Apple Inc. has hit the top of the arc--it's all downhill from here

First off, I’m a Mac. I “converted” in 2004 and have been using an Apple laptop ever since. Since I work as a translator/writer at home, this is an important choice. If the options are Mac and Windows, I’m going to stick with Mac.

That said, I’m disappointed in Apple. Not to the point of hating, by no means. But I got the original iPhone in 2007, loved it, and then kept waiting for the big new improvement to come out. It didn’t, so I got a Windows Phone last October. I love it. Really, it’s so much better than the iPhone–like night and day. It’s also forced me to learn a few new tricks that have improved my productivity; e.g., synching with Google calendar instead of Mac’s crappy Calendar program.

Be that all as it may, my personal preferences are just that. I think a lot of people share my mehness, however, based on the following:

• The new craptastic version of iOS. Oh my. Neon Hello Kitty Uncool. (Another reason to love Windows Phone at this point…)

• Dereliction of the Mac OS (I have 10.8.4, something-or-other Lion, I guess). I don’t hate it, but it has been buggy as hell, and a lot of shit is stupid and/or doesn’t work (Notification Center).

•iTunes. Need I say more?

•Shit like that.

OK, again, these are just some… things. Let’s get to the heart of the matter. The reason why it’s downhill for Apple from here is that they don’t have any new products! And here is where they are a victim of their own success. Because Apple rocked the world starting with the iPod back in 2001. The iPhone was a brilliant success in 2007. Then the iPad in 2010 (doesn’t that seem like forever ago)? Since then, it’s only been incremental stuff, like the iPad Mini and different versions of the iPhone. Since then, a legion of smartphones and tablets have appeared in the market.

Look, job well done. I’m not complaining about that. But then the stock price goes up. And up. And now, well, it’s stratospherically high. Apple introduces the craptastic new iOS and… stock price goes up some more!

Stock prices should rise based on success–to some degree. The problem is that a high price is only justified by the expectation of further growth. Apple has grown incredibly fast based on hit products. But it can’t continue to grow at the same rate. It has no hits in its pipeline. It’s now going to stagnate, and that stock price is going to fall.

Apple is a strong company. It’s got the iTunes and App Store cash cows, and it has a ton of cash. It’s not going to go out of business or anything like that. Not anytime soon. But seeing a once great company stagnate is not a pretty thing to see. As Apple comes down the other side of its success arc, I hope it continues to take care of its laptop customers like me (which it is already not doing a great job of taking care of).

As far as causes go, I don’t think it’s anything special. It had a great run, and runs don’t last forever. I also don’t think it had much to do with Steve Jobs dying. I’m not a Jobs worshiper by any means, and I think this would have happened anyway. It just is what it is.

Thoughts?

This argument comes up every time Apple does something that doesn’t shake up the world. Apple could be working on a new innovative product to amaze us all right now, but we won’t know about it until it is ready. Unlike other companies, Apple doesn’t announce every little idea they have, and they don’t release their failures to the public.* Apple’s “Next Big Thing” will be completely unknown up until the moment they choose to announce it.

Read this article from John Gruber about how Apple works. It is 3 years old, but it is still accurate.

[QUOTE=John Gruber]
This is how the designers and engineers at Apple roll: They roll.

That’s how Apple builds its platforms. It’s a slow and steady process of continuous iterative improvement—so slow, in fact, that the process is easy to overlook if you’re observing it in real time. Only in hindsight is it obvious just how remarkable Apple’s platform development process is.

[/quote]

Pretty much sums up your opinion that Apple has been amazingly successful, but doesn’t seem to be too exciting right now.

*More accurately, they don’t release anything that they don’t have complete confidance in. They most certainly have had failures, and they own up to those mistakes.

They haven’t shaken the world in three years, however. That’s the difference this time.

IF they have something in the pipeline. The rumored “next big thing” was some type of TV, but that doesn’t seem to be going anywhere. If Apple comes out with something truly amazing that no one has expected, I will gladly say I was wrong.

I’m not sure what you are trying to say here. That Apple’s development system is so good that they will always come up with a hit product within a certain period of time? Because that’s the key factor here. I would not be surprised at all if Apple comes up with the “next big thing” in the next 15 years. I would be surprised if they do so in the next two years, however.

Let me also add another point. Until the iPod, Apple was an underdog computer manufacturer with a strong fanbase but tiny market share. There was plenty of upside potential in their computer business, and they could have sustained moderate growth in that sector for some time and done well as a company at a smaller scale.

Now, however, their music player/smartphone/tablet business dwarfs their computer business. That’s a huge accomplishment, but irony is that there is very little upside here. In fact, they have lost significant smartphone share to Android (though the market has grown during the same period, so they didn’t feel much if any financial pain from that). Now smartphones are a commodity, and tablets are heading in the same direction. The iPod has largely been replaced by the smartphone as music player.

It is this marketing position that makes their situation so sucky. They really need to create a totally new market, as they basically did three times in a row with the iPod/iPhone/iPad, in order to grow.

In a different economic system, Apple could be fine. But in our system, if you aren’t growing, you are failing.

The same thing happened 25 years ago when Apple fired Steve Jobs. It was a slow and sad decline. By the time Jobs came back Apple was a pathetic shadow of its former self. They even did the deal with Microsoft.

This time there is no Steve Jobs to help them. I’m not sure if Apple can stay relevant. Supposedly Steve left them a folder of future projects. But they sure screwed up iOS. Not a good sign for the future.

I wouldn’t want Apple or Microsoft stock in my portfolio much longer. There’s no rush to sell, but once the markets climb, then it’s time to consider it.
History of Apple Inc. - Wikipedia.

There’s Apple as a hardware company and Apple as a software company. I have to assume that the bulk of their profits come from the hardware sales but it’s the integration of the 2 that makes them as popular as they are - the lauded Apple ecosystem.

For people that like that walled-garden approach, I don’t see them abandoning Apple anytime soon. But that’s not what is going to support their P/E multiple. Hardware upgrades will and that’s where new products come in of course.

Apple lost in the mobile market on the software side a long time ago. Android is far and away the dominant player and despite some recent gains in the US, globally speaking, Apple is toast and has been for quite some time. Fortunately for them, that’s largely irrelevant to their bottom line if they can continue to innovate and come up with new products people are willing to pay their current 40% margins for. But that’s not what they seem to be doing. Rather they seem to be doing things adding different colored cases and fingerprint scanners. Not really cutting edge stuff.

This might be reminiscent of what happened to Blackberry. They had plans for a lot of the same devices as Apple did before Apple brought theirs to market but because of their dominant market position didn’t feel any sense of urgency and before they knew it, the there really wasn’t any - because the market had made them irrelevant.

I see that happening with Apple. The next hot device will probably not be something like Google Glass but something like a smart watch, although not the limited type of device Samsung plans to release. Apple is said to have something like this in the works but as to when they plan to release and what it will be able to do, we’ll have to see.

I don’t get the apple appeal, android is just as good (I own both an ipod touch and an android phone) and is half the cost for the same and sometimes better functionality (like the ability to add SD cards).

They haven’t “shaken the world” in about a decade. Appleheads are grousing that iPad Mini is a re-hash of the iPad in smaller form, forgetting that the iPad launch was followed with cries it was a re-hash of the iPod in larger form, whichis equally valid. They’ve basically been releasing the same tech in different form-factors since the iPhone-sized iPods launched, with updates. No big crime - it’s what the pc industry has been doing for decades.

What will cause Apple’s eventual “downfall” is what held them back from dominating the pc market when they were hot in the 80s - self-marginalization due to their “walled garden” concept. Once the Android side of the market matches them in functionality, users will defect in droves for the more open platform.

It’s not going to happen soon - they’ve got a heckuva lead - but it’s inevitable. They’re going down the same old road, and it’s going to the same old place - a 10% market share of loyal users.

I would say the iPhone was a big deal, and that was 6 years ago. The iPad never interested me much at all, so I am with you on that.

Apple’s smartphone market share is already down considerably. I don’t know if it’s from defections or adding fewer new users as the market grows, but Android has already won this fight.

I don’t even know if that level of loyalty is sustainable in the smartphone and tablet market.

Apple has one major card they could play very soon: controller support for iPod/iPad.

Controller support was added to iOS 7 and when combined with an Apple TV, Apple could create a massively useful mini game console that would use an owner’s existing slate of iOS games. Word is that a lot of developers are adding controller support to their iOS titles and that’s more a matter of “when,” not “if.” If Apple plays it right, they could own a big chunk of the living room.

It’s not flashy, but a surge in app sales on the back of controller support could happen.

Interesting, Justin. Thanks.

It was three years between the iPhone and iPad. It was longer than that between the iPod and iPhone. Again, how do you know they don’t have something in the works right now, that will impress the market in 2014?

Rumors.

Nope, I’m saying Apple will come out with a hit product when it is ready. They won’t say a word before then. They won’t leak teasers, or build up hype, or announce something years before it’s ready. A lot of companies work that way to keep the shareholders interested. Apple doesn’t. Apple’s stock doesn’t grow with product launches or announcements, it grows when they beat expectations every quarter.

Maybe it will be 15 years. Maybe it will be next year. Apple has proven the market analysts wrong year after year. Apple will be criticized every year that they don’t do something groundbreaking, until the year that they do. Then the whole cycle starts over again.

Unfortunately, that’s not how the market works. That’s not how you support your share price. That’s not how you keep your investors happy. That’s not how you keep your loyal customers happy. So unless you think Apple doesn’t care about any of those things, either you’re wrong or Apple is.

To be fair, Microsoft was forced to do this, as in vaporware — products they were never going to release — or copied products that were released as inferior to the promise eventually, to destroy or intimidate competing companies from forestalling them.

Apple has never had to do this.

I don’t disagree that it’s going to be difficult for Apple to sustain the success they’ve had, but I disgree with some of your points.

The iPad never interested you so it’s not a “big deal”?

Of course it was/is a big deal in economic terms and in terms of establishing a major niche in the computing landscape (yes there were tablets before, in extremely small numbers).

Android has won the fight of being the de-facto standard for non-Apple devices.

But that isn’t a fight that Apple is/was fighting. Their fight is to make a ton of money by selling a device that works well etc. etc. They clearly never attempted to do what Android is doing as is evidenced by not licensing their software to anyone.

Apple get’s 53% of all profits from smartphones, Samsung get’s 50% and everyone else splits the rest. Apple is fighting Samsung and it’s pretty close at this point.

I have complaints about Apple products, but I don’t understand the gripes about the new iOS. Other than misreporting my unread mails, I love it and gave been waiting for ages for someone to stop with the ridiculous 3D/bezel/shading effects on every little graphic element. The only thing I don’t like is the new calendar. It’s harder to navigate, in my opinion.

Maybe Apple feels it’s more important to keep things secret so they get a jump on their competition.

Based on iPod, iPhone and iPad success, it seems like a pretty good strategy. Why give competitors more time to catch up when you can jump into the market and gobble up share and profits giving yourself a lead of a few years. Seems smart to me.

Apple’s share price is down mainly because it was trading at such a high multiple and that multiple was based on unrealistic expectations for future growth. Except they weren’t all that unrealistic if you compared them to past performance. But as they say, past performance, yada, yada.

Right, the fight was never iPhone versus Android. It’s iPhone versus Galaxy versus Droid versus HTC One versus Optimus versus Incredible versus yadda yadda yadda. The iPhone blows away every other smartphone model when it comes to marketshare. It only loses when you add them all together.

It’s ugly as sin and nowhere near as intuitive as it used to be.

The iPod was a huge leap forward for them, and then they were able to ride that arc with improvements like the Nano. They were due for another big product by 2007, but they were doing OK. The thing is, the iPhone wasn’t just a huge leap forward, it was tremendous. At that point, they set the success bar (and growth requirement) much higher.

They might, but I doubt it.

Well, if it’s 15 years, then that’s not being successful. I’m not saying Apple can never do anything good again. I’m saying that they cannot maintain the arc of success they’ve enjoyed since 2001 (and especially since 2007).