On Wall Street, a company’s performance is only as good as what it is expected to do next quarter, not what it did last quarter. For Apple Inc, last quarter was one for the record books; record revenue and profits, record unit sales; more profits than any company has ever seen in a single quarter. Ever.
What can Apple do for an encore that will satisfy Wall Street’s naysayers, members of the technorati elite, market prognosticators, and critics busily grinding their axes at Apple’s expense?
It won’t matter what Apple does. It’s in the company’s DNA to do what it does, regardless of what the stock market, critics, or competitors do. Is that arrogance and hubris? Or, is it simple confidence that the road less traveled still needs to be traveled by someone who knows where they’re going?
For much of the past few years Apple has done the impossible. It’s considered impossible for a company to grow itself organically (vs. buying another company to increase revenue by a large percentage). Average selling price of the hot selling iPhone should have gone down as market share and unit sales went up. It did not. ASP went up, too. iPhone sales increased by almost 50-percent in a single quarter.
Just as crazy is Apple’s severely conservative guidance for the current quarter, typically the company’s softest of the year. iPhone and Mac sales remain so strong that even this quarter and next quarter look positive.
For Apple’s many critics and doomsayers is it ‘time to put up or shut up?’ Forbes contributor Peter Cohan is already on the offensive with yet another list of why Apple is doomed. It’s filled with the usual suspects, too; many of the same ones that have been trotted out after every successful quarter Apple’s had in the past five years.
- Stock is too expensive
- Smartphone prices are falling
- Margins are declining
- iPad sales are dropping
- Apple Watch overhyped
- Inability to innovate
Allow me to do a quick walkthrough of each one so you won’t be tempted by another member of the so-called Forbes contributor network which gives the likes of Cohan free reign to embarrass themselves in public.
Stock is too expensive. Oh, puhleeze. Have you seen Google’s stock? Or, Microsoft? Or, Facebook? Or, any other competitor that has a single product line vs. multiple successful product lines? Which company wouldn’t trade places with Apple’s financials in a heart beat?
Smartphone prices are falling. Except at the premium segment of the market; the one ruled by Apple. Have critics not learned anything about the Mac’s business model?
Margins are declining. Except at the premium segment of the market; the one ruled by Apple. Have critics not learned anything about the Mac’s business model?
iPad sales are dropping. Remember, the iPad is Apple’s most successful new product, selling more units in less time than even the iPhone. So many iPads remain in use that it owns the usage statistics. iPads are hand-me-down products which makes it more like a Mac than an iPhone. Apple’s challenge here is how to make it better than nearly perfect. Still, which company makes more tablets than Apple makes iPads?
Apple Watch overhyped. By whom? Apple? All we’ve seen so far of Apple Watch are a few videos, some webpages, and… well, plenty of critics who call it a failure without wearing one. Will it be as successful as the iPhone? No. Better than iPad? Probably not. But longer term, capable technology will be that small and that useful.
Inability to innovate. That canard? If I’ve said it once, I’ve said it a thousand times, Apple innovates differently. Instead of pie-in-the-sky R&D promotions, Apple makes products that people can buy and use. Each product receives what I call iterative innovation; steady improvements over time. Crazy-assed ideas– passed off as innovation— that never see the light of day are not Apple’s style.
What is Apple’s style is disruptive innovation. Apple disrupts markets with new products. Mac, iPod, iTunes, iPhone, iPad, App Stores, as well as innovation that seldom gets viewed by the public and certainly not by the likes of Forbes’ Peter Cohan– manufacturing innovation. Apple is an expert at building high quality products that cost the same to make as do cheaper imitations. That gives the company tremendous flexibility and higher margins, greater profits.
Isn’t it time for the critics– so much embarrassed by being so wrong so often about Apple– to give it a rest and just shut up for awhile?