, mind you; it’s the store, the way Jobs convinced the music industry to sell digital tracks individually. It persuaded listeners to rip their CDs and, for the first time in the history of the world, keep a digital library of music.

Not long after, rumors began to fly that Apple would soon do to cell phones what it did to digital music players. Then, 6 years after the launch of the first iPod, the iPhone debuted. This device matched what the iPod was able to accomplish in terms of changing the world and even more.

Who would have thought about surfing the web on a mobile device before the iPhone? Who would have thought that web developers would have changed the way they designed and wrote Web sites based on this one product? The iPhone practically invented the new app economy, sustaining developers by providing them an incredibly profitable business. Even as the iPhone was first released, rumors were beginning to fly about Apple’s new revolutionary thing— a tablet.

Then, 3 years after the iPhone, the iPad was unveiled.

Once again, Apple took an industry that was in terrible need of an overhaul and breathed new life into it. There had been tablet computers before. Using a tablet was supposed to feel like the future and yet, before the iPad came along, using a tablet felt like running into complicated brick walls.

The iPad was the first tablet device to be easy to use. It was fun, it was (and is) intuitive, and it once again created a market. Competitors like Motorola and Samsung have yet to best the iPad.

Three (Apparently) Long Years

And yet, people are whining about how Apple no longer innovates. Since the iPod’s initial release, Apple continued to improve it every year. Now, the top of the line iPod Touch, (hell even the iPod Classic) is worlds away from the original. The same can be said of the iPhone and, to a lesser extent, the iPad. After all, Apple’s tablet is not yet 3 years old.

3 Years.

It’s been 3 years since Apple released their last “innovative” product and already people are calling it quits for Apple.

If we look at the timeline of Apple products, we’re right in line for Apple’s Next Big Thing. Even before the iPad was released, we’d been hearing rumor after rumor about Apple’s next “Big Thing,” the television. These rumors took on an air of truth when Jobs famously said he had “cracked” the way to do a television. More recently, Tim Cook has said his company has “intense interest” in the television market, noting that he feels as if he has “gone backwards in time by 20 to 30 years” whenever he turns on his television.

If analysts and pundits judged other companies in the same manner that they judge Apple, it’s likely very few would confidently purchase any consumer good or stock in these companies. When was the last time Samsung innovated anything? Google has made their search engine the most popular web tool in the world, but what have they done since? Best I can tell, they’ve mostly chased Apple’s smartphones and tablets while using their users’ data to sell more ads.

I’d like to recall an article I read earlier this week. Though I’ll probably never cite this man again, Mike Arrington wrote an interesting article this week wherein he mentioned how bored he is with the current state of technology.

“…A lot of the mobile stuff out there is just radioactive decay from the iPhone launching in 2007,” writes Arrington in his exasperated sigh of a blog post.

There are two problems with expecting one company to lead the charge when it comes to innovation. First, it places unfair expectations on the one company, asking them to lead the charge. Meanwhile, while everyone waits for this company to hurry up and innovate already, the competition either stagnates or spins their gears as they try to play catch.

Secondly, expecting one company to innovate has a tendency to make us all whiny children. Apple has consistently led the charge, and now everyone wants more. No other company has so far been willing or able to take up this mantle; so all eyes fall on Apple.

Yet, as gluttonous as it may be to consistently want more and more from our luxury products, all signs point towards Apple being more or less right on track.

It’s been 3 years since they released their last “great” product, the iPad.

It seems likely that we’ll see something new from Cupertino this year or next, something to do with television.

And it isn’t just Apple who feels television is the way of the future, one of the last great markets in need of a makeover.

Google and Intel, for instance, have also been trying their damnedest to break into television, to capture the attention of the world with a set top box. We’ve watched as the companies have failed to bring anything worthwhile to market. Google, a company who has never been known to care about the human connection or great devices, released some monstrosity of a thing which looked something someone from the 80s would have invented if asked to design something “from the future.”

The Wall Street Journal reported this week that even though Intel has been working hard to bring their television product to market, they’ve been running into walls in their negotiations with content providers.

As it turns out, TV is a tough nut to crack. And so far, it seems likely that Apple already knows the “why” of their new, groundbreaking device, but has yet to work out the “how,” particularly when it comes to their potential partners.

In Jobs We Trust

In closing, let us not forget about the people Steve Jobs placed in power before he departed his beloved Apple. It’s an argument many others and I have made in the past— to negate these men and women is to negate the very man you claim to praise. Jobs knew Cook would be able to make the tough decisions and act in the best interest of Apple. This year, Cook has nearly gone out of his way to show us how capable he is of living up to the Jobs Standard, even going far beyond.

There was no way Jobs would have ever given shareholders dividends or launch a share repurchase program. Jobs never would have apologized for the whole Maps thing, a blunder that Mr. McStravick claims as proof that Apple has “lost their way.” Cook initiated a program to match any employee’s charitable donation to a non-profit. This never would have happened under Jobs. Cook had the stones to get rid of John Browett and Scott Forstall when Apple’s retail and Maps began to show their seams.

Cook even had the smarts to place Sir Ive at the top of Apple, giving him free-reign over the design of all Apple products. This is all a long-winded way to make this point; Jobs is still very much a part of Apple. To claim that his death also triggered the death of the company he built is to pay a great man a great disservice.

Mr. McStravick quotes the legendary B.B. King, saying of Apple “The thrill is gone.”

Yet, their latest iPhone broke sales records, both for Apple and the carriers. The iPad, even the 4th generation, which was supposed to anger any customer who had only just purchased the latest tablet, continued to outsell other tablets this holiday season. Customers were even storming the doors to buy up Apple’s latest iPad mini, a device that many panned as subpar and too expensive.

Apple’s stock may be slipping, but the “thrill” surrounding the company has not yet died, and should the company enter the television market this year as many sexpect, it’s likely many of the world’s electronics makers will continue to follow Apple for years to come.

A 4-month slip does not a coffin make.

No, Mr. McStravick, the thrill is not yet gone.

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