SUMMARY: Yes, Apple makes more money than any other company. It has nearly $250 billion in cash and equivalents on its balance sheet, and no other company came close to the $59.5 billion in profits it made last year. But in pursuit of higher profits Apple has put all their eggs in one basket; the iPhone. Now the product life-cycle is kicking in and smartphone sales have peaked. Where does that leave Apple?
According to fool.com “there’s little room for iPhone sales growth anymore. After 12 years of evolution, the changes brought by each new iteration of the device have become so incremental that they are virtually meaningless. This has led to longer upgrade cycles which, in turn, has led to iPhone sales actually declining year over year from their recent peak. Customers see little need to buy new ones.”
Apple, for some reason, thought that people would be willing to fork over $800+ every two years for a new iPhone when their old ones met all their needs. I would call this arrogance others would call it foolish.
The fool.com goes on to say “investors, industry observers, and consumers have been waiting for years for Apple to surprise the world, either by introducing the next big thing or by making a big acquisition that would allow it to reinvent a new business.” Under Tim Cook that hasn’t happened.
Apple overpaid for Beats headphones, which are marginal products at best, failed with their Home Pod and is being out-innovated by companies like Google, Amazon, Samsung, and Microsoft.
Apple could have used the tax cut to become more innovative but Tim Cook is not a CEO to lead innovation; he is strictly an operations person who is good at pleasing investors.
Rather than make a big acquisition or develop a breakthrough technology, Apple has largely spent its profits on share buybacks. In fiscal 2018, it repurchased a whopping $72.7 billion worth of shares. Apple could have bought Tesla with that money and still had $21 billion left over.
There used to be a time when Apple was the cool company seemed out by people who were technology early adapters. That time is over. The Mac team (OS) has been stripped down so that updates contain little tweaks not wholesale updates to its antiquated browser and mail apps.
So what makes a successful brand?
That depends on who you talk to. Wall Street is always looking for more. More growth, more sales, more profits. Steve Jobs was content with innovation over profits . Sure he failed at some things, remember iBlog and the Apple speaker, but with him, people were always waiting to see what Apple would do next
Most businesses are obsessed with fighting and winning and dominating and destroying. Under Cook Apple has been determined to keep the cash coming in even though any iPhone owner could have told you that paying $800mevery two years for a new phone was crazy.
Under Jobs, a successful brand was one that helped people manage their workdays and become more productive. He never envisioned that people would become so addicted to their phones. To Cook, it’s all about a new iPhone model every year and having someone on stage at an Apple developers conference to talk about Emojis.
I have given a LOT of money to Apple over the years. Now I find that new Windows laptops are better, faster and less expensive than Apple machines. Even with the pending introduction of new iPads, Apple is still in trouble. Who needs a new iPad when the old ones are just as good?
I really miss Steve Jobs…