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Why Nothing Apple Does Is Ever Good Enough


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By Marcus Wohlsen 01.28.14 6:30 AM

Apple is kind of like a wildfire. It burns so hot, it creates its own weather.

How else to explain Wall Street’s rats-off-a-sinking-ship reaction to another quarter of stratospheric sales and profits from the cash machine that Jobs built? The only rule with Apple is: No matter how well it does, a whole different school of stock market physics seems to apply.

On Monday, after the markets closed, Apple reported its most recent quarterly earnings, and investors responded by dumping their shares. The company’s stock price dropped as much as 9 percent in after-hours trading. With most companies, such a sell-off comes after a big loss, tepid projections for the future, or quarterly numbers that failed to meet the expectations of Wall Street analysts. But in Apple’s case, it arrived after the company reported $13.1 billion in profits on sales of $57.6 billion, beating the Street’s consensus.

The problem with Apple is that all the numbers have become so large that it’s hard to comprehend how they get any larger.

The company said it sold a record number of iPhones for the quarter (51 million), as well as a record number of iPads (26 million). And big profits and sales are predicted to continue. For casual students of capitalism, all this sounds like everything is going right.

Instead, the big drop in Apple’s stock price has become something of a ritual purge every time the company announces big news. See, for example, here, here, and here. Similar disappointment greeted CEO Tim Cook’s announcement of the iPhone 5s and 5c back in September. The 5s looked especially great — best in class, even — but for Apple, sometimes even great isn’t enough. The same holds true for sales and profits. It’s not about how big they are. It’s about how much bigger they could be, but aren’t.

Too Big Not to Fail

During the first decade or so of the new century, Apple went from a company that made a device that transformed the music industry to a company that made a device that transformed every industry. And its revenue growth reflects that trend. As the iPhone went from coveted status symbol to ubiquitous tool of the mobile age, sales began to rise. Once the iPad was introduced, Apple’s growth rocketed, setting the standard that has been nearly impossible to match as the market for smartphones and tablets has matured — a dreaded word. While iPhones and iPads are still setting new records, overall growth is flat, and this past quarter’s iPhone sales came in below expectations for the holiday season by 5 to 6 million units. Apple’s numbers represent a healthy consistency but not that next level of nose bleed-inducing altitudes .

It’s possible Apple could once again reach those heights with the release of a category-creating wearable gadget or smart device, and some of the pessimism around Apple arises from the reality that the company has yet to do this. Rumors of such Apple hardware have been around for ages. Apple poaching former Burberry CEO Angela Ahrendts was seen as the surest sign yet that the company is getting into the wearables game. The trouble is that Wall Street wants an Apple smartwatch now, and it hasn’t seen one yet.

Meanwhile, activist investor Carl Icahn sees other deficiencies in the Apple machine. Icahn’s version of “not good enough” is Apple’s $100 billion stock buyback plan, which he believes the company should hike up to $150 billion. So he’s using Twitter to badger Cook and company almost constantly.

In a sense, the problem with Apple is that all the numbers have become so large, they can’t get any larger. Then again, a majority of the world’s people still don’t own smartphones. If Apple can figure out how to get its devices into even a fraction of those hands — which it has struggled to do in emerging markets, compared to Google Android — maybe it could finally add enough billions to its balance sheet to make everyone happy.

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the problem with Apple is that all the numbers have become so large, they can’t get any larger.

Really? The last I heard, their market share was stuck at around ~17% or so in the smartphone industry. Had they released the 5C at around $299-$349 as was being forecast, things might have well been different. ;)

But TBH, with the impending launch of the rumored 4.7 and 5.7 inch versions, I have no doubt that they'll increase their market share. A lot of people who'd want the iPhone, but wanted a larger screen and hence sticking to Android, will definitely give those larger iPhones a go. Of course, by then the goalpost would have shifted and yet larger screens will be the norm, but I still believe that those devices will force a lot of people to move from Android to Apple and expect a lot of iSheep to also upgrade from the 5S within a year.

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Apple has never been high marketshare and they aren't going to make a cheap piece of shit (the iPhone 5C to me is an expensive piece of shit, but it is an iPhone 5 vs a glorified phone with a touchscreen slapped on that can barely run Android 2.X) just to sell in the 3rd world, so Android is going to flourish there (it may be the only place that actually wants WP8, as well).

What on earth are you ranting about? The 5C costs $700 here in India and the top end 5S almost $1200. Yes, *THAT* much! When you denounce Android budget phones as "cheap piece of shit" and "low end third world phones", think whether you'll spend that kinda' dough for your beloved Apple trash.

Ignorance unfortunately is not always a bliss. You need to use the $179 Moto G - a "low-end" Droid, which you described so eloquently as "glorified shit with a touchscreen slapped on") - before embarking on yet another episode of your deluded Apple worship. But then again, there's no reasoning with the iRetards. :mad2:

Your plasticky iPhone 5C that you suggest as an alternative to "glorified shit to sell in the third world" costs me $700. Meanwhile, a larger, faster Droid like the MotoG costs me $179. Which one am I going to choose? I know that answer. And you would too if you were not such a juvenile imbecilic fanboi.

In the meantime, your beloved cr@pple is still losing market share, and not just in the "third world". It's happening in Europe and the US as well. If anything, it's doing alright in China - the poster boy for the "third world".


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Apple is always limited to an IBM user and is for end users (if not graphic designers) - I am not a fan and will never be even if an IBM computer became extinct in the future

thanks to the laptop sleek design which every DJ now has in their booth in every nightclub however if it wasn't for that - I wonder how many will buy an apple book other than showing off and that's the type of crowd it attracts, the rich and show offs

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