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from the the-tide-goes-in-and-the-tide-goes-out dept.
The New York Times published a story that states the obvious for anyone who has studied economics, that Apple's dominant position today is not permanent. They may be very clever and innovative thanks to the spirit (and curse) of Steve Jobs lingering around 1 Infinite Loop, but all fame is fleeting.
In a few short years, Apple has become the biggest company on the planet by market value—so big that it dwarfs every other one on the stock market. It dominates the Standard & Poor’s 500-stock index as no other company has in 30 years.
Apple’s market capitalization—the value of all of the shares of its stock—is more than $758 billion, greater than any other company’s. Yet the Wall Street consensus is that Apple is still having a growth spurt. In fact, if Apple’s watches, phones, laptops and other gadgets and services keep generating favorable publicity—and if its quarterly earnings report on Monday is as strong as the market expects it to be—there’s a reasonable chance that Apple’s value will keep swelling. Not far down the road, it might even reach the $1 trillion level that some hedge funds predict.
Yet, IBM was once a huge computer company, the one to beat, not unlike what Microsoft became.
IBM thrived for years afterward, but just as [Steve] Jobs had predicted, it turned out to be vulnerable to disruptive change, as all big companies are. For decades now, IBM has engaged in a sometimes painful transition, and as it revealed in its quarterly earnings report last week, it is still hurting: Its revenues have declined and it has endured wrenching business shifts.
My take on this is pretty straightforward. I own IBM stock; I don't own Apple except in the form of an S&P mutual fund. While I use Apple computers and like them, I have little faith in Apple's long-term future, whereas I think IBM will be around and relevant for much longer once they get their business properly reoriented.
(Score: 3, Insightful) by PizzaRollPlinkett on Monday April 27 2015, @11:10AM
Apple has mastered the Product Launch Format for new products. The main difference between them and Double Your Dating and other nonsense (stock market advice, etc) is Apple has a good product for the money. They deliver something with value. Other than my iPad Mini and my toilet, are there that many products I use multiple times every single day? But Apple knows how to do it. They have the press on their side, reporting on every leak and rumor. Apple manipulates the press to build excitement for their launch, and then launch a new product. They have supplier leaks, lost prototypes, rumors, journalists speculating, slips of the tongue, and so on leading up to their events. Then they have an event, with their main guy on stage telling people to buy the product. I don't know how much Steve Jobs contributed to Apple using the Product Launch Format, but it's why Apple is so successful.
What separates Apple from everyone else is their Product Launch Format. No one cares about Android watches. They were mostly ignored when they came out. But Apple has carefully built up hype for their watch over several years, let Android take the early hits, improved their watch from seeing what Android did wrong, and then built up to a frenzy hype launch recently. I still don't know if you can actually buy one or not. It's all hype. But hype works. Apple not only has a core group of media outlets that do nothing but echo its hype, but they have the mainstream media on their side.
Apple's hype is brilliant. Solid gold. Apple is worth billions on the stock market because they're able to talk people into buying their products, and right now in today's commodity world (did you see the weekend WSJ article about how the world has too many commodities and not enough buyers?) that's worth more than any true value anyone could create by shipping a real product. Having a product doesn't really matter. What matters is being able to convince people to buy your product.
Apple has differentiated itself in a commodity market. You can buy a MacBookPro, or some boring old Windows laptop. You can buy an iPad, or some boring old tablet. The ability to take a commodity item and make people want it is the most valuable thing in the world right now. Apple may be more expensive, but they deliver quality. I had a Creative Zen MP3 player that bricked itself after about a year. I've had an iPod Touch since like 2009 or something, still going strong. My MBP is so old I have year after year of tax software on it like an archaeological record or something. I don't have any other computer that old at all. So Apple does deliver quality, but that's not enough. They have to make people want to buy their stuff, and they are able to do that in a world that sells mostly cheap junk at commodity prices.
IBM was boring, is boring, and will always be boring. They did their business by overcharging big corporations for boring back-end mainframes. No comparison.
(E-mail me if you want a pizza roll!)
(Score: 3, Interesting) by VLM on Monday April 27 2015, @12:13PM
Could you have the cart before the horse? If you have hundreds of billions because of temporarily leading a hyper-profitable emerging market (which is no longer hyper profitable or emerging) then you can afford some staggering payola and any main stream media manager who isn't an idiot is going to court Apple for all their worth to get a cut of the ad sales budget.
Gadget oriented techies have common cause with the media execs, so a natural blindness sets in where people think the general public gives a F about apples new products, when of course they don't, its right down their with baseball box scores and water cooler talk about last night's sitcom episode, and forgotten just as quickly if its ever noticed at all.
I think your correlation analysis is pretty good, but the causation is unfortunately probably backwards.
The commodity vs buyer thing is just the old income inequality story. People would buy stuff if they had money, which they don't. A lot of anecdotal observations boil down to we no longer have a functioning economic system for almost all of the worlds population. Eventually that's going to be a huge problem. Hopefully the conversion will be orderly and peaceful (LOL as if humans ever do that)
(Score: 3, Insightful) by Phoenix666 on Monday April 27 2015, @06:19PM
While that is true, prima facie, Nerdfest's point is correct:
That is, the people who are tastemakers in our world are Apple fanboys. They are constantly telling people through advertising, media, etc what is cool to wear, to do, to be, and Apple fills the computer/tech niche nicely for them. No, most average people don't obsess about the shoes the cool guy in the office is wearing, but they notice. Most people don't obsess about the car they drive, but when they see something cool looking pass them on the highway, they notice. Likewise most people don't obsess about what brand phone they have, but iPhones are considered far more cool than androids and people notice when you have one. And, if my wife is any indication, the people who do have an iPhone get a secret thrill out of being in that club.
Me, I'd sooner be dead than own a device that I don't "own," and that I can't hack and develop apps for without paying Caesar. And you'll have to pry my QWERTY slide-out keyboard from my cold dead fingers. But then I'm a function-over-form kind of guy, which it sounds like you are too, and different things are cool to me than are to most people.
That cool factor, that understanding of what average, non-technical people want from technology, is centrally responsible for propelling Apple's shares to such a high valuation. It gives them tremendous wiggle room when it comes to customer satisfaction; because most people buying the Apple Watch are already stalwart fans, they're going to do the hard work for Apple of figuring out why in the hell anyone would want one. They'll invent enough reasons and blog/vlog/evangelize about them until the plods around them say, "huh, maybe I should get one, too."
I'm waiting for Apple to meaningfully conquer entertainment proper. They certainly have the cash to do it. And their fan base, being so solid in the entertainment industry, would probably be happy to be conquered. That's a path to an even greater climb in their market valuation.
Washington DC delenda est.