What’s NeXT for Apple?

As the ghost of Steve Jobs transitions from cultural guidepost to mythical god, Apple is struggling to find its new identity.  Jobs, love him or hate him, was a unique character that took Apple to its peak through sheer force of will.  But now that Apple is back to the leadership of mere mortals, where will the latest mere mortal, Steve Cook, take the flock?

The Apple QuestionI’m reminded of the Yogi Berra quote, “It’s like deja vu all over again.”  Remember John Sculley, formerly of Pepsi?  To refresh your memory, he was recruited by Jobs to be President of Apple back in the ‘80s when the company’s schtick was to be the counterculture computer.  John’s mission was to make Apple a big time computer company via his marketing prowess.  It wasn’t long before the honeymoon was over and in April of 1985 he forced Steve out of the company that Jobs had founded with the other Steve (the Woz).

As it turned out, selling Apple as mainstream wasn’t that easy.  Sculley and his successors never understood the cult following of Apple.  After 15 years the gig was up and Apple wasn’t very far from “has been” status.  Meanwhile, Jobs’ latest venture was NeXT Computer, which wasn’t, but had developed an operating system (OS) that was of interest to Apple who was failing at trying to develop one themselves.  The Board did a deal with Steve to get NeXT’s OS, NeXTSTEP, which eventually became Mac OS X, and within a year Jobs was “interim” CEO of Apple… never to look back.

It was this return in 1996 (the 2nd coming one might say) and the miracle of the iPod (circa 2001) that ultimately saved Apple.  Follow up miracles of the iPhone (c. 2007) and iPad (c. 2010) took them from counterculture to cool… or make that “hot”.  So hot that by Apple’s peak in 2012 Wall Street analysts couldn’t come up with a number large enough to predict Apple’s future stock price.

It’s been thirty years since the first Jobs departure and just over two years after the final departure and once again Apple is struggling for identity.  One might think that being at the helm of a company with the brand loyalty and balance sheet of Apple can’t be a bad thing… unless of course you’re Scott Cook and that company is Apple and you’re following up Steve Jobs.  In four years Apple has produced no new products of any significance, there are no rumors of any floating around, and it’s difficult to see what the their next revolutionary product could be.  But then again, if I could see that I wouldn’t be sitting here blogging would I?  The point is, Steve Jobs was a one of a kind, product visionary.  Apple was Jobs, and now he’s gone.  As an Apple stockholder (AAPL) I want to know… What’s the plan?  (Just kidding about the stockholder part.)

Well, I have four great options and I’m sure when Scott reads this he’ll be giving me a call.

First… Consumer Electronics.  Revolution is over so move to evolution and start pumping out all kind of products (TV’s, watches, etc.) with the Apple brand.  Given only the converted will pay the price, you just do a study in price elasticity and keep jacking the margins up until demand flattens.  Could work well for a few years.

Second option, be the manufacturing version of Google, Facebook and Twitter and focus on getting dollars off the web.  This may be the default plan already since recently Scott Cook told Wall Street analysts that in terms of the next big revenue channel he believes that with 800 million iTunes users Apple can monetize that channel much better.  Now that’s visionary.

Here’s another great option.  There’s already a rumor that Apple has more lawyers than engineers so just go with that and focus even more on being the world’s largest law firm.  Rounded corners on icons is a clear Apple patent violation; suing all the companies whose icons have non-square corners could prove very profitable.  The only problem with that strategy is lawsuits can take years and sometimes decades to resolve and Wall Street works on the Quarter system.

Apple in Religous HierarchyThe forth, and I think best, option is that Apple should change their tax status to 501(c)(3) and register as a church.  There’s certainly a case to be made because at 800 million adherents they are closing in fast on Hinduism (1B) and would be behind only Christianity (2.1B) and Islam (1.6B).  And not many people would argue that Apple really isn’t a religion anyway given their followers true love and even reverence for the brand, not to mention the prices they pay.  It’s like tithing, but at 50% instead of 10%.  Of course one problem I haven’t resolved yet is how they would deal with the church and state issue given Apple’s penchant for the education market.

Apple really is entering into a new era, a post Steve Jobs era where Apple’s breakthrough days are over.  And while every stock has it’s ups and downs, the next time you see Apple peak (like now)… go short.


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