Why Apple needs more hardware hits – And, has Tim Cook lost his focus?

“As far as Wall Street is concerned, Apple might as well rename itself The iPhone Company,” Richard Waters writes for the Financial Times. “Its stock market fortunes rise and fall with the rhythm of the iPhone product cycle: the last surges in its share price coincided with the iPhone 5 and iPhone 6 releases — the big, biennial moments when the handset gets a full makeover.”

“In off-years like this, a different narrative takes hold. It runs like this. The smartphone market is maturing fast,” Waters writes. “As innovation in handsets slows and existing models start to look “good enough”, users hold on to their phones longer, extending the upgrade cycle (a trend accentuated by the ending of carrier subsidies). And a lack of exciting features in the newest phones opens the way for fast-followers to eat into the premium market with cheaper handsets.”

“No wonder Apple has been trying to change the narrative — primarily by highlighting its surging (and high-margin) services revenues. The trouble is, it has not hit on the right formulation to get investors to look beyond the iPhone cycle,” Waters writes. “But, to fire on all cylinders, Apple’s business needs more hit hardware products to cash in on the value of its burgeoning ecosystem… Nearly five years into his term, Mr Cook has shown himself an effective steward of the iPhone. Beyond that, the picture is mixed.”

Read more in the full article here.

MacDailyNews Take: Here’s the formula:

A new iPhone every year – death to the “S” — along with annual Mac, iPad, Apple Watch, Displays, and other products.

Apple, the world’s most valuable company, looks LAZY from the outside. Where is the Retina Thunderbolt Display for Mac users? Where are the new Macs? Why can’t Apple manage to make a new phone every year when far lesser companies can?

We get a lot of emails from AAPL shareholders here. Many in the last few days following Q216 earnings. They can be boiled down to this:

From Cook, we see lots of social justice crusading. Lots of personal and political opinions. (By the way, is the net effect of all that helping or hurting Apple’s business worldwide?) But, beyond Apple Watch, where are the new products? And where are the expected and necessary product updates – Macs, Apple displays, etc.? Apple’s CEO seems confused about his primary focus. – distilled from recent AAPL shareholder emails

SEE ALSO:
The iPhone 6s has been a major disappointment for Apple – April 27, 2016
Analyst: Apple to dump ‘iPhone 7s’ and jump straight to iPhone 8 next year – April 22, 2016
Analyst cuts Apple price target, says ‘iPhone 7’ doesn’t look like a must-have upgrade – April 20, 2016
Why the 2017 iPhone will be made of Liquidmetal – April 18, 2016
Ming-Chi Kuo: Apple’s 2017 iPhone to feature new ‘all glass’ enclosure – April 18, 2016
75 percent of teens say their next phone will be an iPhone – April 13, 2016
Mossberg: Apple’s iPhone 7 had better be spectacular – March 23, 2016

51 Comments

  1. I agree with most of the comments in MDN take. I’m also very frustrated that Apple doesn’t fight its corner hard enough in promoting iOS as a far superior OS than anything Android can do. Equally, almost every so called commentator doesn’t have a clue about the benefits either.

    1. He has been incompetent from birth. A rare breed, in the vein of Steve Ballmer, where everything they touch turns into a steaming pile of sh*t… Only Cook is so thoroughly incompetent he even makes Ballmer look like Elon Musk!

      The longer Cook is in charge the more likely the chance he will bankrupt Apple in under 5-years. If they would’ve fired him 3-years ago Apple would be in a great position.

      Instead, Apple in 2016 is left with poorly made, unnecessary, and frivolous new products, shoddy software, an abandoned Mac lineup that’s now on life support, a tarnished reputation, virtually ineffective marketing, a worthless executive team, zero innovation, no quality control, and a company severely lacking an semblance of public relations!

      If they don’t boot Cook soon, everyone will dump this stock!

      1. “Only Cook is so thoroughly incompetent he even makes Ballmer look like Elon Musk!” This is a pure pile of crap statement. You clearly don’t remember (or were not around) during the last many days of Scully and the many CEOs that were there before Steve came back.

        Also, I doubt Cook has lost focus. He’s just focused on the WRONG things: 1) fashion marketing, reducing inventory and increasing sell through efficiency, increasing the “brand value”, reducing product costs… all the things that a business school will try to teach you are the most important things when running a business.

        Yet, they were all the things that Steve Jobs abhorred.

        Steve thought the single best thing to do was to make truly revolutionary products. Those products would change customers lives for the better. Those customers would purchase the revolutionary Apple products. Customers buying lots of Apple products would grow a great company. Thus Steve’s focus was on Apple’s products and focusing on creating the best products possible. And, Steve was not a fan of waiting on the market to need a new product. He wanted to change things before the world was wise enough to know it needed a new product.

        Tim Cook believes you build a great, classically efficient company. Then that great company will inherently create great products and people will want to buy them. You force your IR&D section to create products that are timed to arrive when people stop buying the prior version and not before. Thus Tim Cook’s focus is on the company (Apple, Inc.) itself as shown by the executive hiring over the last 18 – 24 months.

        Personally I agree with Steve Jobs’ approach over Tim Cook’s.

    2. SPOT on MDN – Tim and his direct team have lost complete focus and are enjoying their celebrity a little too much – Steve would not have tolerated this professionalism for a second, or lack their of.

    3. Cooks activism does make an impact on the company, there are probably a fair number of people who look at that negatively, whether that ok? not my call. While the popular media really likes it, a lot of people don’t care for popular media either.

      The Mac needs a serious upgrade path, they need to complete on the BYOPC crowd.. While Steve really preferred limited upgrade systems, they’ve gone to far…

      you can have the coolest looking Mac on the planet, but if you cannot easily upgrade GPU’s, add RAM, or do other things to it to keep it competitive, you don’t spend $3000+ for a Mac that cannot be upgraded, and what may have been top of the line at the time of release, does not last.

      They downgraded the last Mac-Mini, what was the purpose of that? Sure it helped their margins perhaps, and got them a lot of relatively negative reviews.

      iPhone, they’ve made large screen people happy, and small screen people seem happy now, so unless they can knock iPhone 7 out the park, its not smooth sailing from here.

      Software is tough, its really complicated now, and IOS and MacOS need to be more polished, and somehow the beta process doesn’t seem to be working. Though it could be worse.

      Win10 is still a joke, its just a tool for MS to spy on you, whether you chose to believe it or not. And they’ve back rev’ed the spying to Win 7 &8.. I could write a book on the short comings of windows, the lack of security still at the top of the list, the slews of patches every month, the inconsistent and painful UI.. etc etc etc

      1. Even when the old Mac Pro was around, how many people would upgrade the processor in that beast? Fact is, most buy a machine, then a few years or so later, when it feels slow to them, they buy a new machine. No matter what you do, even if you upgrade components, it’s a diminishing returns proposition. SSD – sure, RAM – OK, but an old design motherboard won’t necessarily house a new processor even if you did upgrade it. And then if you have it all upgradeable, you have a generic PC box.

  2. Everyone talks about the iPhone as if it is REALLY a Phone!

    The iPhone, in all its forms and throughout its life is a ‘Super Computer in your pocket’! The whole Apple Inc. ecosystem revolves around this Super Computer, so yes, this is a major contributor to the revenue stream and profit of Apple Inc. It has been intentional.

    Apple Inc. are actually charting a well worn path that they took with the iPod, when, if you remember, they were a one trick pony and only a ‘Music company’; now they, for their myopic sins are an ‘iPhone company’. Yes, the iPhone has matured to the point where they are now releasing different form factors and with the iPhone SE, expanding the addressable market much further, to expand their ability to drive annuity revenue from services.

    What everyone misses, except for astute long term investors, is that Apple Inc. has now amassed a huge loyal base of users, who regularly touch Apple Inc’s ecosystem to the tune of more than 1 Billion devices a month & growing!

    The Apple Inc. ecosystem has grown tremendously, to include Music, Pay, various App Stores, Health and Care Kits, Car Play etc…; also, lest we forget Apple Inc. now has a fully functioning Maps capability that is used significantly more on their devices than Google Maps or others Maps apps.

    To say that Tim Cook has lost focus is truly laughable!!

    1. Tim Cook is Apple’s babysitter. A rhesus monkey could perform better, because I guarantee you it wouldn’t be as lazy as Tim Cook is!

      In fact, Steve Jobs has done more for Apple in the past five years, even though he had been DEAD the entire time. I’ve never seen a more incompetent person than Tim Cook, and I’m including Steve Ballmer in my list!

      Tim Cook is a part-time gay activist, a part-time Apple CEO, and a full-time, inherently incompetent f*ckup!

    2. No.

      I will repeat myselg again.

      If you can’t PRODUCE a program from the device itself, it’s NOT a computer.

      A computer without programming tools is like a car that can’t move.

      The iPhone (as well as the iPad) are awesome CONSUMER PRODUCTS. They are GADGETS. They are useful by themselves (I love my phone and my tablet). But they are COMPLEMENTS to a computer.

      A car that can’t move can be useful to sit down and listen to music. It can have a use, and a good use. And you could sell a lot of cars that don’t move, make them bigger and more confortable, change their name, and make them desirable and cool.

      But the ultimate purpose of a car is to MOVE. To transport people.

      And the ultimate purpose of a computer is to be programmed, to make it do what we want to.

      So, no. A gadget without the possibility of being programmed is not a computer. It has the POTENTIAL to be (as the motionless car, it has the POTENTIAL to be a car, just shove an engine in).

      Untile then, stop calling them computers. Not even Steve Jobs called them that. He called the iPhone “an Internet connection device”.

      1. Excellent way of describing the difference between an iOS device and an actual computer that must be used to produce apps and content for a consumption device like iOS devices. Ok, a limited amount of consumption content can be produced on an iOS device, I will concede that. Nothing complex though.

        So the question is : how many people will comprehend your explanation.

        If they are just iOS consumers; probably not many. You can’t see with your eyes what your brain does not recognize.

        Sort of like the people who believe world history began the day they were born, so nothing else could possibly matter.

        1. Very few. Unfortunately, people saying “Apple will move away from the Mac” are neglecting the fact that Macs are the ones building the software for iOS.

          Perhaps most people don’t need a computer. Perhaps a gadget is all they need. Nothing wrong with that. But someone need to build that content. And for that, wee need the tools. And the tool have a name: The Macintosh.

          Bottom line: Apple neglecting the Mac means Apple neglecting the foundation of its ecosystem. The iPhone, iPad , Apple TV and everything else is dead in the water without the Mac, unless they turn the gadgets into actual computers.

          1. Indeed, the key here is “can be programmed”. The iPhone can RUN programs. To BE programmed you need a Mac. You can NOT program the iPhone straight from the iPhone.

            A car can be defined as a machine with an engine and wheels that transport people. If a car is static in a museum, sure, it’s still a car, and has the potential to fulfill its purpose. But in every practical sense, it doesn’t work as a car.

            Same with the iPhone. If you get academic, sure it’s a computer. It has all it takes in hardware. But it lacks what computers need to be actual computers: programming languages. That makes them as a computer as a car in the museum: full potential, but not fulfilling its actual potential.

            Programmingwise, the iPhone can’t survive with the Mac. It can’t be a device on his own. Therefore it’s just a gadget.

      2. Disagree; look up ‘Computer’ in Wiki and you will see the description as a “general purpose device that can be programmed to carry out a set of arithmetic, or logical operations automatically”. An iPhone or an iPad can be programmed, has a CPU, memory and a solid state disk to hold data & executable programmes, so they are by that definition, computers!

        If you still do not agree, then propose that you change the definition in Wiki to support your view and see how long it survives.

        So, again, the iPhone is a Super Computer in your pocket, nothing less!!

        1. You realize by that definition you put iPhones, laptops, supercomputers, hand held scientific calculators and Fisher price toys you program with blocks on the same level. “Can be programmed” could be interpreted as “a programmer can change the program directly on the device”. This would differentiate ‘computers’ that can use programs written using nothing more than the device itself (like all the above excluding the iPhone) from devices such as Samsung’s rice cooker which can download programs to allow the cooker to prepare more than just rice. To be fair if another OS was on an iPhone that supported writing software for itself it would fall in the first group. As it currently stands however iOS is the limiting factor.. Even Android devices can write stand-alone programs for itself in several languages.

  3. Strange how no one seems to suspect that Apple is being hit by the economic downturn everyone else is being hit by. ” A sharp pull­back in busi­ness in­vest­ment and weak global de­mand dragged down an al­ready-lack­lus­ter U.S. econ-omy in the open­ing months of 2016, the lat­est set­back in a bumpy ex­pan­sion en­ter­ing its sev­enth year.

    Con­sumers and the hous-ing mar­ket kept the U.S. from slid­ing back­ward, though only barely. Gross do­mes­tic prod-uct, the broad­est mea­sure of eco­nomic out­put, ad­vanced at a 0.5% sea­son­ally ad­justed an­nual rate in the first quar­ter, the Com­merce De­part­ment said Thurs­day. That marked the econ­o­my’s worst per­for-mance in two years.

    Cor­po­rate ex­ec­u­tives and econ­o­mists say tur­moil across global fi­nan­cial mar­kets in the open­ing weeks of the year may have re­strained U.S. eco­nomic ac­tiv­ity, with con­di­tions im­prov­ing some­what af­ter the Fed­eral Re­serve scaled back its ex­pec­ta­tions for rate in­creases and com­mod­ity prices be­gan sta­bi­liz­ing.” – wsj

    “U.S. cor­po­rate prof­its, weighed down by the en­ergy slump and slow­ing global growth, are set to de­cline for the third straight quar­ter in the long­est slide in earn­ings since the fi­nan­cial cri­sis.”- wsj

      1. Amazon’s Services Revenues are up significantly. Apple’s services revenues are also up.. ( Services*: $5.991 billion revenue (vs. $4.996 billion YOY / +20% YOY)
        *Includes revenue from Internet Services, AppleCare, Apple Pay, licensing and other services ) but I guess Wall Street says that’s not enough to offset the amount of business and growth that is dependent on the iPhone.

        Mobile phone sales are down worldwide. Sooner or later, everyone who wants or needs a mobile phone has one.

        Either something has to disrupt the industry like the iPhone did again or there isn’t much growth. I think Apple is betting on the iPad to disrupt the computer industry, but it looks like its going to be a slow evolution instead.

        I think investors should (IMHO) be looking for industries that are ripe for disruption if they want incredible returns again.

        Things like housing, medicine, law, i.e. stuff that is so entrenched in old ways that they don’t see something new coming over the horizon. If someone can create a reliable wireless broadband technology that can cheaply be installed in rural and urban areas delivering speeds greater than 100Mb/s, that would disrupt the cable industry. I keep watching for that.

        1. Right; I dont plan to replace my 5S until the Lightning connector socket wears out. And to not replace my iPad at all because my Macbook is a superior mobile device.

          100Mb/s, that would do it for me.

        2. Unfortunately services revenue is up because more people feel the need for Apple Care, because Apples renowned build quality has been on a steady decline over the past few years. Cut cost to improve already stellar profits to try and make the street happy.

    1. Perhaps some do suspect but notice that AAPL is dropping further than their competitors who are being hit by the same economic downturn. As it is, AAPL far from being a ‘plus’ for DJIA.. AAPL market cap when they were added in mid-may 2015 was about 742.6B.. As of 4/29/2016 AAPL is at 513.5B.

  4. Apple has neglected the Mac terribly. How so?

    – No advertising
    – Hardware is out of date
    – Way overpriced SSD’s. ($600 more than Amazon)
    – Overpriced RAM
    – Soldered ram that can’t be upgraded
    – Mac software that has either the same or fewer features than the iOS counterparts.
    – Destruction of Pages and the failure to develop a powerful yet easy to use flat file database for iWork. This is essential for many small businesses.
    – Font sizes in the operating system that are too small and can’t be adjusted.

    Here is nice list of where to start on improving the Mac OS:

    http://forums.macrumors.com/threads/how-would-you-improve-osx.1961714/

    1. When companies that have been traditionally strong Mac proponents give up on the Mac… Something is wrong and Apple needs to address it. Blizzard, the makers of World of Warcraft, arguably the most successful Mac game ever, are essentially saying “meh” to the Mac with their new game “Overwatch.” http://www.pcgamesn.com/overwatch/here-s-why-there-s-no-mac-version-of-overwatch-and-how-there-could-be-in-the-future

      For many people, myself included, the Mac is the foundation upon which the success of other Apple products rest. It’s really time for some SERIOUS engineering and “beyond-Jony Ive” design to hit the Mac. Slapping a slightly faster processor in it once a year and calling it revolutionary doesn’t work anymore. And you can hate it all you want but for many people, Windows 10 has caught up.

      Apple is fine for now, but they’ve got some soul searching to do.

      1. Fully agree. Talking to a (here to fore) die hard Apple Gen Yer who just very recently won a top of the line Ipad Air. He just sold it on e-bay for $730 and is seriously thinking about buying a surface as he is going back to grad school and needs a new laptop. Why surface?, Laptops from Apple are expensive, less powerful, and for a little more can get both. Plus, he’s hearing good things about Windows10.

        There was an earlier MDN article regarding the Apple earnings release and how Cook was cheerleading and Maestra was appologizing. I sure as heck hope this is a wake up call for Apple, because they are sliding rapidly out of consideration for many young professionals.

        Apple has to get a lot more customer and product focused. I think if they continue the slide it will be even harder to get customers back. If they consider Apple products as having been there done that, it will be tough to get back into the thoughts and minds of that generation.

      2. agree.

        Blizzard has been great releasing Mac simultaneously while other strategy game companies give horrible ports much later, sometimes years, (many so buggy they are unplayable). If Blzzard is giving up on Mac for a new game it’s bad news.

        btw: Tim Cook says nobody needs PCs anymore , does he even know about Blizzcon? I bet 90% of the thousands there have PCs.

    2. All good reasons to prove Tim Cook is failing Apple. We have waited patiently for Cook to demonstrate that he has the same vision, passion, and determination as Steve Jobs. Sadly, Cook had not measured up. Tim, do Apple a favor and go away.

    1. I don’t think he’s more focused on activism. I wonder though if he is doing any more than following a plan laid out years ago by Steve Jobs. Steve was the one who declared the PC wars over and that Microsoft had won. Steve was the one who declared the iPad the next best thing. Steve was the one who declared that only some people need trucks.

      I believe Cook is still following the Steve Jobs plan and might be trying to push people off onto the iPad too soon. It just doesn’t have the power of a conventional computer yet and at the rate they’re going, we’re talking 2020-2025 befor it does. Meanwhile they’ve put the Mac on the declining product tract, like the iPod when the iPhone came out, and it’s way too soon.

    2. I heard a commentator raving on the radio yesterday about how spectacular it was that Google was making over 20 billion dollars a quarter and how pathetic it was that Apple was only making 50 billion. This isn’t about profitability. It is about idiots who think a 25% annual growth rate is sustainable forever.

      Remember the story about the con man who convinced a king to give him a single grain of wheat on the first square of a chessboard, two on the second, and so on. Before long it was a pound of wheat on a square, and ten squares later a ton. The entire kingdom’s wheat supply was gone with three rows on the board to go. Infinite geometric growth is a practical impossibility.

      I think all the alleged shareholders who object to “social crusading” need to ask themselves whether they would have had the same reaction to a corporation in 1962 that was committed to equal rights for African-Americans. Just as a matter of simple economics and demographics, there are probably almost as many LBGT individuals in Apple’s US workforce and user base as there are persons whose ancestors came from Africa, rather than Europe or Asia.

      Offending those folks would not be good for recruiting or marketing. As a matter of demographics again, rednecks in North Carolina are not very important to Apple. MDN used to poke fun at that “Hee Haw demographic.” Progressives in Silicon Valley, Austin, and the Northeast are very important. (Yes, you can point out fundamentalist Muslims as anti-gay, too, but they aren’t a core market, either, and they hold other views that conservative Americans would not like to adopt.)

      1. Human biology is anti gay. Nature is anti gay.
        You went to school. You did sex ed.
        The boy part goes on the girl part and if you do it right it feels great and produces a baby, which assures that the human race continues.
        What does homosexual behavior produce? Go on the CDC website and look. Nothing of any benefit, certainly not any children.
        AIDS and the raft of other adverse effects of homosexuality are nature’s defense against it, and only a fool would actually campaign for its acceptance. Sadly fools easily follow fools.

  5. Tim Cook does not have the laser focus that Steve Jobs had; that is nothing against Cook: nobody else in the world does either. However, Cook’s Apple is playing it safer, trying to stretch the dollars out of technology.

    Jobs liked high risk, high rewards; there was always the potential for abysmal failure, but he had been there before. So, while a new technological marvel didn’t appear every year for him either, you knew one would appear eventually. Apple needs to roll the dice, and knock people’s socks off. (I actually put the MacBook in this category by eliminating to old ports, but it was underpowered.)

    The other Jobs’ trait that I believe Cook needs to adopt is to drop outdated technology. Don’t keep last year’s model hoping to squeeze an extra dollar out of it. Apple is slowly returning to its days of failure by having too many versions of each technology. Most consumers are not sufficiently savvy to determine which model is the version they want, and frequently they end up frustrated when they realize they got less than desired. Only sell the best, and the customers will come to you; don’t chase them with cheap price points.

  6. “As far as Wall Street is concerned, Apple might as well rename itself The iPhone Company,”

    Well, they could as well rename themselves Mac Company (sales dropping), iPad Company (sales dropping) or Thunderbolt Display Company (is anybody even buying this at all?) But I think given the recent products they introduced they should go for Apple Fashion.

  7. When was the last time you were shocked amazed and delighted at an apple presentation?

    Apple’s fetish for thinness and no physical ports above all else has just left the industry with thinner and thinner smart rocks. Of course iPhone is everyone’s favorite computer but after you have your iphone6 or 6s and you have an iPad and you have a Mac that is still running ok even if it is old, what do you do? I know it is against the apple culture that believes that they always know better but they should get out and talk to more people than themselves. Invite groups in to one infinite loop for bagels, focus group people in those magic areas of the world where pollsters and Nielsen work. It’s clear that Apple doesn’t know anymore. How could anyone if they never got outside or listened to other people?

  8. besides my “we want to buy a Mid Tower upgradable mac” (hundreds of five star votes added up from various posters on same in the last few days), but ” Apple for some bizarre reason don’t want our money ” as the stock falls from 130 to 90 because of ‘sales worry’ posts.

    here’s what I also wrote yesterday;

    “seriously,

    I’m an apple fan but it’s frustrating to see them not upgrading macs in a timely manner or building machines that people have been clamouring for which like I said isn’t hard (not like building a car) . . Plus it’s not as if Apple honchos DON”T HAVE TIME as note we’ve got T.C and SVPs:

    — running to charity events, social initiatives
    –and award events NOT RELATED to Apple
    — Ive building furniture etc for charities and supervising the building of the campus (building a GIANT structure to the exacting standard of “like an iPhone” as their touting is a waste of resources !) WHILE we got Mac Pros one sixth the power of HP workstations…

    — attending fashion shows, galas, cocktail parties of actors and rap artists
    (while as far as I know from the news they are NOT visiting Mac Graphics studios, Mac using institutions, businesses , gaming studios or Mac User groups. Maybe i”m wrong but haven’t seen a news item of any of the SVPs doing this)
    — thinking of projects like “Sex Filled dark comedy romp of Dr. Dre’s life for original mini series” (WHILE the Apple marketshare of the education market has dropped to 10% and Chromebooks climb to 55%)
    — joining boards of non tech related groups like the Kennedy centre.

    HEY it’s NOT like the above are BAD (most are good stuff) … EXCEPT when you have Apple having a huge number of problems like un-upgraded macs, bugs (wifi, iCloud etc) , flubbed launches (Apple Music, no remote app for Apple TV, practically every launch supply constrained etc ) and AND the stock sinking from 130 to 90+….

    as recently noted Steve Jobs did not even want celebrations for Apple’s 30 th anniversary as it would make Apple lose it’s eye on products and the future. Apple today needs to REFOCUS.

    the financial results of billions etc earned is still spectacular but this doesn’t hide the fact of problems as we see even big boosters like Icahn dumping the stock.”

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