Saturday, January 26, 2013

Investors don't count Apple out just yet

Apple (AAPL) stock has taken a beating recently, despite record profits and over 500 million people owning iOS (iPod, iPad, iPhone, iPad Mini devices) many investors think that Apple has reached its peak in sales and will only go downhill.

Now before you decide to dance the Charleston on Apple's grave, they aren't dead yet. The Apple Doomsday Clock hasn't been set in over a decade because Apple made a great recovery from the 1990's when the Apple Doomsday Clock would get as close to midnight as it possibly could and many where waiting for it to finally hit midnight and then Apple goes bankrupt and becomes another statistic. It won't happen in these modern times because Apple has too good of a hold on the current market.

Yes the iPhone 5 had quality control problems, but consumers didn't seem to mind the imperfections or maybe didn't notice them. Yes Apple Maps and iOS 6 had quality control problems so bad, that Apple had to fire a lot of people. Again consumers didn't seem to mind or maybe didn't notice them (It looked like Salvador Dali's painting of melted watches only it was street features for Apple Maps) and most iOS 6 problems were for older devices not the newer ones, which seems to have forced a lot of people to upgrade just to avoid them. (My iPod Touch 5th Generation has nothing but App Crashes with iOS 6.0.1 and no update in sight to fix it, it worked great with iOS 5 though.)

I mean look at Microsoft, almost everything they release is as buggy or poor quality like Apple released last year. Microsoft is having problems selling Windows 8, so they blame the PC makers while PC shops charge $125 to downgrade those Windows 8 PC systems to Windows 7. Look at Oracle and all of the bugs the recent Java had. Poor quality control is an industry standard apparently since the 1990's when "Good Enough" replaced "Total Quality Management" and "Zero Defects" and "Continual Quality Control" and terms like "Six Sigma" were forgotten and considered only used by 'Geeks' and 'Nerds'.

In fact products still sell in record numbers even with poor quality control, consumers hope that there will be a future software update that will address the quality control problems. Sometimes there is, but it introduces other quality control problems.

Apple is now Post-Jobs, Steve Jobs was one of the best people to have one of the best quality control programs on the planet. People had called Steve Jobs a 'jerk' but it was only because he rejected poor quality products and software and sent it back telling them to 'do it right this time' until it passed his quality control tests and was ready for release. Somehow Apple has lost that process, but it doesn't matter as people still buy their products and services in record numbers.

True the iPad Mini has cut into sales of the iPad, but that is only to be expected. Apple needed a smaller tablet device to compete with all of those cheap Android tablets out there. So Apple is saving itself from losing marketshare to Android by selling the iPad Mini, also the iPad Mini allows Apple to sell a cheaper device and reach a newer market. It hasn't yet kicked in, but in the future it will reach newer markets as the cost of making iPad Mini devices goes down in a price war with Android.

Sure Macintosh sales are down, this is the Post-PC era. When Steve Jobs introduced the iPad, it was to be a PC-Killer. Since the Macintosh is basically a PC running an Intel chip these days and using PC technology, it stands to reason Macintosh sales are down while people buy iPad and iPad Mini devices instead. The PC has not evolved into the Post-PC era yet, and PC makers are feeling the crunch as the mobile market and tablet market cuts into their sales. There is one use for a Macintosh that an iPad cannot do yet, and that is develop iOS apps using XCode to submit them to the Apple App Store. So the Macintosh is still needed to develop iOS apps and using XCode to submit them to the App Store.

The Apple TV has not caught on yet, Apple is reinventing it into another DVR like the TiVO. What Apple should be doing with the Apple TV is not just making it a DVR, but also making it a video game console as well. Make game controllers, keyboards, mice available for it along with a camera that can sense motion changes and release a SDK for developers to develop video games for it. Have it compete with the Microsoft XBox and Sony Playstation series video game consoles. Get some major video game companies to port their existing video games to it. Put in a decent video adapter with 3D graphics in it, because it is not an iPad it is more of a set top device that can use AC power so you don't have to limit the power requirements of the components. Provide a feature to pay a monthly fee like $8/month to watch movies and TV shows in a streaming format to compete with Netflix and Hulu and tap into the iTunes library for media to stream.

Apple has to innovate itself out of the problems it faces. That means improving quality control of software and devices, that means getting rid of contracting companies that use child labor, that means building some of the devices in the USA, that means inventing new devices and features for existing devices and finding new uses for existing devices and software.

Now keep in mind Apple is mostly a consumer and entertainment company and the 'business' use of their devices is mostly for 'creative content' like picture editing, video editing, desktop publishing, web page design, etc. Apple does not have the market the Windows PC has for Finances, Accounting, Business Management, Administration, Healthcare, Point of Sales, or even running the Backoffice of a business yet. These are areas they could develop for and move into, but haven't done so yet.

1 comment:

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