The Cult of Jobs – it is back to the cellar for Apple.
Posted on January 14th, 2009 in AAPL, Apple, Apple's Mojo, Cult of Jobs, Jobs, Mac, MacBook, Macintosh, Nano, Steve Jobs., Touch, Uncategorized, iMac, iPOD Nano, iPod, iPod Touch AAPL, Apple, Apple's Mojo, Cult of Jobs, iMac, iPod, iPOD Nano, iPod Touch, Jobs, Mac, MacBook, Macintosh, Nano, Steve Jobs., Touch
Back in Sep 2008, I wrote that Apple was losing its mojo [the stock was at $140 back then]. I argued that apart from doing a lot of things correctly, Apple was guilty of doing a lot of things incorrectly – which led me to question/pick on Apple’s mojo. Here’s the list:
1. Not being brave when updating the Nano.
2. Slighting their faithful.
3. Not marketing iPod Touch as a MID.
4. Gravitating towards proprietary hardware.
5. Once again, thwarting generics [which did them no good the first time around].
6. The Cult of Jobs – dependence on one single person.
Apple’s marketing department did fix #3 and the iPod Touch is marketed as a MID and then some. But Steve Jobs’ temporary exit from the helm for health reasons has the stock down some 7% after-hours today. The stock went down 5% when Jobs was rumored to have died. I have a deep dislike for rumor and innuendo – especially when it applies to the life of a human.
While Steve Jobs is an honorable man, Apple’s response to his now disclosed illness will be analyzed and dissected from every possible angle [in fact, mea culpa of the same]. I think that both the company and Jobs need to be taken to task for the direction that they chose – when it came to disclosing his still unknown illness. Since Jobs is on a LOA, he should have disclosed *what* it was for – or absolutely nothing – with no mention of enzymes or proteins or anything for that matter. In other words, tell us nothing or tell us everything. Anything half-way will invite criticism from both Apple lovers and Apple detractors.
The future for Apple looks like they will be back to the cellar that they were in from 1980 to 1998. Let me explain my thesis. For starters, Apple has been a target of the new Blodgets [while I love the current avatar of Henry Blodget, I am talking about the Y2K version here]. 40% of the smart-phone market – or 77 Million phones is what they need to sell [at the high end of expectations]. WIth numbers like these, Apple will need to cut corners to maintain its gross margins, AND enter the cut-throat world of consumer electronics. Either way, it is a lose-lose situation.
The current growth of Macs is fueled by people willing to pay just a little more for Apple “coolness” and Apple “reliability”. These numbers have already shrunk due to the economy – where for now, the net-book is king. If Apple moves more towards proprietary hardware, a lot of these new adopters will turn on Apple – as they are unlike the faithful – who funded Apple during the “bleak years”.
In other words, Apple will be a victim of its success. They successfully killed the WalkMan, Vista; created a conduit through which people pay real money to download songs [iTunes]; and did not even try to get into the high-end corporate and data-center market [a good move, as this would have put them in competition with Dell/HP]. Now, the only “cool” technology that Apple can conquer is Ubuntu/Goobuntu – but then again, Ubuntu is free, and open – which does not fit into Apple’s mould for success.
So these are what will lead Apple to the cellar:
1. The cult of Jobs.
2. Not being cutting-edge [as it applies to new versions of devices].
3. Existing top end of estimates are ridiculously optimistic.
4. Apple knows how to be a niche player, and has no idea on how to be a commodity electronic gadget-maker.
5. Line-extensions will succeed only for a few years.
6. The Mac, MacBook and iPod Nano are getting stale.
and finally,
7. The new adopters of Macs and iMacs and MacBooks are unlike the faithful who supported Apple from 1980 to 1998. They will happily switch to HP or Dell when the time to replace their toy arrives.
I am confident that there will be a lot of people who disagree with me, but I am an Apple user. In fact, I use my MacBook almost exclusively for all of my computer use. But I am like the people I talk about in #7 above.
© Bapcha’s Stocks Jan 2009.
Disclosures: No positions in AAPL.
January 15th, 2009 at 2:04 am
Interesting viewpoint. I enjoy seeing the various opinions and predictions that people have of a company that is both unusually charismatic and innovative as Apple. IMHO, I think people error on the side of comparing Apple to existing models when they have always beat to their own drums.
Apple, well moreso, Steve Jobs strengths, time and time again, is not inventing something new, but taking an existing invention and packaging it as a product. Their best ideas were stolen, i,e, Mac UI from Xerox. In a world where more horsepower, more megapixels and supersized food seems to be the yardstick of success, for apple its quality over quantity. In quality I mean their industrial design, user experience and marketing image.
Steve Jobs has describe apple as bring culture and poetry to products. Nothing you described above mentions any of that, and in fact mirrors what Apple did, sans Jobs, with the Newton.
IMHO, what apple needs to do to continue being successful is:
1) cult of Steve Jobs: The biggest affect this will have is on mac/jobs fan(atics). They will stick around after he’s gone, and in fact their “faith” may have a brief spike. The “cult” of Steve Jobs doesn’t get new customers, Apple’s innovation does. Job’s ability to leave a legacy of that innovation is whats key, not the Cult. Think of how Disney has changed decades after Walt Disney’s death, then again after Eisner’s departure… in this case another visionary, Jobs/Catmull/Lasseter, is finally driving.
2) Proprietary hardware.. well I agree partially. I think Apple’s switch to intel is a good balance: they retain a proprietary “mac experience” by still having their own machine while opening up sales to their hardware (and exposure to their software). What is proprietary is the “mac experience”, but not the hardware of their products. Good move. Think lexus: the cars luxury can be replicated and even surpassed, but not the “experience” in is class, i.e. service, etc.. just walking into a lexus dealer is different from cars of its class
3) I agree that apple’s strength is niche and not commodity. The iPod was the first device to change that. the other exception was the Apple II, but that was moreso dominating a niche market than something established or large. However I think overall, there are more people that dislike apple products than like… as long as apple can keep enough people paying more for the apple experience, I believe thats safer than going for a high overhead enmasse product.
4) as far as cutting edge, again, their strength was the user experience, not being the fastest/edgiest/highest tech.. sure at times they may have been. But look at what happened when the pentium was beating the PowerPC in speed: apple released iLife, i,e, a software suite which added value to the computer purchase and a better user experience. iPhone? No cut and paste or voice dialing, but a better smart phone experience overall.. you didn’t need a manual!!! To improve it you get the app store. iMac with dotMac: easy connection to internet and a “mac experience” with the dot mac service, not the dated AOL or the chunky earthlink software. iPod? Less features than the competition at the time and no removable memory!! But it had less buttons, great industrial design, and was easy to use.
5) when you talk about the mac computer and its future, you forget that the computer is an appliance today as opposed to 15 years ago when it was just a computer. People will switch to Dell and PC when apple stops being easy to use, convenient and expensive. For example, I credit the relative stable OS releases and the existence of iWork and especially iLife as half the reason to get an apple. Before that was the only reason along with the mac experience. Now with the intel hardware, you have hardware that can house almost any modern OS available to the consumer. I think apple’s recent laptop release shows a level of cost reduction (shared keyboard, same industrial design) without skipping on innovation as they prepare for a lean haul. Their machines are still sexy, clean designs, the OS is still the mac epxerience.. that is their strenght.. so IMHO the macs are prepared for a harsher market environment and far from stale.
A good example of the above is that at CES, dell announced a sexy internet 12″ laptop that features a tuner and GPS. Plus I love the 12″ form factor for travel ala 12″ powerbook G4. But I prefer the mac experience with the OS. As the powerPC lag proved, I “settled” for a pricier and slower hardware because the experience on that hardware, via software, was better. The “more megapixels” size driven viagra culture is perhaps for the masses, but apple was about niche, and not masses. So in other words, apple hardware has got to really suck, shoot up in price and the OS turn as bad as pre OS9 to get me to “switch”. BTW, I originally “switched” from a Commodore Amiga computer that I used 5 years past Commodore’s demise.
Its like with the iPhone… I, like others, aren’t blackberry people. I barely used my Motorola Razr past voice, texting and some internet… and the experience was slow and cumbersome. I read the manual once and lost interest in filling my head with more “if-then” statements of a non intuitive computer. When the iPhone came out, it wasn’t a better phone overall: it lacked voice dialing, movie taking, Media messaging and for the internet/mail, no cut and paste. Plus the service cost more, although I did get more service. For the feature-queens thats a deal breaker, but for the user desiring a more accessibility to features and a better experience, the iPhone was a fit. While this may not yield a 95% market share, it offer a consistent product, experience and service to a market share that is willing to pay more for it.
Thank you for allowing my post.
March 17th, 2009 at 10:08 pm
CAUTION: Saying that Apple/Macs/iPods/iPhones are not BRILLIANTLY AWESOME TO THE POINT OF HEALING ALL YOUR DISEASES BY MERELY TOUCHING THEM (Yes, in caps.) causes the Cult of Steve Jobs to flame you in a rabid frenzy. I use Linux: I KNOW Mac OS X is inferior.
March 17th, 2009 at 10:14 pm
Clarification: By “Cult of Steve Jobs” I don’t limit it to the narrow field of the the obsessive Steve Jobs worshippers who work in Apple, but ANYONE who seems to act as if Jobs is Jesus’ Second Coming. These are the ones who actually think Apple products are flawless and better than everything, despite clear evidence to the contrary.
To them, Steve Jobs can walk water and is even more of a man than Chuck Norris. To Linux users, who see the real Steve Jobs, he’s like Bill Gates, a thief who got rich off of opportunities, not great products.
March 19th, 2010 at 5:49 pm
Well Done! I Like it!