It seems amazing that after all these years analysts still don’t understand why Apple has been successful. In a terrible piece of analysis over on CNN.com, Jason Calacanis has a lengthy rant about how Apple is doomed because of its “evil” practices. Of course we’ve seen this argument before. When the iPod was gaining massive popularity, the company was doomed because it didn’t open up its DRM to third parties. The iPod was not the one that was doomed though, but rather the numerous other mp3 players and stores which promised a more open approach by using equally proprietary Microsoft DRM.
Now that DRM has gone away, Calacanis is arguing that Apple will once again be doomed, this time by not letting iTunes work with other mp3 players and cell phones. This of course on the back of the standoff with Palm and the Pre over its attempt to sneak in iTunes compatibility by emulating the iPod. He goes on to sum up his many arguments as to why Apple is facing imminent failure by saying:
Apple will face a user revolt in the coming years based upon Microsoft, Google and other yet-to-be-formed companies, undercutting their core markets with cheap, stable and open devices. Apple’s legendary comeback ability will be for naught if they don’t deeply examine their anti-competitive nature.
This to me is the crux of the problem with many analysts today. They simply do not understand the company they are reporting on. There have been “cheap, stable and open” competing devices for years and they have had no effect on Apple. There are hundreds of cheap mp3 players, none of which have made a dent in Apple’s dominance of that market. You would think by this comment too that Apple invented the cellphone, and yet it is only a fairly recent entrant into a market filled with cheap cellphones. How cheap devices are going to undercut Apple’s products when Apple entered and then dominated an industry of already cheap products is beyond me. The last line is the real kicker though. Do analysts really not realize that Apple’s so called “anti-competitive” nature is what propelled the company to success in the first place. People want devices that are properly integrated with software. Apple’s whole strategy of everything working together is one of the key elements that resonated so well with consumers. In fact it was so successful that Microsoft abandoned its “open” music stores based on “plays for sure” and instead tried to emulate Apple’s integrated approach with its Zune store.
Fortunately for Apple, it would seem that its competition seems to think along the same lines as Calacanis. Microsoft clearly thinks that lower prices are the way to compete with Cupertino. The company’s rush to the bottom has resulted in an almost complete dearth of Windows machines selling the high end of the computer market. (A move which I’m sure PC manufacturers are thrilled about.) Nokia and Sony Ericsson are both suffering and are both having considerable financial issues in the current climate. Yet, like most other cell phone manufacturers they have a significant range of low margin handsets. You know, the one’s that are going to “undercut” and destroy Apple. Google’s android has yet to make any significant dent in the handset market either and it was also hailed as the instrument of iPhone’s downfall.
Of all the companies competing in the current economic climate, a climate that should punish the makers of higher priced luxury goods, Apple seems to be doing the best. On top of that it is doing so with strategies that time and again we’ve been told are going to “doom” the company. When will analysts ever learn?
[Read The Case Against Apple]
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You nailed it, Thomas. To my way of thinking, 90% of so called ‘analysts’ seem to be rambling
and babbling without facts on their side.
These Analysts are creating FUD. They are also
write fancy headlines to get more clicks. They
don’t really care because they repeat the same
tactic over and over. They use talking point style
argument and repetition to win the argument when
they don’t have any facts.
Plus these are lazy people who are going to do
the same kind of gush in the beginning and cry a month
later. rinse and repeat.
I have to wonder how many of these analysts are required to type their drivel on Windows-equipped PCs that have been bought and serviced by their IT departments.
The IT folk are wedded to Microsoft, as this ensures constant employment and growth.
The sheer stupidity of these college liberal arts majors that call themselves analyst is one of the
reasons why economy is where it’s at– in the shitter.
As for Apple, let’s face it Wall St. types have been predicting its doom since Windows 3.1.
Ironically, Apple may outlive Wall St. itself. After all , have you asked yourself why we even have a Wall St. anymore? If it weren’t for the 401k money tied up in Wall St. it would have been a thing of the past.
The vast majority of analysts don’t get tech at all. This is why they spent their time on Wintel manufacturers. It was easy to compare one with another.
I looked at a piece of so called semiconductor research this week. It was an analysis of 2Q results. No discussion of underlying trends and fund managers pay for this stuff.
My thoughts “iPhone platform takes over from the Mac”
http://lowendmac.com/nash/09tn/iphone-takes-over.html
correct. as long as Apple maintains product quality and meets consumer needs, its integrated “wall garden” hardware/software/services business will prosper. you don’t care about file formats, etc. etc. instead you know all the pieces will work seamlessly with each other, with a consistent (usually) user-friendly UI. no other company can deliver that. that alone is worth a premium price – not that much more actually – which at least 10% of the world is able and willing to pay. that is a rock solid business plan that will always work.
when Apple offers innovation as well, then it takes a market leadership position too and gets bragging rights, always good for marketing PR – and more importantly, customer satisfaction.
Most of my relatives of various ages have switched over from Windows PC to the Mac or Apple devices. Most of them know very little about what OSes do or file formats or even simple software upgrading of their computers. And they really don’t seem interested in learning. The majority that switched say they are very happy with Apple devices (iMacs, MacMinis, iPhones, iPods, MacBook).
They feel that they’re easier to use, easier to update and they know they can depend on Apple customer support to help them with any minor problems. They say they would never go back to using Windows. They enjoy going to Apple Stores and taking One-To-One classes and they like to play with the products in the Apple Stores. Although none of them are rich, they said they had no problem with paying more for the products because they are more than satisfied with what they got for their money. They don’t feel like they got abandoned once they bought the product. There seems to be some sense of security that new users get and it really induces brand loyalty. If they buy an iPhone or iPod, they usually end up buying a Mac or vice-versa.
I don’t believe Apple will ever hold more than a 15%-20% market share in desktops or more than 40% in smartphones, but Apple will make far more profits than most companies that have much higher market share. Apple will be able to hold on to those numbers with consumers due to brand loyalty and a feeling of security no matter how cheaply they can buy products from another company. And there is no company that can afford to undercut Apple that much for any length of time and expect to stay in business. Apple only needs to find a good-size user base that doesn’t mind spending money and Apple will be set for years to come.
So far, most of consumers that I’ve spoken to about their Apple products are really not into tech at all but they feel that their Apple products make them smarter because they feel Apple devices are so simple to use and can get more out of them. The problem with so many tech-heads is that they figure if they can use a more complicated device with advanced capabilities, they figure anyone can, but this just isn’t the case. I guess that’s why they figure that Apple devices are for stupid people. Maybe they’re right, but there are an awful lot of stupid consumers out there when it comes to tech. Apple is definitely going to get those consumers.
Yes but Balmer says all this will change when really cool PCs show up running Win 7! APPL will fade as M$ surges into the behemoth it wants to be and everyone will be saying “WOW” and kicking up their collective heels.
I can’t wait to hear the analyist then, can you?
Consumers want well-integrated hardware and software. Apple products are the best example of this.
If anyone wants to compete with Apple, they can. They just have to not only create the hardware but the software too. No one is stopping them.
Recently, Blackberry came up with its desktop software to match its cell phones. Google, undoubtedly, will also have their desktop software to match the hardware. Just like Apple, these will all work on Windows – the 90% of the market operating system.
What about Palm? Palm doesn’t want to compete at this level. They are being lazy and being a parasite to another company’s work. Duh.
Even Microsoft is competing with Zune and Zune Software.
Palm? It doesn’t have a clue. Stupid is as stupid does. Palm is a loser.
First thing to note is that Jason isn’t an analyst – he’s a business man, and a very successful one at that.
Second, the thing that Jason says which really hits home is that if you take a statement about some of Apple’s business practices and replaced the word “Apple” with “Microsoft”, a lot of people would be screaming about how evil it was.
Lots of people will not want to accept it, because they believe that Apple is in some way “different” to Microsoft. But it’s not, at least in terms of its business practices.
Remember: Apple’s only mission is to increase its value for its shareholders. It is not in business to be nice, to play fair, or to allow its competitors a single inch. It will pursue that goal via fair means and foul.
And in some areas, that “foul” is becoming a little more apparent.
I have to disagree. I keep hearing that argument as a get out of jail free card to be used to defend any outlandish criticism of Apple. But it’s just not the case. If Microsoft did any of the things that Apple is being accused of in this article then no one would bat an eye. Apple is held to a much higher and unrealistic standard than Microsoft, and every time they so much as look sidewise someone goes on a rant.
Look, I can criticise apple when it needs be. If you look through the other posts here I have been attacked by mac macs plenty of times for calling Apple out what I believed at the time were genuine offences or stupidity, but the things in his article are either blown out of all proportion or like I said, things that consumers actually want and respond to.
Calling out Apple for not letting other devices work with iTunes is BS. Especially the way Palm went about it. No one expects Wii or PS3 Accessories to work with the xbox, and no one complains about that, yet Apple is supposed to let it’s hardware and software work with competing devices? No one has ever complained that the Zune store doesn’t work with iPods, and even if they did they’d be complaining that the iPod didn’t work with the Zune store (and it would be Apple’s fault)
I think there has been lots of criticism of Microsoft over the years that has been unjustified, but equally there has been a lot that has been. But to say every time that someone thinks Apple are getting away with something, that is really nothing, that if it was Microsoft everyone would be up in arms, is simply not true.
I give you that I may have mislabelled him as an analyst, but I don’t care how successful at business he is, he doesn’t have a clue about Apple or why people buy their products.
When one of these anal-ists start a multi-billion dollar computer company in their parents garage I will begin to listen to then.
Remember, they are anal-ists because they chose not to be anything better.