17 November 2012

The Apple of My Eye?

And now for something completely different. In which an attempt is made to forecast the future of Apple Computer. The share price has been vying with Lindsey Vonn for fastest time. Why might that be? And what might it mean?

Apple's "growth" has been driven by "new" products, what Vance Packard termed "planned obsolescence". They've been good at it in the Jobs-ian past. There's no indication that they'll continue to do so. Just what "new" product is waiting to enthrall the Apple Fan Boys? If the answer is, "we ain't got none", then Apple's growth goes poof.

Apple invented none of the platforms (MP3, laptop, smartphone, tablet, desktop) that have driven this growth. They did tweak their products in those platforms. All existed before Apple's entries. In some of those cases, Apple (purposely?) lagged the cutting edge to decipher the profitable high-end, MP3 for sure. Apple gambled that wireless network hardware would catch up soon enough, just as MicroSoft gambled that the next PC hardware would be just fast enough to support the next bloated version of Office.

What *existing* platform(s) are out there, for which Apple doesn't have an entry? If the answer is "none", then Apple has no option but to be MicroSoft/HP. They could invent a new platform, but that's something *not even Jobs did* (Woz made the machines). Right now, the answer is "none" to both questions. Feel free to name any.

Moreover, Apple's products have, since the original Mac, been intentionally high-end and small shift. That Samsung, et al, shift more parts isn't paradigm breaking; it's the norm. Samsung is MicroSoft/IBM et al.

Apple has benefited from a psychotic patent system which permits any random thought to be moated. And we now see Apple morphing from maker to taker; suing everybody on the planet. A patent on rectangle with rounded corners, indeed.

In sum, there is reason to believe that Apple has gone to level flight. Since it eschews high volume, low unit profit for low volume, high unit profit, can it continue to grow? No. While population growth continues on the steep end of the hockey stick, the number of households which fit Apple's economic criteria isn't. Continuing wealth and income concentration take a big bite out of what would otherwise be a burgeoning upper-middle class, in both the USofA and Europe. Japan continues in its lost decades (yes, now plural), and China's macro-policies of exporting poverty don't help Apple much either. Apple needs an expanding, global, upper-middle class to support its growth. Even if it does stumble onto a new platform. Whatever happened to iTV? What additional computerized activity can be made mobile? Address those questions with positive answers, and Apple has new parts it can shift at its traditional very high margins.

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