The Rise and Fall of Apple

4 Flares Twitter 1 Facebook 0 Google+ 3 LinkedIn 0 4 Flares ×

The Rise and Fall of Apple rise and fall of apple fall of apple apple stock Apple is one of those companies where everyone seems to have an opinion. From the fanboys to the critics, it’s hard to sift through the partisan noise to see what’s really going on with the growing tech giant. Though it may be difficult to deny the success of such an innovative and profitable organization, Apple is losing its way and the very technology and brand image that has made it great, may be its undoing. Their recent stock performance tells a tale, but here’s the whole story.

A History Lesson

It’s impossible to speak of Apple’s success without giving credit to the late, great Steve Jobs. His leadership and vision helped to propel the company from $10 a share to over $400. This rise was possible with the creation of Apple Mac, iPod, iTune and iPhone, and Jobs was the was captain of the team that delivered one great new technology after another. The inventions were timely, disruptive, and well packaged with a brand image that symbolized simplicity, value and being cool.

During his run with Apple, all seemed well- The momentum was building, investors were cashing in, and people were lining up around the block for every new product release.  People had a thirst for everything Apple, and they could do no wrong.

Even as Jobs left the company and eventually passed away, the company continued as a market leader and everyone wanted insights on their success. It seemed his legacy would carry on under the leadership of Tim Cook.

Why Have They Succeeded?

The reason companies do well on the open market is that people believe in them. They see the profits and expect more, they see what is and dream of what can be, they see the iPhone 4 and dream of the iPhone 5. People buy stocks because they anticipate a percentage of growth in the future, and when they don’t, they sell. It’s a simple concept for an environment with infinite variables.

For Apple, every home run in the past 12 years gave evidence to the market being right in its assumptions. They were market leaders and their quality and brand evangelization allowed them to charge premiums for products that weren’t necessarily better than the competition. Granted, the first generation products usually were remarkable and unique, but the subsequent iterations seemed to be much of the same and they met serious competition in the marketplace. That competition erodes at the market share for each innovation.

With the Brand Goes the Company

The products and services from Apple have always been neatly tied together in its brand and Apple used to propel its own brand image. Who could forget the dancing iPod silhouettes and how they connected individuality to a mass consumer good? Or the creative Mac vs PC commercials and the historic Macintosh commercial from 1984?

 

 

 

 

 

Maybe they forgot how they became king of the hill, but until recently, they seemed to rest on their laurels. They expected the media to do most of their advertising for them, and they uid. With every new product announcement, the media was unrelenting with coverage and speculation that boosted their sales. The realities were a marketer’s dream- the momentum and expectations sold the phones before they even came out.

But after years of the same hype, the intrinsic excitement has become less and less. Realizing this, Apple recently started investing more into marketing and last year alone, Apple doubled its advertising spending from 2009 to currently over one billion dollars.

The increases in marketing budget were much needed to protect the brand. From “Applegate”  to the recent “Mapplegate,” Apple has been faltering in its image as a premium-value product. Known for its sexy hardware and software integration, these slip ups shifted the media from praisers to cynics. It was no longer just the haters who were questioning what Apple products are actually worth. Though we all know people gladly pay a premium for products that look good and make them feel good, Apple Maps is the antithesis of those ideals.

Would the founding father of Apple ever have signed off on such a sloppy release? Doubtful- It’s Apple’s equivalent to the NFL’s substitute referees.

Are They Doomed?

Absolutely not, because nothing is predetermined and in no way do a few mistakes mean that Apple is headed for disaster. However, the recent stock price is a telling tale.

Their biggest issue is the disruption and convergence of technology. With every great new idea, people copy it and make it better. For instance, all of the best selling smartphones are very similar nowadays. Sure there may be slight differences in size and speed, but as a whole, they’re all pocket-sized devices that connect to the internet, take photos and make phone calls. The differentiating factors are marginal.

With some much sameness, it’s hard for companies like Apple to keep growing when they are running out of people to sell to, and their products are less and less remarkable. All things being equal, the cheaper product will sell the best and that’s bad news for Apple. Apple needs to be seen as innovative and cool and they direly need the next big thing.

Research in Motion (RIM) recently had its stock fall from grace because the market didn’t see any innovation on the horizon. The value in the makers of the “crackberry” was gone. When the stock went down, money tightened up and RIM folded to investors by firing and downsizing, instead of doing what they ought to- reinvesting in technology. Technology and innovation are what made RIM great at its peak, and the same goes for the peaks of Apple, Google and Microsoft.

Where Can They Go?

Integration of technology and innovative ideas like brain-computer interfaces are what’s next. Microsoft is doing well in its attempt to have a seamless experience across-platforms with its Windows 8 and Google is always looking for the next technology breakthrough, whether its Google Maps or Google Glasses. They aren’t afraid to change what has been working for so long. As a result, in the court of public opinion, they both get major kudos because they also aren’t afraid to show their vision.

With the impossible task of living up to a legend, Tim Cook has been doing his best to keep Apple moving forward. Though they no longer have Steve Jobs, they do  have over 75,000 employees and a solid team of innovative thinkers and engineers.

But when you look at Apple over the past few years, it’s hard to see where it’s going and the momentum is drying up. After all, how many differently sized iPads can a company make? Though there’s certainly a market demand for new iPads and iPhones, their market share is eroding and they can’t continue their market-leading growth on the same old stuff. Perhaps they have a big game changer in the works, but that remains to be seen.

 “The best way to predict the future is to create it.” -Peter Drucker (Author)

Like the beeper, eventually phones and tablets will become obsolete and wearable technology will become the status quo. The devices will get smaller and smaller and soon enough everyone will want contact-lens sized computers with a seamless interface. Sure things like brain controlled devices seem strange today, but remember that most technology is either crazy or witchcraft before it’s the norm.

It’s true that obsolescence is a big issue for all the tech giants, but Apple’s fall could be the hardest. Investors are expecting the meteoric growth of the past 10 years and if the demands aren’t met, people will sell. Like the circle of life, in business there seems to be an endless cycle of rise and fall.The old saying “easy come easy go” rings true and no one wants to become the next Wang Laboratories. iPhones and iPads are still relevant and cool today, but consider the analogy that Sony made the best CD players 10 years ago.

For any company, the future is very unclear and filled with competition, disruption and uncertainty. Slower moving organizations have the benefit of relaxed expectations, but tech giants do not. For Apple, they are now on a shortened timeline to make the next breakthrough, before someone else comes and knocks them out. If they don’t, this short-term stock dip could be something more- the fall of Apple.

Get free blog email updates (never spam)
4 Flares Twitter 1 Facebook 0 Google+ 3 LinkedIn 0 4 Flares ×