Apple CEO Tim Cook (Getty Images via @daylife)
The Greek scholar Archimedes exclaimed ‘Eureka’ when he noticed that the bath tub water rose as he stepped in. He understood that the volume of the water displaced was equal to the volume of his body parts in the water. He was so excited that he reportedly leapt out and ran naked through the streets of Syracuse. Apple CEO, Tim Cook, needs a Eureka moment to move Apple stock to $768.
Considering the performance of Apple stock, Cook clearly needs some help. I do not expect Cook to run naked through the streets of Cupertino, but perhaps he can read my open letter to him and gain eureka moment.
Dear Mr. Cook,
It is understandable that Apple is between a rock and a hard place; the growth is in emerging markets, but the majority of people cannot afford Apple products. A $99 Apple phone will be disastrous for Apple as I have previously written. A cheap iPhone will kill the cache of Apple brand. Apple brand is the goose that lays the golden egg. Why kill the goose?
Your eureka moment lies in realizing that you can do the reverse of what the car companies have been doing. Car companies such as General Motors, Ford, Nissan, Toyota, and Honda started with pedestrian brands and found a need to move upscale. GM created Cadillac, Ford created Lincoln, Nissan created Infiniti, Toyota created Lexus, and Honda created Acura.
Apple’s problem is the reverse of what car companies faced. Apple started as an aspirational brand and now needs to address the mass market. The solution lies in creating a new brand for lower priced products. This way Apple brand maintains its cache but Apple as a company will be able to resume its high growth rates.
As for the specifications of a low cost iPhone, just take a look at Nokia Asha.
Yours truly,
Nigam Arora
My models indicate that such a move will help Apple stock run to $768; details on this model will be in a future column.
About Me: I am an engineer and nuclear physicist by background. I founded two Inc. 500 companies, and have been involved in over 50 entrepreneurial ventures. I am the chief investment officer at The Arora Report, which publishes four newsletters to help investors profit from change. Write me: Nigam@TheAroraReport.com. Follow me here. Subscribers to The Arora Report are long Apple from $131 and have already taken partial profits on 90% of the position.
