The other day I was sitting in a public place, indulging one of my habits, I won’t say what, and talking with another gentleman. He’s of similar age to me, and is undoubtedly very well read. I respect him, and I’m sure the feeling is mutual. Inevitably in these situations, topics such as politics […]
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A Conversation Exemplifying the Doubt Currently Surrounding Apple

Jan 28th 2013 by

 

The other day I was sitting in a public place, indulging one of my habits, I won’t say what, and talking with another gentleman. He’s of similar age to me, and is undoubtedly very well read. I respect him, and I’m sure the feeling is mutual. Inevitably in these situations, topics such as politics and religion come up. Fine. Then the subject of technology emerges, and I perk up a bit.

As we were talking, and others bobbed and weaved in and out of the conversation, this gentleman claimed that Apple has peaked. My initial, fanboy-ish reaction was to argue, but I let him continue, and continue he did. He felt that Apple, with the introduction of the iPhone 5 and the iPad mini, has reached it’s potential. At the time we were having this discussion, he had all of the evidence to back up his claim. Apple’s stock price had been tumbling for days.

I sat and listened, with my blood pressure fluctuating upward. The conversation ended and he went about his business, and I hadn’t even gotten a jab in. The sentiment he had shared lingered in my mind for the next few days. Perhaps he was right?

As he pointed out, with the announcement of the iPhone 5, this was the first time that Apple had introduced an iPhone that did not feel like it was taking a massive leap over the Android competition. Instead it just felt like catchup this year. He then noted that the iPad mini, was in fact, just a smaller iPad and not something Apple could ride as a huge success for very long. Although I still feel this was an overly-narrow way of seeing the new product, I do believe the nut of what he was getting at is true. The iPad mini is merely a variation of the iPad line, not a huge innovation.

My decision to remain quiet may have been a wise one for once. Since our discussion, the seemingly irrational way in which Apple’s stock prices fluctuate, has worked against the views that I have expressed. The stock price has floundered, dropping to around $440 at the time of this writing. Perhaps it will drop again, but more likely, I see it moving upwards once again in the near future. Besides, some believe that this recent drop was a price fix anyway.

Along those same lines, Apple’s earnings call for fiscal Q1 of 2013, was stellar, but off a bit, further damaging the stock price. Revenue surged to $54.6 billion, while profit dropped slightly to $13.1 billion (compared to the year-ago quarter’s $13.06 billion in profit). Some saw this dip in profit as a sign to panic, and the next day the stock price dropped 10%. This market news, no matter how irrational it might be, lends credibility to anyone doubting Apple’s abilities and performance.

I think this gentleman’s point of view was further backed up by the fact that Apple recently underwent a management shakeup, which, no matter how well your company is doing financially, looks rough from the outside looking in. We don’t know the circumstances in which Forstall was asked to leave the company, but we can make educated guesses, for better or for worse.

The point to this long parable of mine is this- although I and others like me aren’t super excited about what Apple has unveiled over the last several months, it doesn’t mean that the general public won’t love it, or that Apple won’t remain a huge success for some time. I like many others, believe the iPad mini will soon become the iPad, much in the same way that the iPod mini of the early 00’s became the iPod in consumers’ minds.

As for the iPhone 5, it’s selling well amongst my friends. The same group of people who are not particularly interested in technology. Granted, sample size is pretty small, but the iPhone 5 seems to be doing pretty well despite the fact that it doesn’t blow away other Android phones on a technical level. Fit and finish goes a long way in the mind of the consumer. If it feels like a luxury item, but only costs $200 on a two-year contract, many people, including myself will buy them.

Completing the thread, this gentleman I was talking with, has an Android phone and an first-generation iPad. From talking to him, he doesn’t seem particularly interested in tech, and marginally in tune with business news. He’s happy with his Android phone, which he believes is better because he can tinker with it without repercussions. And his first-generation iPad suits him just fine. Who would need a smaller iPad?

In summary, these conflicting views, that at the time pissed me off a bit for being so knee-jerk, actually got me to think about Apple as a whole. I’m still very confident in Apple’s leadership and the direction of the company. Then again, it took Steve Jobs ten years to put Apple in such a strong position. I would think that it would take more than a year of hypothetically bad management to steer them back off corse. Time will unveil this answer however. As for me, I’ll stick to my “unimpressive” iPhone 5, and watch as the iPad mini explodes into prominence.

 

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