Lefsetz: End of Days for Apple?

Why don’t they just buy all the record labels?

Or Paramount and the rest of the movie studios while they’re at it!

That’s the canard we were exposed to again and again and again – that Apple and Spotify, all the distributors – were gonna become producers. So far it hasn’t happened. Because their shareholders would scream. Distribution is a predictable business, creation is a license to lose money.

They’re not in the content business anyway.

At least they didn’t used to be.

Netflix is the progenitor here.

They leveraged a replacement for Blockbuster – DVDs by mail -into a streaming service that was so far ahead of its customers, never mind the industry, that everybody balked. People were pissed they couldn’t get their DVDs by mail and Reed Hastings blinked and kept coming up with new names and new strategies when the truth is he was right to begin with.

You’ve got trust your gut.

That’s what Steve Jobs did – he never used consumer research.

It’s about innovation, new products, which you leverage down the line. That’s how Amazon got into the content business, via Prime. What else could they add to a two-day shipping service in order to get people to subscribe and buy more stuff. And now, Amazon has the Echo, an ecosystem which is driving further innovation and revenue.


If you want to talk about music streaming, talk about Spotify and Amazon.

Apple is a zit on the ass of innovation,

It’s coasting on brand name and we’ve seen that movie before.

Are you willing to overpay for a Sony product anymore? Never.

“The Late Late Show with James Corden” – James Corden takes over as host of THE LATE LATE SHOW on Monday, March 23 (12:37 – 1:37 AM, ET/PT) on the CBS Television Network. Photo: Art Streiber/CBS ©2015 CBS Broadcasting, Inc. All Rights Reserved

As for Apple products, I’ve got an iPhone 7 Plus – love it – but the truth is outside America Android crushes Apple. And sure, Apple gets almost all the handset profits, but are you a user or a stockholder?

Furthermore, I got one of those new Apple laptops, and now that my wallet is 4k lighter, I feel ripped off. I’m not gonna bitch about battery life and dongles, I don’t really care, but why is it that I’ve got to overpay by so much for what is essentially a tool?

As for the Touch Bar, why in the hell would you use it if you know how to touch-type? It’s a gimmick at best. And my point here is if a dyed-in-the-wool Apple devotee like me is questioning Cupertino, SO IS EVERYBODY ELSE!

This is the same press that told us BlackBerry was gonna survive.

The truth is if Apple Music was branded something else, it’d be a nonstarter. It’s only succeeding because of the brand name. There’s not enough sizzle to entice those not blinded by the Apple light.

And now they’re gonna add bogus reality shows in a world of 450 scripted series and you expect people to care? My issue is too much content and not enough time, I don’t need more “Carpool Karaoke,”

I don’t even have time to watch James Corden when he’s on after midnight – or even on YouTube.

And a reality show featuring whored out celebrities voting on apps… Come on, everybody on the street knows that apps are a way to go broke. They’ve got to be free and they barely last. Sure, there are outliers. But are the purveyors of those gonna go on this cheap reality show?

Never forget what sold Idol and is still selling the Voice is music.

Of course, there was drama, but you got to hear the songs. Exactly what is the appeal of “Planet of the Apps”?

Steve Jobs knew it was about pushing the envelope with new products that people did not even know they needed. Tell me again how these dopey shows fit that paradigm?

And, of course, there is consolidation.

Everybody’s bulking up. Facebook is into video and Google is a monolith of many elements and Amazon is a behemoth of one stop shopping and attention, but that does not mean everybody can execute!

The problem Apple has is no visionary founder.

Which its competitors possess.

No one with skin in the game who was there at the beginning. One can argue major labels are moribund because of this. Unless you personally are at risk, you don’t get it. Who is at Apple who was there at the beginning? Nobody!

What Apple needs is a new product, hopefully hardware, not some also-ran creative plan.

And we’ve got to hear about the future of Apple services when the truth is everybody knows they suck. The sync is much worse than Google’s.

And then there’s Apple TV.

Walter Isaacson reports that Steve Jobs says he’s figured it out and what we’ve ended up with is an overpriced device with apps. Whoop-de-doo. And since everybody in Hollywood has seen this movie, no one will give Apple an inch. But suddenly Apple’s gonna develop in-house!

But they’ve got Jimmy Iovine!

Who turns out to be a marketing genius, selling lame headphones to the masses.

But tech never made it on marketing, it always made it on products. And if lame TV shows pushed icons over the limit Yahoo would be sailing now. Remember when Terry Semel was gonna turn it into an entertainment juggernaut?

Disruption comes from outside. And when it comes to content, Apple was never even inside – it’s a beginner. No one has any experience, but they’re gonna beat Hollywood at its own game.

Oh, they hired Ben Silverman.

Go deep or go home. If they hired ten producers and invested billions…then maybe they’d be Amazon, chasing Netflix, which has a giant head-start. But instead, they’re just  bunting.

Where is the commitment?

So when you hear the press trumpet every Apple move again and again, ignore the reports. Listen to your friends on the street. People talk to me about Spotify every damn day. How often do I hear about Apple Music from a user? Once a month would be generous. There’s no heat, there’s no buzz, other than that which is coming from the company and the press.

I’d be excited if Apple announced an Echo competitor, hell, if Siri ∫ actually worked.

But Apple launching TV shows is like Goldman Sachs making a new social media app.

There is no catalog in tech. You’ve got to innovate every damn day. You can’t tread the boards playing your greatest hits decades down the line.

Phil Schiller insulted commentators by saying the Mac Pro proved Apple could still innovate. A device no one wants that has never been updated.

The Apple Watch is a joke.

Hell, it took them eons just to update their laptops.

But this is the company that’s gonna triumph in the future, by executing a formula that others have perfected.

I don’t buy it.

And neither should you.

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7 Responses to Lefsetz: End of Days for Apple?

  1. David Nelson says:

    It is tough to continually come up with the next big idea – even for AAPL. But with all their resources and capital they have a huge advantage and they can survive big mistakes (they certainly have had their share).

    Be careful betting against them:


    I read about this 240k short before AAPL reported last week and I really liked his logic. Oops.

  2. I am confused says:

    “And sure, Apple gets almost all the handset profits, but are you a user or a stockholder?”

    Since Appple (AAPL) is the third most widely held stock behind Microsoft and Alphabet, odds are the people reading your blog are in fact shareholders. Almost anyone with a retirement account is a stockholder.

  3. I am confused says:

    “The tech giant Apple has accumulated an enormous cash hoard of $246bn, larger than Sri Lanka’s estimated 2016 GDP. If Apple’s cash pile was its own public company, it would be the 13th largest in the world.” – courtesy of Redline

    Apple is more than a technology company now. It is the epitome of “Too big to fail.”

    • Phaedrus says:

      It also has $86 billion of debt….so $160 bn net cash.

      If I were a shareholder, I’d want a large chunk of that cash paid out as a one-time dividend. Otherwise, I’d guess they’ll waste it on fancy HQ bulding, trying to build cars, etc etc.

      The only thing saving AAPL investors is that it’s not priced at 50x earnings like most of the other tech giants of the past. In that sense, I guess the market also thinks AAPL’s earnings aren’t sustainable at the current level.

      • No thanks says:

        I would not want that Phaedrus. That would be a horrible decision on the part of Apple. Most of the cash is held overseas, and would incur incredible penalties if they did as you suggest. I am glad you are not a member of the Apple Board of Directors.

        • Phaedrus says:

          So what would you have them do? That cash has to be brought over someday if shareholders ever want to see a dime of it.

          What kind of return is AAPL generating on the reinvestment of those funds in its business? Look at its current R&D spend compared to the R&D spend back when they were actually developing new products (ipod, iphone, ipad). What are they getting for all that money spent?

          I bet Blackberry (or Nokia) shareholders wish they’d been paid a large dividend back when those companies were making money.

          • Phaedrus says:

            R&D 2006 – $712 million (roughly 3.5% of sales)
            R&D 2016 – $10.4 Billion (roughly 5% of sales)

            That’s a lot of R&D for little innovation.

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