As a certified Apple watcher and fangirl with a reputation for calling it like I see it, I’m ready to call it. Apple’s newest products are expensive. More expensive than competitors, yes, but that’s not exactly news. It’s not even news that Apple’s newest products are lust-worthy and drool-worthy. That’s typical Apple and even with all the accolades for iPad Pro, Mac mini, iMac Pro, Apple Watch Series 4, and the new iPhones, there’s nothing new to see here, right?
Time to move along? No.
Apple raised prices on all the new products launched this year. Apple made those products so they are not easily repaired by anyone except Apple geniuses. That means more AppleCare sales and that means Apple makes even more money on a per transaction basis.
Instead of launching market disruptive products that came often in the Steve Jobs era, Tim Cook’s Apple spent many tens of billions on stock buyback programs and shareholder dividends, neither of which are beneficial to the company’s well being, but instead placate the nattering nabobs of negativism which populate Wall Street; all for a higher stock price (executives at the company love the higher stock price because Apple uses it as compensation).
Apple under Tim Cook has become addicted to massive profits.
Steve Jobs in 1995, a couple of years before he returned to run Apple:
Instead of following the original trajectory of the original vision, which was to make the thing an appliance and get this out there to as many people as possible, they went for profits. They made outlandish profits for about four years… What that cost them was their future. What they should have been doing is making rational profits and going for market share.
By comparison, Tim Cook can be called the new robber baron of the 21st century.
“Robber baron” is a derogatory metaphor of social criticism originally applied to certain late 19th-century American businessmen who were accused of using unscrupulous methods to get rich, or expand their wealth.
Does that sound like Cook and Apple, circa 2018?
Across the board Apple has gained more revenue and profits from fewer sales. Product growth is a thing of the past. iPhone sales have peaked and plateaued. So have Mac and iPad sales. Yet, prices are higher, and that means higher gross margins which translates into more profits on fewer sales.
The term robber baron derives from the Raubritter (robber knights), the medieval German lords who charged nominally illegal tolls (unauthorized by the Holy Roman Emperor) on the primitive roads crossing their lands or larger tolls along the Rhine river—all without adding anything of value, but instead lining their pockets at the cost of the common good (rent seeking).
Rent seeking and tolls and unscrupulous taxes are the nature of such robber barons. Does such a definition hold true in the 21st century? It does if we consider Apple’s latest trends– Apple Pay, Apple Music, In-App subscription prices, iPhone Upgrade Program, AppleCare, et al.
- (slang) the price premium paid by Macintosh users over that of a Wintel PC of comparable power and feature
- (slang) by extension, the price premium paid by consumers of Apple consumer products over comparable devices from competitors
- (slang) the large cut of the gross paid to iTunes from every sale on iTunes by content providers, over how much a cut is given at other online retailers
At every turn with every product Apple makes more money under Tim Cook than it did under co-founder Steve Jobs.
Robber barons, indeed.