The concern was not just in the technical press, but also with their investors. Tim Cook knew he would be facing this and that he needed to try and gain a tight hold over the company. To make sure he was able to keep the investors interested he pushed for the payment of extra dividends to stock holders. This was something that Jobs had never done. Cook also decided to try and identify a core group of the press that he could count on. In the months leading up to announcement of Mountain Lion Apple had multiple one-on-one meetings with what they felt were key journalists and briefed them directly. It was and still is out of pattern for Apple. Even people that attended the meetings said that they felt weird.
Things did not stop there though. For the first time in a very long time companies that work with Apple directly started to talk about Apple products as well as the pieced and parts that they were making for them. This was shocking to many in the press as most companies are at the least scared that they might lose the contract with Apple for talking about their products. Still we saw Foxconn’s CEO talk about exclusive deals and Sharp’s CEO specifically laid out that they were going to be making screens for the next iPhone and told us when they would be shipping! On top of this Apple actually settled with someone that was suing them over trademark infringement in China. They settled with ProView despite claiming that they bought the trademark, it was surrealistic to see the settlement happen and then Apple to quietly go back to work on pushing out products.
Is Apple losing it? Is the company that certain analysts predicted would hit $1,000 per share starting to slide? We think that they might be. If you look at some of the press about Apple recently it is not the same glowing articles. Yes many of them still try to present events in a positive light, but even those have to keep some of the real events in their articles. Apple is starting to lose more patent suits in Europe due to their overreaching attempts at control. Their efforts to continually proclaim themselves as the inventors for the world are failing miserably. Too many people remember the old interviews with Steve Jobs and his statements about taking existing technology and making it better. Even with analysts like Piper Jaffrey making absurd predictions in the face of raw fact Apple is not having a good time.
As of right now they are trying to pull themselves out of a PR fiasco over their Genius staff. These are the people that are supposed to be Apple’s expert tech support. The same ones that Apple tried to use in a recent set of failed commercials. These commercials showed the average Mac user as incompetent and unable to do even simple tasks on their systems. Suddenly after a slight outcry from many Apple customers the ads were pulled. Apple claimed they were only limited run ads, but no one really bought that line. Following the removal of the ads many of the Geniuses employed in the Apple stores found themselves without hours or assigned stores. Apple is now saying that the events that led to these reports were due to an internal mistake and Apple is not letting any of their staff go. This is also an out of character move for Apple who rarely admits to making any type of mistake at all (look at the comments after the terrible ads). Meanwhile their retails stores are offering to price match iPhones for the first time that we can remember (We also found no other indications that Apple has ever offered any type of price matching). Now what makes this interesting is that some of Apple’s resellers are also offering either heavy discounts or credit. Sprint is giving away a $100 gift card for people that buy a new iPhone 4S. There are very few reasons that Apple would do this and none of them are good. The one that comes to mind first is that they have an excess inventory of iPhone 4S phones and need to clear them out before the next iPhone hits. Or, there are delays in the next iPhone and they need people to get back to buying iPhones to make up lost sales. Again but reasons are not good for Apple. Fortunately the margin on the iPhone is large enough that they can take the hit from either price matching (or even a full price reduction).
Apple is also suffering from a crisis on two legal fronts (and that it not including the multiple patent suits they have going on). In their massive legal battle with Samsung they are starting to look like the ones that copy as opposed to the people that invent new technology. We are even seeing some news sites start to change their tune as Samsung has presented more prior art and some very important witnesses indeed. Apple has tried to fight back, but they have not done as good of a job as many expected they would. Of course the trial is not over and it will be appealed no matter who wins at this stage, but it was not the open and shut case where Apple makes the claims and everyone believes them like they are used to.
The same can be said for Apple’s fight with the DoJ over eBook Price Fixing. To sum up, Amazon complained to the DoJ that Apple fan colluded with book publishers to artificially set book prices. The DoJ investigated and found evidence of price fixing. Three of the publishers have settled leaving two of them and Apple refusing to settle. Apple is now claiming that Amazon is using the DoJ to uphold a monopoly. Now wait a minute; the definition of price fixing is: Price fixing is a conspiracy between business competitors to set their prices to buy or sell goods or services at a certain price point.
Hmmm Five Publishers get together with Apple in a deal that Steve Jobs thought up to sell books at a certain price point.
Conspiracy – Check
Set Prices – Check
What part of that can Apple really disagree with? When you have emails like:
“As I see it, [Conspiring Publisher] has the following choices:
1. Throw in with Apple and see if we can all make a go of this to create a real mainstream ebooks market at $12.99 and $14.99.
2. Keep going with Amazon at $9.99. You will make a bit more money in the short term, but in the medium term Amazon will tell you they will be paying you 70% of $9.99. They have shareholders too.
3. Hold back your books from Amazon. Without a way for customers to buy your ebooks, they will steal them. This will be the start of piracy and once started, there will be no stopping it. Trust me, I’ve seen this happen with my own eyes.
Maybe I’m missing something, but I don’t see any other alternatives. Do you?"
The opening lines of this are enough to make it pretty clear what Steve Jobs wanted. He wanted the prices pushed up to $12.99 and $14.99 as opposed to the much lower prices. The conspiracy is getting competing publishers to agree to these price points and also to agree that they would not sell them at a lower price to anyone else.
Even more damning is an email that asks Barnes and Nobel to make Random House hurt for not joining in the conspiracy.
“Random House has chosen to stay on their current model and will allow retailers to sell at whatever price they wish…I would hope that [Barnes & Noble] would be equally brutal to Publishers who have thrown in with your competition with obvious disdain for your welfare…I hope you make Random House hurt like Amazon is doing to people who are looking out for the overall welfare of the publishing industry”
Apple you cannot deny these facts any more than you can continue to claim you invented the smart phone or the technology that is in it. All Apple is doing at this point is destroying themselves from within. They are losing credibility with the market and are even being compared to Microsoft of the 90s. This is not a good comparison; most felt that Microsoft was evil and ended up being hauled into court multiple times for Anti-trust violations. We can see the potential for this with Apple if things do not change very quickly. The dream of $1,000 per share stock is probably not going to happen now (not that we thought it would). While Apple will not simply die and go away they still do make products that many consumers want and like, they will start to slip and their hold on the market will diminish. We expect them to keep the lead in the tablet market for some time (probably through the end of 2013), but their sales increases and massive lead will be slowly eaten up by the competition including Microsoft’s surface products. Unfortunately for Apple all of the lawsuits in the world will not help them with this and the more they fight to block competition the more they will slip behind. We wonder (and not for the first time) if Tim Cook is really up to the task of running a company like Apple.
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