Everyone Is Wrong, Apple Will Be Different (and Almost Certainly Worse) Post-Steve Jobs

The news media and every pundit in the world basically said Apple would be just fine, thank you very much. DaringFireball / John Gruber summed up a lot of the sentiment with the following:


Jobs’s greatest creation isn’t any Apple product. It is Apple itself.

So Apple will be exactly the same no matter what because Steve Jobs carved in stone and left it for all the world to consume? 

Of course not. Either Steve Jobs is the fantastic leader, innovative, and will continue to change the world, or he's a worthless hanger-on, and provides no value. The entire world seems to be saying the latter. Well, actually, that's not strictly true. They all SAY the former, but by implying Apple's going to be just fine, and crank along like nothing will at all change, they're IMPLYING the latter.

I think that Steve Jobs was and is critical to Apple's success and Apple WILL be different (and almost certainly) worse if he's not arround. That's just the law of talented people. There are a finite amount of them in the world, it is rare to EVER find one working at your company. When you lose one, you are likely to not find another one.

But to steal from an excellent post from Tim Bray:

I’m irritated at the prattling pundits prognosticating Apple’s future, most of them saying “Everything’s just fine, Tim Cook he da man.” Jeepers, the essential point about business is that you never know how the story’s going to end.

EXACTLY. No one in the world could have predicted the direction Apple was going to take and succeed in starting in 1997 when Jobs returned. I doubt anyone can accurately predict where they will be even three years out, even inside the company. Everyone has plans, and nice connect the dot lines from here to there, but guessing what's actually going to happen is just a total crap shoot. One thing I will promise - Apple WILL change, it already has.

Have the Republicans Boxed Themselves In?

Many many many Democrats were up in arms that Obama totally mishandled the debt ceiling negotiations - at best, it seems like it was a big wash, and, at worst, he got taken to school. But what does not make any sense to me is that while the Republican won the battle (or at worst tied), the seemingly definitely lost the war. Here seems to be the only options:

  • Republicans go into the super committee and agree to taxes/rewriting tax code. Result? "Balanced" budget, Obama/Democrats win for looking responsible, Republicans all get primaried by Tea Party people who demanded no tax increases.
  • Republicans go into the super committee and agree to nothing but cuts. Triggers kick in, huge cuts in Defense and Medicaid/Medicare. Result? Obama/Democrats win by paint Republicans as anti-older Americans/poor, plus anti-defense. Republicans get to keep their primary wins, but get throttled in the general.

Far be it from me to underestimate the ability of Republicans to effectively communicate their messages, but if they lost NY 26 on the strength of a mere proposal of Rep. Paul Ryan's plan, I have no idea how they don't get killed here.

Retroactive Genius of Apple's Plan

I would have loved to buy a TouchPad had they not sold out so fast. For $99, why not!

Check out this comment on TechCrunch:

Holy crap - I'm just thinking about how cool these might be for our classroom. At $100, these would actually be pretty nifty. We could put pdf files on them to read, have students connect to the internet... hmmmm.
This is just the first of a million uses when something is that cheap.
Which leads to looking at the retroactive genius of Apple. The process was pretty straightforward:
  1. Design an unbelievably cool, ground-breaking device (iPhone)
  2. Get someone else (carriers) to subsidize it so that it's within the realm of hipster purchasing
  3. Build a huge dev community building great apps for it
  4. Expand the target audience for those devs by releasing a larger device, of largely the same innards that have now been reduced in cost due to volume
  5. Win!

This is where the HP TouchPad failed - because it was/is new, they needed to seed the market - hugely! Apple spent $486M on advertising in 2009, let's say, for the sake of argument, that number has now increased to $1.5B (an increase of 3x, which is not a stretch considering their earnings per share have 4x in that time). If they're spending 25% of that on the iPad (a new product that makes up around 20% of their business), that means they're spending ~$350M on iPad advertising. How, exactly, did HP think they were going to compete with anything less?

HP is supposed to lose between $100M and $400M on the TouchPad price cuts. But at the end of this weekend, with everything seemingly everywhere, sold out, that means that they have 2M TouchPads in the hands of consumers - that actually seems like a very effective marketing campaign, considering they're over 18 months late to the party. If it ran netflix and let me stream video, that would be a home run.

    But Can You Get Your Startup To Puke On Your Shoulder?

    New post today on Seattle 2.0:

    You will get a ton of commentary when you announce to your friends and family that you will be launching your startup and most of it is totally worthless so feel free to ignore it. However, the ones who have done it before, and who know what it is really like, will pass on at least one key bit of wisdom similar to “it was nice knowing you, see you in three to seven years.” Much like the gaseous form of a substance, your beer gut, or the US populous in the 19th century, your startup will strictly follow Parkinson’s Law and “expand to fill any (and all) available space.” And, even when you try to step away to vacation, eat, or sleep, you will find that while you may be physically elsewhere, your mind and soul are still fully under the grasp of your creation. In fact, I would say the closest you can get to starting a company is having a baby. »

    Definitely one of those posts where each of these points probably should have been an article in itself.

    My Contrarian View on Apple

    Please feel free to save this for future taunting.

    Apple is crushing it. Just absolutely crushing it. Look at this graph:


    Forbes is getting into the act, and points out six areas that are BILLIONS upon BILLIONS of dollars that Apple can very easily move into. 

    And the always excellent RakeshLobster points out that the iPad is ALREADY the size of 2/3rds of ALL of Google's business.

    As someone who held AAPL at $13 (sadly sold at $30), I've been a long time fan. And they are firing on all cylinders without question. But, seriously, something is insane.

    1) AAPL is (as of today) 87% ($357B) of XOM's market cap ($410B). I know, I know, one is a growth company and one is not, and the P/E barely indicates any insanity (18 vs 11). But, one has rights to 72 Billion barrels (worth ~$7.2T, unrefined)  of a product that has been in heavy use for 140 years, and the other has 21% of its revenue made up of a product it released 18 months ago.

    2) Please take a second to look at this graph:

    Is it just me, or does everything to the right of Q1 2011 (if you leave the iPad out) look kind of, flat? iPhone is taking up more revenue, but Macs and iPods are decreasing at an equivalent rate. True, the iPhone 4 is getting a bit long in the tooth, and a new release will result in new revenue, but still - there are lots and lots of people out there right now who don't have iPhones.

    3) I remember the 2000 bubble - one of my favorite stats was at one point Priceline was worth more than United, Northwest and Continental, COMBINED (this, too, is a funny comparison, since another of my favorite stats is the net profit of the airline industry since 1970? Negative $10B). Apple, right now, is worth more than every other company in the world (except XOM). A company where the majority of their product lines and revenue literally did not exist 10 years ago is worth more than all of them. Why? The standard answer is that "it's about future earnings, not the past". And, to this I completely agree. But people talk about the opportunities in China or NFC or getting 100% of the smartphone market not only like Apple is the only player, but like Apple will NEVER lose market share. That's crazy talk. 

    Look, I'm not saying there are not billions of dollars on the table, but something feels hinky here. Either XOM is undervalued enormously (and all of these other "real" businesses), or AAPL is overvalued. To have a business that can be built in months means that someone else can do the same.

    For a counter to my counter-claim, I would recommend the absolutely excellent Seeking Alpha.

      I've Got a Good Mind to Slap Your Fat Face

      New post today up on Seattle 2.0:

      Hark has been an amazing ride so far, and the best is still yet to come. It is more often than not extremely taxing (mentally, physically, emotionally, financially) but I strongly believe that people who are wired this way simply must do it - birds gotta fly, bees gotta sting, honey's got to be beared, entrepreneurs gotta entrepreneur. To encourage other to join into my shared hysteria, I have also recently publicly committed to helping more startups out - especially in Seattle. And, as the recent startup weekends and broad financial activity show, there's lots to be excited about up here. However, time and again, I run into the same critical flaw that dooms vision after vision from becoming real. So what is this fatal flaw that is infecting the community? Simple - caring about what you release.  »

      There's a difference between a commitment to quality and making that the ONLY thing you care about. There are more important things in this world for Web sites.

      Microsoft's Hidden >20% Discount in the Purchase of Skype

      I really liked Ars Technica's write up on MSFT acquiring Skype - and generally I have to agree. I think that Microsoft generally has enormous assets internally that they cannot properly leverage because they are too bogged down with the existing business lines, and Windows Live Messenger (too many names!!) which has more users TODAY than Skype would have in years, is a perfect example of that. You want Skype integrated into Xbox Live? Guess what already is ... Windows Live Messenger. 

      However, there is a huge item that everyone seems to be ignoring that reprices the acquisition dramatically.

      The deal consideration is $8.5 billion in cash, and because Skype is based in Luxembourg, Microsoft will be able to pay for the deal with cash that is abroad and has not been repatriated to the U.S. This is significant because it allows Microsoft to deploy foreign cash without incurring the taxes associated with repatriation. Repatriating $8.5 billion of cash to the U.S. would potentially result in a U.S. tax bill in excess of $1.5 billion. [Seeking Alpha]

      This means that they were actually able to bid right down the center of what everyone else (Google, et al.) were going to bid as well.

      That said, could they have put that $8.5 B to better use funding 8500 (!) European startups at $1M a piece and taking the GM of Windows Live Messenger and giving him/her reporting authority straight to Ballmer? You bet.


      What They Don't Tell You Is The Wildebeest Is Your Mother's Cousin

      New post on Seattle 2.0 today:

      Being in a startup is not just a rollercoaster; rollercoasters have inspectors and safety bars and rails that you travel on. Being in a startup is more like being duct taped to the top of a blind wildebeest crossing your fingers that it is going to end up where you need to be. »

      Actually, this is not entirely correct. Being in a startup often is not that stressful. Especially if you're good, you have very little downside risk - you'll always have a chance to go somewhere else. Being an executive in a startup is where the majority of the insanity happens. With no net, and real people's lives depending on you, the stakes are much much higher.