Saturday, August 10, 2013

OK, Something is Definitely Wrong with Apple

Some of this article will repeat things I've shown in earlier posts. I'm trying to give you an overview of just how bad things are.

Some will think that I'm being too hard on Apple, but I really think that it's more likely, I'm not being hard enough. I'm far from alone, consider this article from a MacWeek founder: Apple Needs A New Roadmap, Again.

UPDATE: You might also want to read this 2006 post from David Pogue about the last time Apple failed:
One quote he uses that is particularly relevant is:
* Time Magazine, 2/5/96: “One day Apple was a major technology company with assets to make any self respecting techno-conglomerate salivate. The next day Apple was a chaotic mess without a strategic vision and certainly no future.”

Signs that something is definitely wrong with Apple:

Being Less than Truthful with Shareholders

I covered their earnings call indiscretions in this post. I'll recap here, see that post for links.
  • Apple bragged about their 20% iPhone growth, failing to point out that the smartphone market grew at 53%
  • Apple gave a lot of partial market statistics showing the iPhone doing well, when in fact their worldwide market share dropped from 16.6% to 13.1%, a 20% loss.
  • Apple stated, "iPhone 5 remains by far the most popular iPhone, but we were also very happy with sales of iPhone 4 and 4S." Failing to point out that the iPhone 5 had only about 50% of sales, an unprecedented drop in share for their latest phone.
  • Apple said "... we are very hard at work on some amazing new products that we will introduce in the fall and across 2014." There are persistent reports that the retina iPad mini will not ship until 2014. Some say problems getting the display to work, some say they don't want to cannibalize the iPad 5. Regardless, Apple just dropped tablet market share to 32.5% from 60.3% a year earlier. [link] If Apple doesn't have a reasonable tablet showing this holiday season (both in price and features), they may just not be significant any more. There was no mention of this drastic drop or its serious implications going forward.

Board of Directors Concerned About Lack of Innovation

The members of the board of course know some details about future products. Apple's core product essence relies on innovation. What does it tell you when the BOD is worried about its level of innovation? I'll let the link titles tell the story.

Apple's Most Profitable Products Doing Poorly

  • Apple has had to have multiple price reductions on its MacBook Pro Retina models. [link]
  • Apple had to let the iPhone 5 be discounted. [link]
  • The iPhone 5 has only made up about 50% of iPhone sales. Usually, Apple's newest phone had 90% or more of sales. [link]
  • It is widely believed that iPad minis are greatly outselling iPad 4s. [link] It is possible that iPad 2s also outsell iPad 4s, but Apple isn't saying. What is almost certain is that iPad 4 does not have more than 30% of sales. Thus, reports are saying that real reason the retina iPad mini 2 will not ship until 2014 is they are afraid of iPad 5 cannibalization. [link]

Unable to Maintain Cloud Services

Their history of failure in the cloud is legendary, I cannot even remember all the names. So, I'll stick to one of the most recent. Their developer web site was completely down for 8 days and partially down for 24 days. [link]

No Longer Cool

Apple caters to an elite market. When you're not cool any more, the elite market fades... fast!

Strange Cost Cutting

  • Apple's wholly owned subsidiary Filemaker just killed its Bento product and laid off 20 people. [link]
  • Apple Stores sales are down, they still haven't found a new head of retail, they are asking employees to focus on sales rather than service and they are asking retail employees to cut back on office supplies. [linklink] I find the concept of them focusing on sales rather than service particularly worrying. Apple charges premium prices, if they are not providing top-notch service for that price, why would anyone use them?
  • Apple has been running inventory much too tightly, causing frequent random shortages. [link]

Apple has Trouble Facing Reality

  • Another area is in their treatment of suppliers. The prime example is their ongoing suits against Samsung. They have lost the majority of these. Those they have won end up so watered down that it clearly could not have been worth the trouble. [link] Now, they find they have to go back to Samsung to get displays [link] -- I'm sure Samsung will give them a great price! But Apple is mean to other suppliers as well. [link].

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