“Logic says that Apple is in transition,” Richard Saintvilus writes for TheStreet. “It began when Steve Jobs died. As an investor, it’s foolish to not embrace this change and adjust your expectations, regardless of how difficult this mental changeover may be.”
“It’s been two full quarters since Apple’s current CEO, Tim Cook, stated publicly that Apple is ‘not a hardware company.'” He didn’t say this once, but twice,” Saintvilus writes. “Cook, who has become a popular punching bag, also said that ‘there are other things we (Apple) are doing and could do to have revenue and have profit flow.’ What Cook understands is that a ‘new Apple’ is coming, and what is leaving is the overreliance on hardware.”
Saintvilus writes, “Going forward, it is services that will drive Apple’s growth and margins. But Apple bears refuse to accept this. Nor does it seem that this new reality matters to those who are constantly calling for Tim Cook’s head… But the fact of the matter is, this is no longer Steve Jobs’ Apple. That’s right, I’ve said it… This is a ‘new Apple.’ As such, investors need a new way to think. The ‘quick buck’ days of the past five years are over and, as with Steve Jobs, they ain’t coming back. What will come back, though, is higher revenue and cash flow, which will spur a much higher stock price.”
Read more in the full article – recommended – here.
[Thanks to MacDailyNews Reader “Fred Mertz” for the heads up.]
And maybe just maybe, this is the Apple Job’s was trying to build. One not dependent on hit after hit, of it not being able to withstand a product dud that throws it perilously close to bankruptcy.
Apple will always be Steve Jobs’ baby.
Chaz, I will NEVER EVER understand the attraction to the BULLSHIT myth that Apple was EVER perilously close to bankruptcy. Their finances NEVER indicated that was the case. Not ever. Is this some odd twist in the human self-destructive imperative I cannot comprehend? Is this a part of the same human insanity that invented such ludicrous horrors as devils and demons? WTF is this obsession with self-destruction?
What DID happen in 1996 was Marketing-As-Management at Apple forced the production of $1 BILLION worth of Performa Macs that NO ONE ever wanted. They ended up warehoused then eventually trashed in a whopping huge write-off in 1997. THAT was what ALL the doom mongering was about. It’s typically Marketing-As-Management MIS-management. Apple cured the problem by throwing OUT their Marketing-As-Management and becoming entrepreneurial again by buying NeXT and hiring Steve Jobs again as CEO.
Let’s please attempt to stick to history, not mythology.
http://www.businessinsider.com/how-steve-jobs-took-apple-from-near-bankruptcy-to-billions-in-13-years-2011-1?op=1
The Lesson: Under the reign of Steve Jobs, Apple proved they weren’t afraid to take risks and fail. They also showed that when something wasn’t working, they could adjust quickly, pulling plugs and changing strategy as necessary. Jobs has said, “We’re gambling on our vision, and we’d rather do that than make ‘me-too’ products.” — now a lesson for Tim Cook… make changes – streamline the product category – adjust quickly to consumer wants – Apple is a consumer product company – who makes integrated software iOS into devices we all use daily by controlling the design of it hardware.
Kewl post. It reminds me that Tim Cook, despite years experience as the working CEO while Steve Jobs was ill, is a newbie to a lot of Apple’s common ups and downs over time. I have no doubt he is being EXTRA cautious right now, thanks to the LOON FEST that happened after the initial crazy Apple Maps FAIL and lesser blunders, none of which are new phenomenon to Apple. He didn’t have Steve job’s hard won savvy about dealing the loons out in the tech community. I’m not sure how or what Tim Cook is doing to adjust at this point, but caution is clearly one of his reactions.
And that’s just fine with me. As I posted somewhere else around here today, we seasoned Apple fanatics know the worth of waiting for the worthy. Or to recall an old sales slogan: “No Wine Before Its Time”. Apple rushes out any product at its peril. That’s when the vultures have REAL meat to chew. It’s wise to avoid that scenario. 🙂
a great respond
The difference is that;
Tim is cautious – Steve was a risk taker.
Yet the scenarios are different, Apple was threatened into near bankruptcy – so the media shouted – however today Tim is only pressured to produce innovative products yet Apple remains the strongest tech company with billions in the Bank.
You are right Derek, there is no need to panic – Tim is wise to be cautious.
Yup, Tim is NOW most certainly cautious. I expect in hindsight he’ll see he was too cautious. But we all have learning curves and limitations. I’ve seen no reason to worry about the outcome, so far anyway. All I’ve read is a lot of nattering nellys with rancid rumors.
January 2014 is likely to be a very happy time to look back on 2013. Meanwhile: SuSPeNCe!
beautifully said – and a carrot well taken,
look forward not back – Apples future is very bright.
Jolly good bit of onomatopoeia
I have been informed that the figure of speech is alliteration (rancid rumors), not onomatopoeia (ka-ching!)
I suck at rhyming but enjoy alliteration.
I disagree that Steve was a “risk taker” and Tim is “not”. Steve was a risk taker and very cautious at the same time. If a product was not ready or they developed a product that did not meet his standards, he cut it. He was cautious like that. It had to be perfect or near perfect. He WAS a risk taker with trying new ideas and presenting them when they had all the bugs ironed out and all of the unnecessary tech stuff – i.e. he knew what to say “No” to.
Tim is very similar. He is Not releasing every product before its time any more than STeve did. SJ did release the cube and had antenna gate on his watch. So don’t allude the ills of the “Map” as only something that Tim did and not Steve.
They are different people for sure but Tim has to adjust the driver’s seat for his strength. There certainly is no one else out there IMO that can match SJ and even TC. TC takes risks too, and one is that of the new products and updates coming out soon, he will not be released before their time or that they are bug free.
recent FUD from Fox Business News…
What did the board really discuss the other day?
Compare that to 1997.
None what so ever… because Tim is the
man and there other to replace him.
Apple Board Discussion June 1997
a) If we keep Gill as CEO there’s a 10% chance we’ll avoid bankruptcy
b) If we fire Gil and Steve comes back, we have a 60% chance of survival
c) If we fire Gil and Steve doesn’t come back, we have a 40% chance of survival
—-
Apple Board Discussion August 2013
a) If we keep Tim as CEO would we have a 10% chance that the stocks go up again?
b) If we fire Tim then who do we have, we need a 60% chance for innovation to shine in the market now – but has our leader energized and excited our future?
c) If we fire Tim and Ives steps in, would that gain us have a 40% chance of innovation to market today?
—-
Cook stays. Innovation is not created this way… innovation is a study of what technologies are out there, housing a great team of people with the same passion to better the worlds computing lives – how those technologies and processes could be improved and using the imagination to piece together a revolutionary solution to problems no one imagined, other than Apple sees need for. The Board, The Stock Market, the fans all have no say – only to keep the faith in the religion.
Cooks only obstacle is to keep the doubters in a state of happiness.
IMHO it’s all a matter of time. I was just replying around here somewhere that it’s well worth waiting for Apple’s best to hit the market, not some compromised rush job POS that’s guaranteed to trigger nuclear war from the analcysts. 2013 has about 5 more months to go. I think we’ll all be smiling by January 2013 and a lot of the Apple Bear Bullshitters will have shit their pants or have been fired.
Very kewl post! I like your analysis.
haha – the Bears have no Charmin to wipe their butts
but yes, the world will rejoice come Jan 2014;
in deed its worth the wait.
http://s7d5.scene7.com/is/image/Staples/s0429879_sc7?$splssku$
It’s the pivot!
Apple’s products and services provide real solutions to millions of people all over the world. Yes, Apple is different under the direction of Cook, but it is important to realise the tech industry doesn’t stand still. Change is essential. Apple has never been a company to stand still and accept the status quo.
I’m confident we’ll see some great products and services from Apple in the near future. What those are we’ll just have to wait and see…
“In an age of abundance, appealing only to rational, logical, and functional needs is woefully insufficient” – Read “A Whole New Mind” by Daniel H. Pink. “Mastery of design, empathy, play, and other seemingly ‘soft’ aptitudes is now the main way for individuals and firms to stand out in a crowded marketplace. …
To be fair, Cook statement that Apple is not hardware company has nothing to do with whether “the new” Apple is “coming” or not. Steven Jobs made similar statements, too. Apple was never only hardware company.
EXACTLY.
Lets all be honest here.
2007 was the transitional time.
1) Apple introduced iPhone.
2) Apple renamed itself to Apple Inc.
iOS and consumer products was the driving factor. Steve put his money on it and it was massively successful. This was no fluke but a well researched and well planned change and the article is way off basis here. Cook was the right man during Steves’ illness – and Cook has not been perfect yet still the man to run the show. He has made mistakes – yet Cook is not cooked yet. Nor is Apple. Money on the Bank assures that.
Apple is first a software company and second a hardware customizer to order — controlling both sides for a better enhanced experience and reliability of its products. In house engineers, in house design, in house marketing, in house chip manufacturing – Apple has it all covered – and is doing just fine. Apple has invested and continues to invest. And only piece together technologies into innovation as those things occur. Apple is not inventing new processes but pressing for industries to improve so their vision and innovations can occur. Apple can not invent the transporter beam from StarTrek until certain technologies arrive. Appel research department pieces together that in which is available and demands quality and qualities to yield their desired market. And Tim Cook is a master at managing those areas of the supply chain.
TIM / IVES / SCOTT and others ETC all were key players in the success of iOS – JOBS “A” team — and thoarese remaining core to Apple still and ever since it became APPLE INC. The reason was obvious. The transition had already been completed. What Apple is going through now is world economy, market saturation, sacred investors, stock control, harmful rumours bad press and a bunch of legal issues. Yet, Apple under Cook remains focused and true to Steve’s vision.
Can’t disagree. Except for the “sacred investors”. Cook & company pay attention to their stockholders, but I doubt they worship them in a church…
I think he meant “scared” not “sacred”
When you think about it, how much hardware does Apple actually make. None as far as I know. They just design and quality control. Third parties make everything.
We have assembled for Apple up here in Canada… Like Foxconn does – they are our competitor – We build to order — We are Celestica, a branch of IBM one time. Sadly we do not assemble much for Apple anymore.
Instead we build hoover vacs now – Lol
Hense the reason that Apple never enters into the “spec” wars with other companies. They integrate the software on hardware that completes the whole package into a very integrated product. Not a product with a bunch of useless stupid gimmicky features that no one will really use.
It’s still SJ Apple. To dismiss it would be foolish. You just become another tech company. Appe soul is SJ, Mr or Ms CEO of today and tomorrow should never forget that. Create products that SJ would be proud of.
all companies hold a great amount of respect to its founders,
“just another tech company” — even Samsung was a trading co… its main business is trading its manufacturing power; the jump to phones has been a relatively slow transition seen as a huge gain in the recent years through competing with Apple by stealing designs and adopting a heart from Android. A frankenstein plan.
CEOs do misinterpreted, mistranslation and make decision according to the times; where the new leaders will risk change, going against the founder vision.
Cook does not seem to misunderstand Steves’ baby. Apple has a healthy team and growing. The truth is the competition has not out done Apple and so there is no need for action. Apple is doing perfectly well.
Laughable. Samsung did not compete with Apple. Samsung stole/copied Apple IP from hardware to software. Samsung is not even close with Apple on any level.
Apple is still, first and foremost, a hardware company.
Their hardware reels them in… their software and services makes them stick.
Apple provides an all-in-one experience and they always will.
Disagree- Apple has always been ‘first and foremost’ a software company, the world’s best software company, mind you…that manufactures the best and slickest hardware products.
The reason Apple’s hardware is head and shoulders above the rest is Apple’s software ingenuity, which in it’s elegance and meticulous design, is responsible for the best user experience, seamless integration, functionality and appeal.
agreed – thank you
Some one dig up Steve’s quote on All things Digital… D4
I think.
Apple has always been and software company first but prides itself in controlling its hardware too. The two sides are inseparable for a successful reliable product.
Exactly who says Apple’s iPhone hardware is head and shoulders above the rest? I’ve distinctly heard many times that Apple’s iPhone has definitely fallen behind Android smartphones. Just give me one reference pointing to where someone outside of Apple has said iPhones have better hardware than high-end Android smartphones. No one on Wall Street recently ever said such a thing and the tech industry is rather enamored with large display Android smartphones.
Anyone should realize that Apple is being poorly valued because nearly every large investor on Wall Street believes that Apple does NOT have an edge in hardware. Even Apple’s own board of directors want to know why Apple can no longer innovate. I’m fairly certain there is a general perception that the iPhone is not up to industry standards.
Take a company like Tesla. As a complete package its vehicles are said to be far better than most electric vehicles and the company is being valued as such. Tesla sells strictly to the high-end market. Apple sells to the high-end smartphone user and is being valued as a company that has inferior technology compared to other high-end smartphones. If I’m missing something, then please explain to me what I’m missing.
If there’s some independent research company out there that has said the iPhone is head and shoulders above the rest of the smartphone industry, I would definitely want to see that report with my own eyes because it would be contrary to all the articles I’ve read on the internet.
Google is considered the top software services company by a wide margin and is valued as such. I don’t know where Apple falls but apparently there are a lot of big investors out there that believe Apple does software very poorly. Normally, companies are greatly valued for their ability as leaders or profitability, but Apple isn’t valued for either of those properties if that’s the case.
I think Apple hardware is very reliable and I’ve never had any problems with Apple products but I can’t compare them to others because I’ve never owned any of the others. Currently, for Apple software, I only use OSX, Safari, Mail and iTunes and they all work quite well for me.
No.
I have never understood why some people cannot comprehend the marriage of hardware with software. If only EVERY company was like Apple and understood. If only EVERY Apple fan and analyst got the clue as well. The two should NEVER be separated. Stay married forever, amen, AH Apple.
I agree. Are we to negate the influence of Jony I’ve? Apple represents the classiest, most beautiful, functional hardware in the industry, with no real competition in innovation regarding its software and the integration of all services.
I agree wholeheartedly. The argument over Apple is software versus Apple is hardware is bogus. Apple is an integrated hardware and software company. Apple creates experience. Apple creates ecosystem. You cannot divorce Apple from either aspect of hardware or software.
Apple may very well obtain an increasing share of its revenue and profits from cloud-based products and services. But that will never eliminate the importance of integrated Apple hardware and software as the primary interface to those products and services.
Actually I believe Steve Himself referred to Apple as a software company, but “to make great software, you have to build your own hardware”.
Apple’s user experience has always been down to the software.
Yes well said… the FIGHT over who copied who — Samsung and Google stealing Apples iPhone is a perfect example where Software (iOS and apps) — PLUS — Hardware CREATED the innovation… hence CONTROLLING both sides from one company expresses OWNERSHIP.
Apple came to market FIRST with both SOFTWARE and HARDWARE – they rightfully own the innovation. Separate either side and it must have been another company who produced iPhone… but not the case.
Again, Samsung could have used many of its other OSes for its phones… but it decided to use Googles’ Android… the CLOSEST most advanced clone COMPETING to iOS — iOS is SOFTWARE it needs HARDWARE to run on. Hardware that is customized by SAMSUNG speced by Apple controlled by Apple standards and needs.
It was far too easy… all Samsung only needed to design a product as visually similar to the iPhone to confuse consumers or to satisfied their budget with a knock off. The knowledge of the components iPhone ordered for Samsung to build again was easy to match. Samsung basically did bugger all.
what comes first the chicken or the egg…
I believe Apple is a software company… FIRST developing an OS… the OS is the key software. Hardware is second for Apple can buy and piece components from outsourcing. It designs its own hardware but needs other companies to manufacture.
You may disagree all you like – but the OS comes first.
Seems sort of like the chicken and egg question. But, if Apple were a software company, why would they require their hardware to run it? Clearly, it is very much both. M$, is a software company, albeit a terrible one, because they don’t make computers, they make software, or crapware, whatever.
Apple was never just Steve Jobs, nor would it ever just be Tim Cook. Apple was always the sum of a great many parts, a highly co-operative team that works in a quite different way to most other companies.
There’s no denying that it was Steve Jobs who shaped Apple to be that way, but he was also smart enough to shape it in such a way that it would continue to thrive without him being there.
Apple does not play for short term advantage, the long game is much more important and that’s the fundamental reason why Wall Street and the analysts cannot understand Apple. Those people are obsessed with an ultra short-term view, while Apple is playing to rules that the short term lobby simply can’t comprehend, but are perfectly clear and sensible to others.
There is no ‘new Apple’. The team that made Apple so formidable are still in place and doing exactly what they have always done and will continue to create amazing products.
More crap from ‘The Street.’ This is now a trend.
Hey Richard Saintvilus who writes for TheStreet! Your August Effect is showing! Really badly too. 👿
The “services” come from the cloud and people. We see the people. So, when will at least the 5 server farms that Apple has talked about so far be on line? The CA, NC and AZ farms are on line. Do the other 2 or more that no one is looking for, need to be on line the start the new “services”? Yes, billion dollar server farms take time but they all do not need to be fully powered to start the next NEW thing!
Why have we not seen the Apple Mac Pro start shipping? You showed it off. Microsoft and the others do the tease then ship a half year later. Steve Jobs demanded that unless the FCC had to see it first like they did for the AppleTV, the new products were ready to be ordered and shipping in the next few days.
Don’t do a Microsoft! If you are talking then start shipping!
Why have we not seen the Apple Mac Pro start shipping?
Everything indicates that Apple is not willing to settle for the current crop of Intel chips for the new Mac Pro. Apple is waiting for the next generation of chips to ramp up production with enough inventory to release the new Mac Pro successfully. Releasing anything when it is not-ready-for-prime-time is a GREAT way to WRECK a product.
And we don’t want any actual/factual/legitimate bad press about Apple, do we? IOW: Please WAIT Apple until the cake is ready to take out of the oven.
The delay has been largely about components, yes, but the pro “natives” were getting restless, hence the uncharacteristic early demo: “We don’t usually do this…” said Phil Schiller at the time. “coming later this year.” Keep yer shirt on, JT.
There is no question that Apple SAT on its professional end market to the point of detriment. I don’t know why except for possibly:
1) The pressures to keep pumping out new New NEW! products to please the ‘entertain me!’ crowd.
2) The sad failure of the entire Xserve and Mac OS X Server product line. They may well have taken that failure too seriously and turned away in disgust. As I’ve pointed out from years back, Apple knew things were going bad all the way back at Mac OS X Server 10.4 Tiger. The sales were terrible. As a result, they never bothered to even finish Mac OS X Server 10.5 Leopard, which was considered a dog from within Apple itself. IOW: Apple was demoralized at that point with the pro market. Therefore, Apple’s seriously intent and devoted professionals were ignored.
I’ve been part of two Mac Enterprise email lists for years. The anger at Apple’s functional abandonment of the pro market has been loud and resounding.
We’ll see if new Apple efforts can please the pro market. So far, it’s a mixed opinion.
There’s no way that reason 1 ever entered their minds. Since when has Apple held its finger to the wind?
Your reason 2 doesn’t seem likely, either. There is no demoralisation at Apple, only ruthless dismissal of unpromising projects. Remember, the mercurial and judgmental decision-maker Steve Jobs was at the helm for those calls. Xserve simply wasn’t in Steve’s treasure map at that point. It was not, however, an indication that it would forever be such, only that vital resources were being reassembled for an assault on different, more threatening targets.
Apple’s long-term strategy eludes most analysts, and some of us faithful as well. But it exists, and is not only NOT arbitrary or mindlessly reactive to market conditions, but is expertly forged as a sword—Durandel, as it were—to shape the markets themselves through careful assessment of the human condition and what, precisely, science and technology can do to nurture and advance it. 🙂
As opposed to making money. 🙁
In a sense, it’s a godlike mission. Which would explain the pseudo-religious warfare.
Well said, as ever. I hope that spirit remains the core of Apple.
But I will point out that the Xserve line and sales of Mac OS X Server were a disappointment and didn’t drive any enthusiasm for their future at Apple. Server certainly has evolved, or at least tried to evolve, into something more user friendly. But since 10.4 Server it has never been more than half-hearted. I really hate 10.8 Server and wish I’d never bothered with it.
As for ‘religion’, that train of thought was encouraged by Guy Kawasaki’s marketing influence. I suppose it was motivational at the time. But it’s just marketing speak. I never liked the strategy. Religion has enough lack of respect and realism these days with out applying it to something as irreligious as computer systems. The approach promotes cynicism from my POV, and we already have an overflow of reasons for that without added distractions.
Well-reasoned, and I respect your opinion.
By the way, I was among the first to test Mac OS X Server circa 2000, and it was an amazing product for its time—I hadn’t experienced NeXT up til then, and was completely taken aback. I saw its gradual absorption into Mac OS X through the public beta and successive releases. It’s been a relentless, and successful, ride to the pinnacle.
I was able to play with Rhapsody, the interim transformation of OpenStep to OS X. My local Mac user group at the time had a small group of us who would meet and explore it. One member had used NeXTStep and helped us get a handle on it. The difference from OS X was overwhelming at first. I chatted with David Pogue at MacWorld NYC in 2000 about it as well as Steven Levy and a couple other book authors. Everyone was a bit overwhelmed taking it all in and figuring out the safest way to use it. Thankfully I had some background in UNIX from 1998 to give me a toehold of a start.
HTC and Asus are hardware companies, it’s why they are bit players. Apple is a solutions company. Hardware + Software + Services + Support, all designed to solve real world problems.
I get what Cook means when he says Apple isn’t a hardware company BUT that’s where they make their money. It’s not on software (rumors are OS X and iWork might be free) and not really on services either otherwise things like itunes, iMessage and FaceTime would be available on Android and Windows phone.
AAPL reached its all-time high of $700+ the year after Steve’s death. Somehow I think investors are used to the idea of him not being around.
Journalists need to stick to the facts and stop theorizing.
I can’t help but think that Steve Jobs spent perhaps more than the last two years before his death in documenting strategic paths for Apple. It may be that he had brainstorming sessions with a few of his top people, T. Cook, J. Ives, and others to lay out long term strategies. Services and/or Ecosystems were the long term growth path which is just an extension of the software/hardware systems. Server Farms which must have been in planning for many years before they materialize, along with new OS design to incorporate their use and expand into the home etc. This would of course include TV and other media such as iRadio.
Apple is still and will be under the guidance of Steve Jobs and his team for many years, and I look forward to it.
Tim Cook has proven time and time again that the Peter Principle is real and in effect.
This pansy has long ago reached his “highest level of incompetency”, and Apple as a whole is suffering as a result.
He needs to resign and retire with his Life Partner in rainbowland somewhere.
Only delusional, die-hard, ignorant and narrow-minded, dyed-in-the-wool Apple fanboys believe otherwise.
If Tim Cook is an innovator, Sarah Palin is the greatest mind of the 21st century!
This is spot-on. I almost forget what a breath of fresh perspective smells like – I go so long between them.
And let me add (may be implicit in the article): Switching head-haunchos every time investors, and more to the point, WS, says we’re not happy, IS NOT THE ANSWER. Period. Even if TC was not my favorite top dog, (and I’m not saying he is or isn’t…), I would be extremely slow to want to start playing musical CEOs. This has rarely worked in any magical way for large tech corps, and it was most certainly a dismal failure for Apple in the early 90s before SJ returned. No one will be a Steve Jobs, but it still takes a rare type of person to manage a corp like Apple in anyway that’s good for the long term – and I don’t just mean the value of the shares.
Let’s please remember that.
Pretty please with wads of cash on top?!