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Apple's Growing Issues



January 29, 2014 – Comments (0) | RELATED TICKERS: AAPL , GOOGL

Board: Apple

Author: Milligram46

My daughter is 14.

She is an AAPL shareholder.

She had an iPod Touch for a couple of years.

She has decided that Apple is uncool.

Her wish for Christmas was an Android tablet - it's what she got (never mind my views on Android and Google treats privacy - she doesn't seem to care). She got a Samsung.

This weekend she was playing around. And I observed her figuring out how to control the Samsung TV, Blu-Ray player, and soundbar through her tablet.

Oh I know - you can do this with IOS, there is nothing "innovative" here. The ability to use an iDevice was a remote control goes back to the earliest months of the first iPhone.

What I observed instead was a broader connected experience.

Not a missive that Apple should be building TVs and Blu-Ray players. On the contrary, as I predicted five odd years ago, (on the MSFT board when the PS3 was coming out) Blu-Ray would never reach the adoption rate of DVD, and streaming would leapfrog both. DVD/Blu-Ray growth has topped out (80% of households have either a DVD or Blu-Ray player). It's all about streaming (and Apple's iTunes revenue stream is a strong addition to the bottom line). TVs are a commodity business, 3D has flopped, and even the cheer leaders are saying 4K is basically pointless as the human eye can't tell the difference.

So no, I am not saying Apple should be building dedicated set top boxes (aka removable media players), TVs, soundbars, or other static living room devices (although, a game console based on IOS that enabled shared game play across the iPhone, iPod Touch and iPad COULD be interesting).

I'm just looking at a focus group of one - who was in Apple's corner, and is an investor in Apple, in a house full of iPads and iPhones, and this Generation Y focus group of one has jumped ship. Apple to her is - uncool.

My message here is Apple has growing issues, and Android is hitting on multiple fronts. I had written (and linked to where I wrote this) that Apple is fighting a very similar Mac vs PC war that it fought more years back then I care to admit...and lost. Even though it had the better product and the better OS.

I see the same thing playing out again...and no good answers beyond the unthinkable to the Apple faithful - license IOS. You want that Apple TV. License IOS to someone (other than Samsung for obvious reasons) and have THEM build an Apple enabled TV.

License IOS to a car company and have THEM build an IOS enabled infotainment system.

If Apple continues its somewhat "closed" path history shows us the end game. Oh I get what the faithful will say and get lots of reqs. Its about profits and not volume. Well eventually the volume hits a brick wall, and you can only squeeze Chinese factories and engineers so much to move the profit needle.

Apple is just about at a cross roads, there is no Steve Jobs version 3.0 to move the vision. Cook isn't a "bad" guy, but he's not a Jobs (just as Ballmer is not a Gates) and I don't know if there is a "Jobs" out there.

Challenging times ahead - but if you really love Apple - you should treat this last quarter as a wake up call. The time to continue to dismiss Google and Android and all the problems it represents are long over.

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