Day: November 4, 2018

Congratulations Apple, You’re Now Microsoft

There was a time when I would begin an article such as this where I would always begin with the admonition that I was an “Apple fan-boy” because, not only was I product user, but I also believed their products both in design and intuitiveness was best in class.

That is no longer the case.

It’s downright appalling just how far off the rails Apple™ has run under the tutelage of Tim Cook when talking about design, innovation, as well as intuitiveness.

Of course, the same is not so for Apple-the-stock.

If you’ve been a “fan boy” of Apple-the-stock since the passing of Jobs, well then, let’s just say you may be about to get a hint of how it’s been to be a product customer as opposed to just a 401K customer.

The once lauded stock moniker of $Trillion is now a suddenly deleted feature of the stock value, just like many a deleted feature of its products. Welcome to our (Apple product user) world.

Maybe this once beloved feature will make a return. But if history is any guide, coming from a product user “Don’t hold your breath” is all we’ll say. Hint: see Mac Pro® for clues.

The more than troubling issue with all the above (and then some) is that it wasn’t as if one couldn’t see it coming. That is, unless you only listened to the next-in-rotation fund manager crowd paraded across “Bubble Vision.”

Here’s what I said as far back as 2014 that was reported via Market Watch™. To wit:

The call of the day: And with the potential move to buy Beats, Apple could very well take the final step in its (d)evolution into Microsoft. That’s pretty much how Mark St. Cyr sees it. Of course, he’s not the only one piling on such a purchase. Music critic Bob Lefsetz calls Tim Cook a clueless operations guy. But St. Cyr takes it a step forward by comparing Apple to the lumbering software giant. In a “complete and utter cave-in to Wall Street,” Apple’s latest report wasn’t consumer-products based; rather, it was designed to play Wall Street’s game, he says.

“Dividends, debt, splits, and more,” he said. “I don’t think the iPhone has added as many new features at once as the new features released in Apple the stock.” That’s how Microsoft does it, said St. Cyr as he waxed on about the Apple you knew is no longer. “I hope I’m wrong, but the actions are beginning to not only speak for themselves — they’re screaming.”

Shawn Langolis/Market Watch

Since the passing of Jobs Apple seems to have not only lost its way, but is now just sitting idle in another Jobs vision known as “Apple Park.” And, much like everything else that has come from Apple of late, was completed behind schedule and over budget.

This once enviable vision is now a glaring monument to accomplishments of times past. i.e., This was the “house” that Jobs built. Cook and crew are only its current occupants.

I have a feeling the word “current” will have significance going forward, but that’s for another article.

The now demonstrably troubling issue for Apple going forward is that with the current direction the company has embarked, turning around this lumbering giant of tech to recapture its once unapologetic stance to caring about the product first and the stock price second (a paraphrasing of Jobs) may be about as monumental as trying to find a corner to relive oneself around that “spaceship.”

Crude, yes. But this is what it now feels like being a once Apple devotee. i.e., once fervent customers are beginning to feel like they’re the “corner.”

Apple announced right before the latest earnings debacle (that alone should give one pause) that it had upgraded three of its more prominent lines: Mac Mini®, MacBook Air® and iPad Pro®. Here’s my initial reaction: See the term “corner” above for clues.

In its now far past-its-sell-by-date presentation style the new upgraded line was heralded from the stage with more superlatives that it would make a Thesaurus envious.

It’s now become as predictable and more akin to watching a classic rock show without the spandex. i.e., All the past hits are played for sing along – when the new stuff is introduced – people start checking their email or social status.

I watched part but I turned it off when they began stating how the “wedge shape design” of the laptop was more revolutionary, elegant, special, extraordinary, exceptional, _________(fill in your own but you won’t come up with more) and would be the single cause for realigning the solar system into a more perfect design. Exaggeration, yes. But not by much.

There were many of the same when they were introducing the iPad and Mini, but it was the improvements to the Mini that brought me back to that feeling of the “corner.”

Was there any mention of a Mac Pro upgrade of any type? Nope. Be happy with the 2013 model at 2018/19 price points, for that’s all what was implied.

When it came to the Mini there were significant improvements that were way overdue. However, once you began pricing one out at a configuration that you’ll more or less pray you don’t outgrow, because you won’t be able to upgrade in the future, you began to fume. At least I did, and here’s why:

Apple made a big hoopla over the fact that the Mini was now 5x faster than before using a varying amount of benchmarks. The problem is that brings it up to about even with most other alternatives. i.e., Quad core and Six core CPU’s are available everywhere, Apple jettisoned them from the device (a move many called idiotic) years ago making the 2012 models far more preferable than its newest. So this wasn’t some “innovation” moment. It was more of a “catch up” type thing.

Yet, where things become apparent that the once coined “Apple Tax” has now morphed into a “Apple hosing” is when you want to add memory and/or storage of any type.

You can now get either a 1TB SSD (terabyte, solid state) for the low price of $600. If you would like two? It’ll cost you an additional $1400. Yes, you read that correctly: fourteen hundred dollars U.S.

Currently I have and own SSD drives because, I have exceeded the capacity of my internal drives. So, I am one of the many that needs to live the “dongle life” that has become synonymous with Apple products since Mr. Cook’s version of “make everything non-upgradable and F’ what the customer needs or wants” has taken over. i.e., everything you may need now requires either an adapter hanging off the side of your new multi-$thousand device. But hey, at least it’s in space grey, right? Right?

I can purchase today a 1TB SSD drive for about $150. U.S. 2TB for about a bit more than double. And that’s with no discount for buying bulk, shipped and delivered to my door, and last but certainly not least, that’s before the price goes down again.Yes, again!

Memory and storage prices are a consistently and constantly falling priced part of tech. It owes this to Moore’s Law and it has never wavered.

Cook and crew seem to think that this is something we luddites must not know anything about. The issue here is we know all too well because, it has been Mr. Cook’s insistence of making Apple products non-upgradeable (as in after initial sale) that we have to constantly buy these things aftermarket and add them on.

The problem here is we also understand that sometimes internally installed memory and storage functions more seamlessly than add-ons. But adding on, or trying to now order a piece of Apple hardware that you may not out grow in about 6 months time means not just overpaying, but rather, feeling more like you’ve just been violated in ways not fit for polite conversation.

Think I’m off base? Fair enough add this to the above example…

64 GB of RAM. Approximately $500 to $700 U.S. depending and using the same criteria as above. Apple pricing? An additional, again, additional $1400. U.S. That would put the memory upgrade and storage to cost almost more than double the price of the machine itself ($1099) which means the price suddenly soars with just these two upgrades to a near whopping $4000. U.S.

Are you beginning to see why that “corner” analogy I made earlier is maybe a bit too close in reality to people like myself?

Yet, as troubling as any of the above is Cook and crew might have just made their biggest tone deaf product iteration since his tutelage began, and that’s in the tinkering with: Apple-the-stock.

I have stated many times over these past years that Silicon Valley was no longer breathing rarified air, but rather, was inhaling its own exhaust fumes.

The issue here is that it’s set the stage for what might be one of Apple’s biggest missteps. Of course, this is in relation to changing its earnings report criteria going forward.

Personally, I would check the HVAC system that circulates the air within that “spaceship” for possible recycling errors, because I don’t know what else could warrant such a tone-deaf, mistimed product announcement than what took place on this recent earnings call. Unless you want to use the HomePod®, but I digress.

It was announced that Apple will no longer break down or release product metrics, just their revenues. Can you say, “Uh Oh?”

In a stunning statement analysts were notified that the metrics they relied upon as to help figure out what, how, or anything else that may help interpret what the company may, or may not be doing (you know, like how many iPhone® were sold – or not) was no longer going to be broken down or given as to use for comparison. 

In other words: the moment there was a noticeable slowdown (aka missed expectations) in the flagship product, it stated that reporting feature was no longer be available.  

Dear stock analysts, welcome to our (product users) world. Think I was off base with the comparison earlier? Not so much now when looked through this lens, yes? Or, maybe you now know why that “corner” comment just seems to fit.

The issue here is two fold…

First: There is no way this should have taken place without some real buildup and guidance far out. Doing this during an obvious iPhone sales miss into an upcoming holiday season coupled with the tariff speculation and more exacerbated the issue.

Second: Revenue is a great metric, but knowing how you got there is also important. And that’s why there are reports in the first place to make things transparent. Make them opague at the wrong time? See Apple’s main product line aka “share price” for clues.

Now Mr. Cook is facing an even bigger issue than when he first took over.

His baby, his creation, his biggest claim to fame, e.g., share holder value, has suddenly become “less valued.” And that won’t sit very well with the likes of one of his newest adoring fans Mr.Buffett.

Warren Buffett was once heralded as being the smartest investor on Wall Street because of his dogmatic adherence to not investing in things he didn’t understand intuitively such as tech.

Not being exposed to the dot-com crash high flyers and others helped both him and his company stay clear of much of the original damage. Believing in Cook and crew might turn into one of his biggest blunders.

As of now it’s reported that Mr. Buffett’s investment in Apple has lost as much as $4Billion in one day and may even be worse because, he added to his position right just two months prior. 

Here’s the real noticeable problem: It seems no one thought Apple shares “on sale” were any bargain, because they still remain on the lows of that thumping. You know, much like all the others of the FAANG family of “can’t go nowhere but higher” no brainer investment thesis.

Should this prove to be more the case rather, than some aberration that works against Mr. Buffett’s investing thesis of “Rule One: Don’t lose the money. Rule Two: See rule one.” Mr. Cook is going to be under some very serious pressure to fire up the engines of that “spaceship” and stop sitting in the captain’s chair pretending it’s flying.

Mr. Buffett will not stand idly by to watch his money go up in smoke like other tech investors of yore, no matter how many superlatives may be used at any share holders meeting. Trust me on that one.

Mr. Cook has signaled that it’s all about revenue, not the product details. That’s fine and in some ways he’s correct. But on the other hand, the timing in conjunction to all the rest that’s happening shows just how out of step to reality Apple has moved, not just from its customers, but also in understanding the reality of the day. i.e., “It’s different this time” no longer means what it once implied. Now it means – a reversing of it.

Should Apple-the-stock remain in the doldrums for any length of time, in concert with innovation that is both lack luster, as well as overpriced, it may very well be the case that there will be no discernible difference between Microsoft and Apple both in share holder value, as well as product releases.

Maybe those recent tremors emanating along the edge of California don’t have anything to do with Mother Earth per se, but rather, is Jobs rolling over in fury to even the idea of being able to imply such an idea.

© 2018 Mark St.Cyr