I hate to say it, but I’m not bullish on Apple
Robert Scoble is bullish on Apple, and says “if I was investing I would be all in on Apple.” I disagree.
At the risk of looking foolish in a few months (which I hope, Apple is my computing platform of choice and I need them to be doing well), and well aware this post will once again wake up the Steve Jobs fanatics who regularly troll me when I challenge their vision of the world, Apple is sending me wrong signals all over.
The attention to details and anticipation of the needs of the users is long gone. Each product update does not bring much improvement, only more clutter, confusion, and less available storage. Long gone are the days of simplicity, of OSx being rewritten to take less space and run faster. Now it’s “thousands of new features” whose main purpose seem to make your old hardware obsolete and force you to upgrade. Apple is not a customer centric company, it is now a shareholder centric company.
Money and glory are great on paper, it’s easy to think they make things easier. In reality they generate immense challenges for corporations. Apple has been to the top of the world for a decade, and from up there it’s easy to become comfortable and blind. The signals I get from Apple diverge from those of a company running on passion and risk taking, they rather seem focused on the preservation of an oppressive, glorious past. And I am sure Tim Cook is fuming over that, well aware that this is the best way to hit a wall. But changing such a massive organization demands an incredible effort, and very very few corporations ever managed to get past such a challenge without having to go through a massive time of crisis.
Apple keynotes used to be crazy computer geeks sharing something they deeply believed could change the world. Now it’s aging white male billionaires who are disconnected from the realities of day to day life, and likely can’t understand what basic users like you and me need. These are the same people, just twenty years apart. And this is a widespread Silicon Valley problem, not an Apple problem. But the bottom line is that Apple seems to have failed to renew it’s leadership and build a corporation that reflects the diversity of its users.
In a lot of categories, Apple products are not the best anymore. I see more and more 25 years old geeks, a population that is representative of future usages, working on Windows using Surface, Lenovo or Dell hardware. The iPhone is not the best smartphone anymore. Apple laptops have a harder and harder time justifying the premium they command to make their way to your desks. Apple has lost its domination for two reasons: it’s ecosystem is becoming so complex so that keeping the promise of an integrated experience becomes harder and harder, and competition is catching up.
Now Trump is giving Apple a new advantage in its war against Google, Amazon and Facebook. Fear over the new administration’s attitude towards privacy will favour players who, like Apple, make money off hardware and software, not having to syphon as much data as possible from each and every user. I still remember this slide from 2015 when an Apple exec was on stage introducing the new Apple Health app, and in large white letters behind him you could read “Apple will not see your data”. That’s a big, big plus for Apple, and they would be crazy not to capitalize on that in the next fours years.
But perhaps the part I disagree most with Robert is on AR/MR/VR. He believes Apple is working on massive new products that will make those currently confidential technologies pervasive, the way the iPhone ignited the smartphone revolution. That could lead to Apple reclaiming a solid lead over its rivals.
While I think these technologies are super interesting and represent a unique and massive market opportunity, I don’t believe they will wipe out everything that came before. To me enhanced reality (the generic term encompassing augmented reality, mixed reality and virtual reality) is a complement, not a replacement. It’s like voice over IP: people said it would wipe out other forms of communication, and it still hasn’t happened. Why? Because real life is messy and unpredictable, and older technologies are resilient and made it to where they are for good reasons.
This idea of a future where we wear glasses reminds me of geolocalized marketing and beacons: these are technologies that attract a lot of attention because businesses and marketers wish they will work. But at the end of the day, they don’t really make end-users lives better. Do you really need targeted offers when you enter a store? Do you really want your walk down the street to transform into a festival of unsolicited notifications? Marketers hope so, but you, I, and millions of people don’t.
I was mad at Apple for releasing such an insignificant improvement with their latest macbook pros (the ones with the little touch bar above the screen), yet I understand why they did this. People use their computers to write, surf the web, communicate and read, tasks for which a keyboard is not that inconvenient. So improving on this is not a bad idea, although it leads to a hard realisation, the one that this particular branch of computing might have matured to the point it could now belong to the family of boring, slow-moving technologies. If true it would be a painful truth. But painful or not, a truth is a truth.
A key question to ask these days is: what is the problem technologies like VR really solve? Is interaction with computers really broken? Do you feel inefficient while typing on your keyboard and using your trackpad? I sure don’t, and I just can’t imagine a future where each person on the street wears enhanced reality glasses. Does that mean I don’t believe in VR? Not at all, I am dying to get my hands on an Oculus or HTC VIVE, but it will complement my other devices, not replace them.
And people use their devices in public transports, in their cars, in cafes. Not places where it’s practical nor socially adequate to wear a headset. The Boston subway already had to issue a warning that wearing a VR goggles was not advised as it was making you vulnerable to petty crime. That’s why I also have reserves with the hype surrounding voice assistants. On paper it’s a great idea, but how does a train car with 200 commuters work when everyone starts to talk to their freaking phones?
Bottom line: I don’t believe AR/MR/VR is the next computing paradigm in the sense of it being the ONLY computer paradigm. I think it will complement the existing mix, and represents a huge and rare opportunity. But I don’t believe it wipes out everything that came before it, and therefore I don’t think it represents an opportunity for Apple to jump ahead of everybody for another ten years like they did with the iPhone.
You might object that Apple is doing great right now. Agreed. But doing well in the short term does not mean much. I have seen CEOs sacrifice the future of their companies to meet the markets’ expectations, and I’ve seen analysts applaud those numbers who were, in fact, misleading. If to meet the promises you’ve made to the markets you shut down your R&D, you are going to be a genius in the short term, but you just mortgaged the future. Not smart, although with the average CEO now staying at the helm for less than ten years, it will likely be the next guy’s problem.
If what you take away from this post is that you should sell your stocks and that Apple will “do a Kodak” in the next two years, then I wasn’t clear. It’s just not how things happen in this world. Microsoft famously “missed” the Internet boat in 1995, and went through a decade of purgatory under Steve Ballmer. Yet they weren’t wiped away, and are now back stronger than ever.
It’s not about going bankrupt at all. It’s about reaching 50% of your potential instead of 150%. There is too much talent and intelligence in Apple for it to fail abruptly.
But somehow their culture, cash reserves and dominance might be starting to play against them.