Thoughts on Apple
From being called the most valuable company in the world to being declared dead Apple is no ordinary company. Everyone has an opinion, but few differentiate between short-term and long-term expectations.
Without Jobs, Apple is just another tech company; albeit with an amalgam of great products from another time. However great products do not shield against technological evolvement, visionaries do. In the tech world the real cost of dwelling is extinction.
Phase 0: Apple with Steve Jobs is changing the world. Jobs is able to revolutionize how we listen to music, how we read online and how we use our phones. Like Jeff Bezos and Elon Musk, he is always in search of new realities.
Phase 1: After Job’s death, apple is still thriving. A year after Jobs’ death the stock reaches its all time high. Most think it is because Apple is this amazing company, but the truth is that it is because its competitors are so far behind that they are still trying to catch up to Job’s genius.
Meanwhile, expectations on Tim Cook and Apple continue to rise. Unsurprisingly with no genius at the realm, Apple is not able to deliver. No new life-changing products are introduced, mistakes are made and the stock starts to tumble. From September 2012 until April 2013, the price almost halves from 700 to 390.
Apple had failed to meet expectations and it got punished. Selling yields more selling until investors realize that: Ah Apple is actually still selling iPhones all over the world, there is no reason to sell and the stock rebounds a little. Investors are mixing short-term expectations with long-term expectations.
Phase 2: With no other company having a Steve Jobs, Apple still has the upper hand. The products that Jobs designed are still top-notch. The competition failed to surprise the world. They are just copying the genius’ work.
So we are in a phase where competition is playing catch up. It should be no surprise knowing that very few are able to do what Jobs did.
This is equilibrium; this is how statistically it should be. Steve Jobs was an anomaly. Most people are closer to monkeys than to Steve Jobs when it comes to bringing life to their visions.
Phase 3: Apple and its peers are copying each other trying to increase their share of the market with marginally better products. This is a return to equilibrium.
Phase 4: The tech world does not support equilibrium. A new Steve Jobs appears and does to Apple what Apple did to Blackberry. Sadly, prodigies are not abundant, they appear on rare occasions. In this buoyant world that craves for innovation the main cost to a tech firm is the opportunity cost: Having no visionary at the realm is more costly than having failed products.
Hopefully management will realize they are monkeys compared to Jobs. They should recognize that the most significant use of their cash is not to pay it as dividend or share buybacks as Carl Icahn requests but to spend it on finding a new anomaly, a young anomaly that will once again rejuvenate the company. There is no better use to their cash than to spend it on the only thing that can help Apple endure time: A Visionary.