“If you read my work here on the Ville, then you know that I am a proud, card-carrying member of the Apple (AAPL) mafia, and I’m still a believer in the stock and company at these near-$600 levels,” Michael Comeau writes for Minyanville.
Comeau writes, “There’s certaintly no shortage of Apple naysayers out there; some rational, and others, not so much. So it’s time for me, a vocal Apple bull, to step up and play Negative Nancy. Let’s discuss six things that could go wrong… I’ll leave it to you to decide the likelihood of each.”
Six things that could go wrong with Apple Inc.
1. Tim Cook Flops
2. The Smartphone Market Reaches Maturity
3. The Television Just Doesn’t Happen
4. The Competition Squeezes Apple on Price
5. Samsung Says, “No Chips for You!”
6. It Could Get Hit by Litigation
Comeau writes, “These are just six of many possible things that can go wrong for Apple. However, even if you are 100% certain of Apple taking a major hit, there’s still one question you have to ask yourself if you’re going to bet against this company, which is… When?”
Read more in the full article here.
1. Tim Cook Flops
though not the most Charismatic CEO – he is the worlds best at what he did before becoming CEO and WIL NOT FLOP… only people lose faith in him
2. The Smartphone Market Reaches Maturity
very possible
3. The Television Just Doesn’t Happen
why does that matter
4. The Competition Squeezes Apple on Price
yes, already happening, and the competition is right there every step of the way, even making advancements beyond Apple and fragmenting the market Up and Down in models and pricing
5. Samsung Says, “No Chips for You!”
that would hurt, yet Apple has many other suppliers to deal with
6. It Could Get Hit by Litigation
oh okay so can all companies
ONLY point 4 matters most here.
This is not the 90’s any more when people didn’t know any better and bought solely on price.
I agree with you on 1,2 and 3, 4 not so much apple still pulls the majority of profit out of the smartphone market, and in the tablet market the competitors are in a race to the bottom. The only tablet to get any traction other than the iPad is the Fire and it is being sold at a loss. On point 5 if Samsung where to do that their stock would plummet from loosing the largest customer. And I agree with you on 6 the whole industry is constantly in a state of suing each other.
1. Tim Cook Flops
Time will tell. He seems to be doing fine so far.
2. The Smartphone Market Reaches Maturity
There is no doubt that the smartphone market will eventually reach a point at which Apple is primarily selling replacements, with a relatively small number going to switchers or new consumers entering the cell phone market. But Apple still has a lot of room for growth in China and other markets. And, as long as Apple keeps producing compelling new models of the iPhone, sales will be looking good for years to come.
3. The Television Just Doesn’t Happen
The rumored Apple television is a potential area for future growth, but the lack of such a device will not result in disaster for Apple. As long as Apple provides a great ecosystem for buying/renting, storing, distributing, and consuming video, it does not need to sell TVs. The iPad (and especially the new iPad) is already making HDTVs a bit less relevant.
4. The Competition Squeezes Apple on Price
Apple is squeezing the competition on price. The competition struggled to release 10″ tablet competitors at a comparable price. The only reason that their prices went lower is that the companies were desperate to reduce unsold inventory.
Apple is not yet a player in the smaller (7″) tablet market. The competition is fierce at that level with Google selling at or below cost. With the base model iPad 2 Wi-Fi now at $399, Apple is applying some heat to Google, as well.
5. Samsung Says, “No Chips for You!”
Apple undoubtedly has long-term contracts for Samsung components. So Samsung cannot cut off supplies to Apple until those contracts expire. And Apple will be able to prepare for that situation before the hammer strikes. Besides, Apple is a multi-billion dollar customer for Samsung. Profits speak louder than lawsuits.
6. It Could Get Hit by Litigation
Apple is definitely a big target for litigation. But Apple appears to be holding its own, so far, and is still holding a lot in reserves with its growing patent portfolio. Even if Apple were to lose a few big cases, it would not greatly harm the company.
The biggest risk to Apple in the long term is that it loses its vision and drive to develop insanely great products, and begins to chase profits. As SJ said, when the marketing guy becomes the CEO bad things are going to happen.
The biggest short term risk that I can conceive is a major product flaw, particularly a safety-related issue such as batteries, that results in a massive recall. Apple sells tens of millions of products per quarter and a widespread flaw would not only be expensive, but cause a lot of harm to Apple’s reputation. Never mind the fact that many of Apple’s competitors ship crap…Apple is held to a standard of perfection. Witness the recent Siri lawsuit…and Siri is beta software. Just think of all of the software lawsuit opportunities against Microsoft and Google.
Exactly, why hasn’t anybody in the past decades sued Microsoft for delivering flawed and insecure software? (That Windows’ GUI sucked doesn’t matter here. That is what SHOULD have driven its customers away in a free market. Except it is only happening now, after 10 years of OSX and many years before that, where MacOS was better in many respects as well. Finally the IT guys are starting to switch, as they are succeeded by a more unix-friendly generation –or not being replaced at all).
I completely disagree on that point (#4) It seems to me that in every category that apple has (all in one computers, workstations, laptops, “uktrabooks” tablets and phones) The best the competition can seem to do is make a considerably lower quality clone at the same (or even higher) price.
Add to that they they have to rely on “generic” operating systems and software, they don’t come close in hardware or software, only in price 😉
The ability of others to compete with Apple seems to be decreasing rather than increasing.
I suppose the guy, who already owns AAPL stock, wants to buy more, so he tries to manipulate the stock downward.
1) Tim Cook has not done badly so far, even so any boss can have bad times.
2) There will still be many other markets out there. For a good few years anyway. Even if the US and Europe become saturated there is still Asia Africa and Latin America and there are billions of potential customers there. Even if the market becomes saturated do you honestly think that Apple will still fail?
3) Is an Television even necessary? I have just bought the new Apple TV, and it is brilliant. No need for a television really.
4) Apple do not compete on price. Look where all the profits are made in phone and tablets are. Apple make more than the rest of the industry combined in phones manufacture. That allows them to spend more on R&D and so ensuring their lead. The same applies to tablets. Even if you ignore the losses that Amazon make on their kindles to get their tablets as prime competition to the iPad. Then look at the average app spend on iOS compared to any other app store. Apple clean up there.
5) Samsung would be fools to say no to their biggest customer. They would lose in more ways than one. Apple can prepay to ensure stocks when necessary, they also guarantee demand on chips which lowers the risk of production and over time allows lower prices, benefiting everyone including Samsung, who can use them for their own products.
6) Litigation can also go both ways. Apple could kill off some of the clones through litigation.
And that is what they have that $100 Billion for. To fix any of those possibilities.
Well say WaterLily
Dont forget the world could end and ww3 and stuff. Tough job being a writer, what else can you write about? I do see a pattern though with the trolls. They start every negative piece with how much they love apple.
Any good investor should be thinking about this stuff constantly. If things do start going south, you need to know at what point you will pull out. Not to say that his list is perfect (or all that good (specificly 3, 5 and somewhat 6), it is the first thing I read and follow through the quarter on AAPLs 10Q.
Trolls have ALWAYS opened with lines about how much they love the thing that the are about to disparage.
Once I alerted, i start to look for their faulty logic.
True,
Answer to these five worries.
Publishing
Television
Business
China and japan
Last but not least THE EDUCATED CONSUMER WORLD WIDE DUE TO ALL THOSE GENIUS BARS AT THE APPLE STORES….think about the magic.
“6. It Could Get Hit by Litigation”
Ya mean like the lawsuits they have been hit with everyday for years, and the Feds and European Union riding their ass?
Does this dipshit really expect to be taken seriously with that kind of ignorant crap?
7. The world could be overwhelmed by a biological disaster that turns everyone into brain eating zombies, who in turn refuse to buy anything that isn’t Android or Windows based.
I was going to say get hit by asteroid, but basically the same thing, and about the same likelihood of happening.
8. California slides into the ocean along one of its many geological fault lines.
If Apple wasn’t based there I’d vote for that one.
So you wish for the death and destruction of millions of people. Your parents must be proud.
Gee, you’re so judgmental.
Only those that can’t swim!
Someone with half a brain would know that California will separate from the continental US in geological terms and become an island in the Pacific, because it’s on a different tectonic plate. It won’t sink under the waves, although there might be a tsunami or two along the way.
I know this, and I’m not even American.
well you are almost right, the plate intersection in CA is a sliding fault not a subduction or spreading fault (the scenario you describe would be in the case of a spreading fault)
A slice of the west coast (west of the San Andreas) will eventually (millions of years) slide north past Canada
Number 4. really not a deal breaker for Apple. Apple has always had a premium price, but also had premium quality and service to match. You can’t go to Samsung and get your phone replaced on the spot, and that goes for the rest of them too.
You can’t get free software support for you PC. Just try and do that at Best Buy and see how far you get. You can’t get your hardware serviced at Fry’s and have it returned to you in less than a days time. These are the things that make Apple better even though the price maybe slightly higher.
We already know the cause of Apples’ demise: December 21st.
6 Reasons why Apple is not going to lose:
Damn, I hit the return key by accident
Apple is NOT going to lose for a half dozen very good reasons:
1. Apple is vertically integrated and becoming even more so, while competitors are not.
2. Apple makes plans 5 years out and watches tech. innovations and does estimates out beyond a decade.
3. Apple is absolutely committed to various wireless connectivity between all devices
4. Apple’s innovation is centered on ease-of-use, as opposed to Windows settings that are daunting for experienced users.
5. Apple doesn’t announce what products they will do in advance, unlike dell, nokia and Microsoft, giving away the store.
6. Apple truly believes in hand holding on customer relations and in-store and phone service…no phone calls, plus damn good warranty coverage and repair services.
6. is huge. The Apple Store employee who switched me to the 4S from a old clam shell dumb phone did a superb job. I’ll be updating every two years.
Therefore, updating becomes number 7 on the list of why Apple is NOT going to lose.
There is a much greater chance that the earth will be hit by an asteroid that will wipe out civilization.
This list is ridiculous.
If Samsung turns down its largest customer they’ll be going down too!
Apple is a large enough consumer of chips to do it’s own chip fab.
The reason for the $100 billion cash?
Things that are RIGHT about APPLE!!
1. Adult leadership.
2. Superior products.
3. Ease of use second to none.
4. Customer service and support second to none.
5. App store, iTunes, and iCloud services.
6. Dedicated developer community. 🙂
Silly list. Maybe he wants to be noticed by CNUT and ZDUMNET and be part of their amazing and highly respected team of journalist.
Seventh item – Apple could just disappear or maybe explode into a reality distortion field.
…Implode into an RDF…
What happens if there is a China shutdown for one reason or another?
Seventh – MS partners with Dell and moves forward with marketing of the Big Ass Table on a global basis. Apple, not fully realizing the fierce competitive threat posed by the companies that gave us the Zune and DJ music player, does not react immediately and the BAT grabs giant market share. They funnel the massive profits into a nationwide buildout of MS/Dell retail stores. Civilization, as we know it, ends.
Tim Cook understands suppliers and supply change management. That’s why Steve Jobs brought him in. He’s not going to flop.
I’m not sure I know what to make of the notion that the smart phone market will mature and how that affects Apple in the short to medium term. Will the smart phone market evolve? Of course, Apple insists.
I wasn’t aware that “the television” was a product contributing to Apples bottom line.
Competition is not squeezing Apple’s profits. It’s the other way around (see Tim Cook, above).
Samsung needs Apple more than Apple needs Samsung. The two will work together for as long as it makes sense for Apple.
Litigation, protectionism are two issues that successful global companies deal with on a daily basis. It simply goes with the turf.
1. Apple flops when they stop innovating.
2. Never compete on price – especially when your competition has more money.
3. Read the Jobs bio – Cook isn’t new to the job. And J’s legacy was in creating a company, staff and culture that exceeds him.
Ehhmm, you forgot…
Idiots who write articles with a headline: Six Things That Coud Go Wrong…