Image via CrunchBase
Earlier this year I thought Apple's problems were fundamentally about poor reputation management and said so a couple of times. That's ironic for a company that is king of cool.
As of yesterday, however, it is clear the problem lies elsewhere - how does Apple maintain its value, in a hostile climate, when there is nothing really new in the locker until early 2014?
Nigam Arora, over on his MarketWatch blog, says Tim Cook, yesterday, finally showed he "gets" the reputation problem and is now more aggressively selling the case for his management of Apple. But what about the innovation issue, the heart of Apple's brand?
Yes, there will be new products, says Cook (probably, my guess, a variant of the iPhone or iPad). Here's Robert Hof on that:
CEO Tim Cook continued to promise a rich array of new products will arrive starting this fall–including not just improvements on existing products but “new product categories.”
But Cook has been saying that for 16 months. In February 2012 he promised mind-bowing products. In October he talked about Apple's prolific product roll-out, "the most prolific in our history". He was careful yesterday to say two things:
1. There will be a new product that counts as a new product category, so think iPhone or iPad-type of impact.
2. The timing of new products is Fall 2013 onwards but with no commitment for this "new product category" in the 2013 part of that time-frame.
I take that to mean 2014 before we see anything really new - and already predicted as much here.
There are good reasons for that - Apple wants improved display features and probably display flexibility for the next generation of products. 2014 is a realistic timescale given the difficulties in mass producing those technologies.
Unfortunately that means Cook has let the innovation well run dry and problems for the share price will mount in Q3 and possibly Q4 as we see some same old, same old, around the iPhone and iPad.
The company took the opportunity yesterday to talk down Q3. Management projects $33.5 billion to $35.5 billion in revenues compared to a consensus of $38.6 billion and gross margins of 36% -37% for the next quarter vs. consensus of 38.5%.
That is likely to perpetuate the reputation problems, despite Apple being an absurdly profitable company with a highly enviable market position.
The declines, though, could have been avoided by a more studious growth program, introducing, for example, the cheaper iPhone in Q1 of this year or investing in a more aggressive retail strategy in 2012 - they had plenty of cash and an expanded retail presence could have helped keep margins up.
Apple's issues are therefore not just about the inevitable decline from stellar heights and unreal margins. There are clear missed steps.
Yet a strong undertone of support for Apple persists, reflected in growing positive sentiment for the company. You can see more on that here. Until the last quarter, online social sentiment was not running in Apple's favor - now it is.
The big question though is how the company gets through to 2014 without anything radically new to show for all of the wealth it has generated but keeps stashed away (and will now return to shareholders). Though Tim Cook believes Apple invests wisely in innovation, the guidance on Q3 suggests otherwise
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