Each time I hear about Apple’s stock price taking another hit, or being undervalued, I can’t help but shake my head. Wall Street seems hell bent on tanking share prices for Apple over the notion that, though the company is not currently sinking, they are mere moments from striking the proverbial iceberg.
You’ve heard the arguments before: iPhone is boring, iOS is boring, iPad is boring, there’s nothing NEW. The counter arguments from more rational folk are strong: $100+ billion cash in the bank, profit leaders in handsets and tablets, growing computer sales amid a shrinking market, no need to change, and so on.
The problem is that both camps are wrong. Yes, Apple products are a bit boring, but they are boring because they just work as expected, not because they are bad products. Apple products are boring by design, and it just so happens that boring in this case is actually good. It’s also true that Apple is banking a lot of cash everyday, but even if Apple can run the company for years off its cash stockpile without selling a single damned thing, well that doesn’t mean that everything is OK — it’s just a thing that Apple could do.
Either way you look at it, both the ‘Apple is fine’ and ‘Apple is doomed’ camps are looking at the wrong things and drawing the wrong conclusions.
Apple does need excitement or they will eventually have to start dipping into that hoard of cash. This is not to say that Apple needs to make a watch or a TV set, but that Apple needs to get back out front, and be the leader that everyone else is chasing.
Because, news flash, Android and Windows Phone 8 are damned good. Because Samsung is making compelling phones. And it’s only a matter of time before there is a tablet that can rival the iPad lineup.
There’s no more time for Apple to rest on its laurels, yet that’s what it seems Apple is doing.
You can preach all you want that Apple only does things when they are good and ready to do them, but that doesn’t work in today’s world. You can’t sit back and watch your competitor release a new and exciting (for someone), phone every quarter and say to yourself “pshhaw, iPhone”. That doesn’t work. It doesn’t work for Wall Street, for tech journalists, for tech consumers, and most importantly for share holders.
Each of those groups wants just one thing: new and shiny.
Samsung is full of new and shiny, but Apple really isn’t right now. Apple’s modus operandi has been: new and shiny only when making a huge splash (e.g. iPhone, iPod, iPad), the rest of the time Apple just milks the product for everything it is worth. Don’t get me wrong, it’s a great strategy provided you know when the milk is about to run out.
I think this explains the stock price conundrum: The deflated stock price has nothing to do with innovation or anything else, it’s about new and shiny — and Apple is lacking in that field — so investors are worried that Apple doesn’t know when the cow is about to dry up.
Laptops and desktops are old and boring no matter what you do to them. Tablets and smart phones are hot items, and Apple has yet to make a change to their lineup that screams “new and shiny”.
Right or wrong, this is how the world works now.
This also explains the iPad mini craze. The iPad mini sold like hot cakes — to the tune of people not being able to buy them fast enough. They sold like crazy not because they were better, but because every person could instantly tell that your iPad mini was/is, “new and shiny”. That’s not just another iPad, it’s the new iPad.
That’s powerful stuff.
At first glance you can’t tell an iPad 2 from 4. You can’t tell an iPhone 4 from 4S, and many can’t tell you have an iPhone 5 until they are holding it. That’s problematic when consumers are eager to show off their forward-thinking, money-wasting, ways.
Apple can survive for years staying the course they are on — truly they can. But then they become Microsoft, and my how Microsoft is struggling these days. Office has no new and shiny, and the new Windows 8 doesn’t seem to matter.
The key for Apple is going to be recognizing how long they can stay in the churning-amazing-profits-era and when they have to move back to new and shiny disruption era. I don’t think Apple is there yet, but by the same token it certainly feels like we are getting close.
My litmus test for “new and shiny” is what I call the stranger effect. That is, if you take your latest Apple gear into a public place and use it — do any strangers stop and ask you about it?
The Powerbook G4 had that effect when I first got one, same with: iPod, iPhone, iPad, iPad mini. But when I switched to the iPhone 5, no one noticed. When I upgraded from the iPad to the iPad 2 and then to the iPad 3 — no one noticed.
When people stop asking, stop noticing, that’s when the new and shiny is gone. It’s not a sign that you need to drop everything for a new product, but I do believe it is the sign that you need to start thinking about what is next.
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