The King is Dead, Long Live the King Back in the day, Steve Jobs had a cult of
personality, and he could do no wrong. From 1997-2011, Jobs' golden touch
brought Apple back from the brink of death and back into profitability. In 2011, The Guardian
reported that Apple saw record revenues under Jobs reign. Every move he spearheaded seemed to be a
windfall for Apple. Heck, even Apple won me over with their iPhone from my trusted Blackberry.
When Steve Jobs died of neuroendocrine cancer in 2011, the cult of Apple held its breath.
Who would take up Jobs' mantle? Who could follow the creator of the "think different" mantra?
It turns out that Tim Cook would do a pretty good job in Jobs' place. Where Jobs was a flashy
marketer with a signature black turtleneck and wire-rim glasses, Tim Cook was a nondescript
beancounter. Jobs was a rock star, Cook a supply chain and spreadsheet nerd. When Cook took over
in 2011, no one could predict that Apple would continue its meteoric rise. But things don t look
that rosy now going into 2022. Today, we ll look at the highlights of Apple s successful decade
Rise and the top 3 challenges which could bring it crashing down. I ll try to keep the video brief.
If any of you would like more detail on any of the points, let me know in the comments below.
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that and now let us continue on with the Rise and Fall of the Great American Icon, Apple.
The Rise of Apple from the Dead We re now going into 2022, and Apple
seems to be humming along; Cook is arguably the most successful CEO in recent history.
No executive has made more money for shareholders than Cook has. When Jobs died, Apple was valued at
$349 billion. Investopedia reports that Apple is currently valued at more than $2 trillion. It was
the first company to cross the trillion-dollar market cap, and it keeps growing.
That makes Apple the most valuable company ever.
To put it in perspective, if Apple were a country, it would have the 8th highest GDP globally.
Highlights of Cook's Reign ? Annual sales have more than double from
$108 billion in 2011 to $274 billion in 2021 ? Net profits have doubled in the same time
to $57 billion, making it the most profitable company in the world.
? The "Apple economy," which is the company's revenue plus the revenue other companies
make on its platforms, has increased to $1 trillion. 1 Trillion! Can you believe it?
Cook has been a boon for Apple and could ride off into the sunset as the guy who spun gold,
but he has decided to take a different route and wait until 2025. Cook has a good reason
for staying; in 2025, his stock grant will fully vest. CNBC notes that by 2025, Tim Cook could have
1,001,961 shares. At the time of this video, Apple Inc. was trading at $142. So if Cook stays,
his shares will be worth $142 million dollars. Not bad for five years of work!
We have Cook to thank for the supercomputer in our pocket iPhone, Apple Watch, and AirPods. Just like
Jobs, Cook seems to have the Midas touch. Consider this; for every seven people on this planet,
there is an Apple smartphone. During an Apple earnings call on January 27, 2021, Tim Cook
claimed that Apple has one billion smartphones and 1.65 billion devices across the globe.
Take a look at that white box your Apple device came sleekly packaged in,
on the back you will see Design by Apple in California. Assembled in China.
Bloomberg reports that Cook transformed Apple by making China the company s manufacturing factory.
Even before Jobs died, Cook outsourced Apple's manufacturing hub to China under the
Foxconn umbrella early in his tenure. Foxconn employs about one million people. The cheap
labor meant big profit margins for Apple. In addition, Cook gambled and went all-in on
the iPhone's App Store, and it paid off. Apple created a positive feedback loop with its App
Store--attracting app makers, which attracted more consumers, which pulled in more app developers.
In 2020, more than 2 million apps were responsible for $643 billion of revenue for Apple.
Cook dabbles in ethics, too--since the ethics line up with profitability and marketability.
His goal is to make Apple carbon-neutral by 2030, and under his watch, Apple has
purportedly deemed privacy a human right. This proclamation manifested in requiring
app makers to ask users if they want to be tracked for targeted ads.
It's easy to be pro-privacy when it doesn't impact your bottom line.
The Decline is Inevitable Cook's handling of Apple and its
insane trajectory begs the question: how long can Apple keep rising?
In reality, it's going to be a lot tougher in this second decade of Cook's tenure than in the first,
and we are already starting to see the cracks appear in the perfect white veneer of Apple.
The factors that blasted Apple's value into the atmosphere appear to be lagging,
and with that lag will most likely come a reversal of fortunes.
Apple's decline turns on three significant factors:
1. Growth 2. Geopolitics
3. Competition 1. Growth
How can growth be a bad thing? If I may borrow from the late, great humorist Mark Twain,
the rumors of the iPhone's death have been greatly exaggerated. For years,
analysts and Apple-haters predicted that this version of the iPhone would be the last.
Apple kept churning the smartphones out and raking the profits. However, in 2015, the sale of iPhones
peaked at 231 million devices. What has followed is a slow but methodical decline. The sky is not
falling just yet; after all, Apple sold 200 million units last year. But think about it,
how many of us have updated our phones like we did before? Back in the day when I was younger,
I used to always aspire to trade in my phone every year. Now? I m still using the iPhone 10,
and it still suits me perfectly well. I don t see myself upgrading anytime soon anymore.
The problem is that as Apple grows into a behemoth, it is less agile, cannot pivot as
quickly, and its sluggishness prevents the same rapid growth from the previous decade.
Apple and Cook have been riding the App Store, Apple Music, and Airpod
trains hard in the last couple of years. The demand for a new bellwether product is high,
and Apple has struggled to innovate. Rumors and innuendo about iGlasses and the iCar are sexy,
but plenty of reports have been about the tech giants' struggles
with the products and blown timelines. In 2017, there was a leaked Apple report
about iGlasses. According to The Daily Mail, the contents of that leak spell trouble for Apple s
foray into VR glasses. Employees reported injuries and eye strain from use of the prototype. It s now
2021 and the company is still struggling to launch a device. Insider Pro reports that the devices
will not be ready to ship until at least 2025. What will Apple do about its iCar?
A phone is not a car--and a car does not naturally fit into Apple's ecosystem.
The project seems doomed from the start, there was the aborted deal with Hyundai in early 2021 and
the loss of key project managers in June 2021. All in all, it s hard to argue that a company
whose value is in the trillions is seeing the start of a decline,
but history has shown us time and again that enormous companies who failed to innovate
die. Is it possible that Apple will join the death parade of Kodak, Nokia, Xerox, and Blackberry?
2. Geopolitics Cook has a burgeoning geopolitics problem.
So far, Apple has stayed above the fray in the emerging fracas between the West and China.
China is Apple's manufacturing hub. That's where devices are assembled,
and it provides a large market for the devices. Lately, China seems to be on
the warpath in how it treats its tech giants Forbes reports that China is incredibly clamping
down on the tech giants within the country s borders. First, party officials canceled
the IPO for ANT Group as punishment for Jack Ma s pawnshop mentality comments about Chinese banking
(check out my video on Jack Ma here). Then, Ma and Alibaba incurred a record $2.8 billion
fine for anti-monopoly violations. The recent developments are in line with
Xi Jinping s policy of creating more state owned enterprises at the expense of private industry.
The tenacity and viciousness with which The Party attacked Ma and other tech giants
must be making the suits in Silicon a little hot underneath their turtleneck collar.
Apple has other options in the East for manufacturing, especially in India and Vietnam.
However, the depth and breadth of the operation occurs in China.
Apple is vulnerable to the whims of China s authoritarian ruler.
In fact--according to a June 2021 New York Times interview with Dough Guthrie--Apple is
at real risk from the Chinese government. Guthrie, an expert in Chinese industry,
warned Apple of its precarious position. If Xi Jinping takes a hardline stance against Apple,
Mr. Cook and the tech giant will struggle to recreate the manufacturing
utopia they currently enjoy in China. There is also a non-zero chance that China
bans all Apple devices. The Communist Party trends are more authoritarian,
and the Western doubts about China make for a fraught and frigid relationship.
Let s look at how other US tech behemoths fared in China.
Facebook? Banned Youtube? Banned.
Google? Banned. Whatsapp? Banned.
See the trend? Apple is walking a
tightrope over a chasm of bubbling enmity. On one side, you have China, who at any time may
enact a nationalist boycott of Apple products (ask the NBA and Nike how that turned out). And
on the other side, you have an increasingly suspicious Western world that finds Apple's
continued business with China to be repugnant. The United States engaged in Trump s trade
war with China. With that trade war came Trump s pressure to make Apple bring manufacturing back to
the US again. Trump is gone now, but the pressure remains. According to S&P Global, President Biden
s agenda includes pressure on Apple to shift some of its production out of China.
In May 2021,Congress members--Ken Buck, Scott Fitzgerald, Burgess Owens and Dan
Bishop ratcheted up the pressure on Apple to leave China. In a letter to Tim Cook,
Buck et. al, urged Apple to ends its near total capitulation to the communist regime in China.
The context for Congress speaking up was the allegation that Apple and China reached a deal
where Chinese citizens who use Apple devices do not have the same privacy policies as others.
Apple Insider reports that, in essence, the Chinese state has full access to all user data.
In the last quarter of 2020, Apple lobbied against a Uyghur forced labor bill called the Uyghur
Forced Labor Prevention Act. The act would require companies, like Apple, to guarantee that their
products do not benefit from imprisoned or coerced workers from the Muslim region of Xinjang.
As reported by The Verge, human-rights groups have credible reports that the oppressed Uyghurs
are being forced into labor for Apple's Chinese suppliers. Apple s lobbying against
the act and allegations of forced labor are not a good look for the company.
3. Competition The consortium of tech cartels
is thinning. There seems to be a tacit agreement between the masters of our tech universe: Alphabet
(Google's mothership), Amazon, Apple, Facebook, and Microsoft have not strayed into each other's
space in any appreciable way. Apple never really tried to make an
"iSocialMedia," Facebook never attempted an app store. There is no Apple "iSearchEngine," instead,
they partnered with Google to make it the default search engine on iPhone.
As growth and greed increase, the need for new sources of revenue dictates tech's brave new
world. Apple champions privacy, but it keeps that data in-house, away from Zuckerberg's reptilian
grasp. That stinginess with information also makes it more likely that Apple will develop
its own targeted advertising business. iPhones are pervasive. However, Chinese
firm Xiaomi recently overtook Apple as the second-biggest smartphone maker by volume.
Other notable failures include: ? HomePod's inability to grab market share
from Amazon's Alexa and Google's home products ? Facebook's Oculus is miles ahead of iGlass,
or whatever iteration the failed product is on ? iCar must contend with Tesla and
other EVs on the horizon Cook is 60 and won't be at the
helm forever. As Jobs' death reminds us, all good things must come to an end. How will Apple go out?
It looks more and more like not with a bang but a slow, drawn-out whimper.
So with that said, thank you so much for watching my video. There was a significant
amount of research and production, and iPhone buying over the years that went into making this
video possible. If you haven t seen already, check out my video on the Rise and Fall of Business
School or the Rise and Fall of being American. You might enjoy or have a personal view on either. As
always, stay happy and healthy and stay tuned for another episode of Company Insight next week.