Imagine if you bought Apple stock 10 years ago before they launched the IPhone, you would have made over 1200% today. The right question to ask is what do you think the stock will perform for the next 10 years? In January 2016, as widely expected, Apple warned about the first dip in IPhone sales since it virtually created the smartphone market 10 years ago. The shock wave has been felt through one of the largest supply chains in the world. For BRCM/AVCO, drawing 10% revenue from Apple, the street has lowered another 15% Q/Q decline (from the previous +5%) in the April quarter. DLG (70%+ revenue exposure to AAPL) also guided March Quarter below expectations. Both cited the recent weakness in IPhone demand.
However, the real challenge is that Apple has unwillingly changed its business model from as the visionary innovator to a defender of its share in a rapidly saturated market. Apple’s legendary success story originated from Steve Jobs’ inventions, IMAC (1998), IPOD (2001), ITUNES (2003), IPHONE (2007), APP Store (2008), and IPAD (2010). Over this 12-year period, Apple stock has soared by 5500% ($1 to $55). Since Tim Cook took over CEO in 2011, the releases of IPD mini (2012), IPD RETINA (2012), and various IPhone model upgrades, including last Monday’s IPhone SE and IPad-Mini, have increased the stock from $55 to $105, a 190% return over the 5-year span.
Whenever Apple found themselves in a position that they needed to come up with products to react to their fierce competitors, the end results have not yet been blockbusters. A few examples would be IPhone SE to replace IPhone 5c, IPad-Plus to buoy flagging tablet sales, Apple Watch to compete with Fitbit, IPhone 6 to Samsung’s Galaxy, or Apple TV to Smart TV. Further, other than endless lawsuits with Samsung, the research firm IDC expects to see an increase in sales of low-cost devices running Android in 2016, accounting for almost 83 percent of smartphones sold worldwide, while iPhone sales making up 15 percent of the market.
Naturally, we all like to compare Tim Cook to Steve Jobs. Steve Jobs was a visionary, a perfectionist, an innovator, and a natural-born leader. Tim Cook is a humanist, a pragmatist, a manager, and a team player with a clam demeanor. Both have shared the same high expectation. Steve Jobs was genius and passionate in product idea design to “provide the simple solution to complex problems.” Tim Cook has got Apple out of an operational and financial mess. Steve Jobs would have called everyone back to work during Christmas just because he didn’t like the IPhone color. Tim Cook would send everyone right back home for vacation. Steve Jobs would hoard an ungodly amount of cash. Tim Cook would and has returned close to $200 billion, some borrowed, to shareholders in dividends and stock buybacks.
Steve Jobs was not better nor worse than Tim Cook, as Apple at different time needs different leadership. As Steve Jobs practically invented the smartphone industry 10 years ago, Tim Cook, without Jobs’ charisma, has been able to turn Apple into a supply chain giant, commanding the entire smartphone and tablet market. Though, Apple shareholders may legitimately worry the company does not have another blockbuster product in the pipeline to replace the iPhone which drives two-thirds of Apple’s sales.
As new phones coming out of Samsung, LG, Huawei, and Xiaomi have been seen the best yet by tech analysts, where is the next Steve Jobs in Apple?
On the other hand, Cook’s Apple is not the same as Jobs’ Apple.
So, while Tim Cook is no Steve Jobs, Tim Cook is not Steve Jobs.