Newsletter Issue #1016
May 16th, 2021SO APPLE DIDN’T FAIL UNDER TIM COOK
Wall Street analysts must go back to the drawing boards after Apple reported two blowout quarters in a row so far this year. With total revenue of $89.6 billion for the most recent quarter, you’d almost think they had, by mistake, released the numbers for a holiday quarter. But no, this was correct. It was 54% higher than last year, with earnings of $1.40 per diluted share.
Most important is that Apple’s “failing” products all had significant growth. That includes the iPhone and even the “old fashioned” Mac. So maybe Apple wasn’t so crazy switching to Apple Silicon and ditching Intel. Or maybe most Mac users don’t concern themselves with the niceties of parts selection and such and are more concerned with having a computer that, well mostly, just works.
In passing, I go with the latter. While I don’t have any polls at hand, I rather suspect that the vast majority of Mac users wouldn’t know what sort of processor their machine has. Well, perhaps the numbers will be higher for the M1 Macs, since Apple has made such a huge deal in promoting them.
Now when Tim Cook became the “permanent” CEO in August of 2011, after having pinch hit for Steve Jobs from time to time during his previous absences, the critics were skeptical. After all, Cook wasn’t a former counter culture figure. He was a mainstream professional business executive with an MBA. He was the sort of individual you’d think Apple wouldn’t touch with a ten-foot poll. He had been working with a mainstream PC maker, Compaq. So how could Jobs possibly choose him to take over management of the company’s supply chain?
I suppose one can both criticize and thank Cook for his moves. In larger part, Apple has proper control of its supply chain, so absent unexpectedly high demand and an occasional production glitch, products tent to ship on or mostly on schedule. Sometimes you do have to wait, particularly when there’s a pent-up demand that takes a little time to fill.
For the most part, however, you should be able to get the product you want once it goes on sale without having to wait months.
On the negative side of the ledger, Cook outsourced much of Apple’s production to Asian factories, mostly in China, although that has begun to change in recent years. The critics pounced on Apple because these contract factories are notorious for poor working conditions where people are overworked and underpaid. When such publications as The New York Times have attacked Apple for the situation, they by and large ignore the fact that tons of other tech gear is assembled in many of the same factories.
So why not attack Dell or HP. Both sell more PCs than Apple, right?
In any case, Apple continues to be criticized for not coming up with enough new gadgets that turn the tech industry on its head, at least under Cook. After all, the iPhone debuted under Jobs, and most changes since then have been largely iterative. That said, Jobs’ original iPhone sales prediction was that he’d be happy to grab one percent of the market, which today’s iPhones are in use by hundreds of millions of people. Although Apple may usually be second among smartphone vendors, nobody comes close to matching their sales volume for any individual model. The number one best selling model on the planet is from the iPhone 12 family.
When it comes to Macs, Cook has been attacked for mostly neglecting the platform while focusing on iPhone and — and to a lesser extent — iPad growth. The 2013 “trashcan” Mac Pro is regarded as a huge miss, costing Apple the business of many professionals who used to depend on the platform.
As iPhone sales growth stalled, Apple has reemphasized Mac growth. Today’s Mac Pro is a proper descendant of previous models, and the ongoing switch to Apple Silicon is being done with finesse and without too many downsides. Apple developers are making the proper move to deliver M1 versions of their apps, and the slackers still run mostly OK under Apple’s Rosetta 2 emulation environment.
But this is nothing new for Apple. Processor changes were done twice previously, including Jobs decision to go to Intel, which was announced in 2005 and completed in 2006. So this is hardly an unusual move.
As to those products, Cook’s personal lifestyle as a fitness addict may very well have been at least partly responsible for another fast-growing platform, the Apple Watch. As with the iPhone — and PCs for that matter — Apple wasn’t the first to deliver a smartwatch. Indeed, the critics complained that Apple was late to the party and could never catch up, although that concern is nothing new.
The original Apple Watch, introduced in the spring of 2015, appears to have been a marketing misfire. It was first delivered as a fashion accessory, and one model, the Edition, was put on sale for $10,000 with some versions priced at up to $17,000. Surely Apple went in the wrong direction.
But Apple clearly was onto something. The Edition went away, and Apple focused on models costing just a few hundred dollars. More to the point, they found the right focus, and fitness features have been added. Nowadays, when you think of a smartwatch, it’s almost always about the Apple Watch.
What surprises me is how many people have no problem paying a few hundred dollars for one, and these are people who probably never wore watches previously. I’ve seen cashiers at convenience stores with them, and their wages are relatively low in the scheme of things. Apple continues to post double-digit growth for the product, despite its main limitation of strictly supporting Apple gear.
And, no, I do not expect an Android version any time soon, though I suppose Apple might consider one if growth stalls.
Long and short is that Cook may be a relatively mainstream corporate executive, but he was clearly the right person to choose to run a company that had reached its middle years. When it comes time for him to leave, and he’s made it quite clear he won’t be there forever, there will be other Apple executives-in-waiting to replace him. I won’t deal with current speculation because things change and today’s candidate may be tomorrow’s retiree.
Now it’s fair to suggest that part of Apple’s amazing success in the last two quarters might be part of the revitalization of the PC industry because more workers are sticking at home as a result of the pandemic, so they’re buying stuff. Or their employers are buying stuff for them. Students in the U.S. may be returning to school in larger numbers, but parents realized the need for iPads.
The transition to Apple Silicon seems to be going quite well so far. What might hurt most over the next year or so is the worldwide chip shortage. At worse, you might have to wait longer for the gadget of your choice.
As for me, I’m weighing whether to sacrifice three inches of screen real estate and save up some money for a new iMac. Even outfitted to the max, it’ll be cheaper than the Late 2014 5K model I have now. But the potential benchmarks indicate it’ll run a whole lot faster with the apps I need.
At my age, and considering how long I’ve kept my recent Macs, it may also be my last Mac. Not to get back to working over that gadget budget.
THE FINAL WORD
Gene Steinberg’s Mac Radio Newsletter is a weekly information service of Making The Impossible.
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