The verdict against Samsung for copyright infringement and the introduction of the new Iphone 5 ought to be cause for celebration at Apple. By first blush, everything should be coming up roses for Apple. Yet it seems to be looking at the wrong enemies: Samsung offering near look/function alike smart phones running on Android. That is the last battle, of Mac OS Classic versus Windows, in the 1980’s. Apple’s real enemies, and the ones likely to bring it down, are the four horsemen of the economy, suppliers, Amazon, and worst of all and most deadly, PC. That is Political Correctness, not Windows-compatible Personal Computer.
The economy is Apple’s enemy, because it is basically a smart phone company with set of small, low-volume personal computer and tablet and MP3 player sales attached. Most of the revenue Apple makes comes from the Iphone. Which in turn is subsidized by mobile phone carriers seeking all that data usage for which they charge customers plenty. What happens if it is a question between an Iphone, and eating?
Ben Bernanke’s latest helicopter drop, aka QE3, or printing virtual money and using it to buy bonds, has pushed interest rates down low again, which has a real effect on the economy. Things like stocks, and commodities, gain value. The dollar loses value, in turn. That’s good for Wall Street. Very good, the markets are up by a lot. That’s bad for Main Street, which buys Iphones. Because they’ll pay a lot, not a little but a lot, for things like meat, grains, orange juice, gasoline, electricity, and so on. Consumers just got a lot poorer. And the fun has not yet begun. Drought, global shortages, Iran, and other events (like world-wide Muslim riots against America to free the Blind Sheikh) are certain to cause supply shocks, making consumers pay even more.
Money spent on food, clothing, electricity, and gasoline, is money not available for an Iphone. Heck the best-placed carriers are those that offer low, pay as you go, voice/text phones. A mere ten dollars a month beats paying say, $200 or more.
Then there are Apple’s suppliers. Already, Apple had to pay $60 million to a local Chinese company just to use the Ipad trademark in China. This is common, Chinese law is mostly make it up as you go, and benefit local oligarchs. There is nothing to prevent say, Foxconn from running off the same Iphone on the same production line as the Apple official exports and selling it in “Apple Stores” of which there are many fake ones in China. Is this likely already happening? Sure. Apple can combat piracy here and in Europe, with a robust legal system. Good luck doing so in China. Or Latin America. Where the intellectual property laws state its not yours if its not nailed down, and its not nailed down if it can be pried up with a crowbar.
The larger enemy, however, is Amazon. Which is the most like the Windows monopoly of the mid-late 1980’s that nearly crushed Apple. Amazon is directly challenging Apple on price, and ecosystem of “content.” In the 1980’s, IBM-compatible PCs running DOS/Windows were far cheaper than Apple computers, and had a far greater amount of programs available for them, than the pricey Macs. Oh sure, the Macs were technically superior, and far easier to use, but the PCs were just far cheaper. And there were far more games, and applications, you could buy and use on them too. This did not happen by accident. Microsoft made a deliberate attempt, and one highly successful, to court developers. Microsoft had as its goal, to have the most and best programs running on DOS/Windows. And they succeeded. In contrast to Apple, which had a fairly difficult and opaque process to become a developer, Microsoft was happy to welcome pretty much anyone to their development program, and provide technical support and assistance. This meant by the late 1980’s, you were better off with a PC than a Mac, just on software availability alone. Not even counting price, which was lower.
The same is happening now. Amazon is rejiggering its author program. Authors can now offer serialized books, the way say, Arthur Conan Doyle and Charles Dickens offered their works originally, and get paid right away. No longer do they have to finish a lengthy novel to get paid, users subscribe at say, $2.99, and get the latest installments automatically. Certainly Amazon has made the basic Kindle amazingly cheap (now only $69), and made it very easy to publish on Amazon. The Amazon e-book catalog is the largest, and easiest to use. For self-published works, or e-books in general, the prices at Amazon will always be cheapest. In order to sell on Amazon, a publisher must guarantee that the prices are always lowest or equal on Amazon, they cannot offer the work cheaper anywhere else.
By contrast, getting an e-book on Itunes, or the Barnes and Noble site, is laborious. Most self-published authors use intermediaries like Smashwords. The process is just that difficult. This matters because while say, a best seller by say Ed Klein (“the Amateur” about Barack Obama) will always be available at roughly the same price on Amazon, Barnes and Noble, and Itunes, the hot new e-book self-published might only be available at Amazon. Or might cost a full ten dollars more on Itunes or Barnes and Noble’s site.
Creating an e-book is not that difficult. Selling one is, but creating them and having consumers buy them and read them on the generally excellent Nook or Kindle or Ipad or Kindle Fires is not hard. Amazon is taking a page from Microsoft in the 1980’s and making sure they have the most content. At the lowest prices. That means hardware prices too, the new Kindle Fire 7 inch model will retail at around $150 or so. That is very, very low.
Suppose you got a cheap Kindle, its only $70 or so. And you want to read a book by a self-published author? Amazon not Itunes is the place to go. That is the bet Amazon is making, and while it remains to be seen how well it plays out, having the most content at the lowest prices is not a bad way to go. Apple increasingly is moving towards the least content at the highest prices, for that strategy to pay off it needs to be great. Or rather, insanely great.
Which brings us to the last, and greatest enemy Apple will ever face. PC. Political Correctness. The dominance, and charisma, of Steve Jobs, meant that Apple did not have to face a PC inquisition about its lack of “diversity” on the board and executive suite. Right now, there is a jihad by the diversity folks to remake Apple into a “diverse” company. As Steve Sailer noted:
Thank God I sold all my Apple stock in 1999 and used the money to buy Hewlett-Packard stock because HP had appointed Carly Fiorina CEO. As we all know, white men cannot begin to grasp the diverse needs of women and people of color, so how can they sell them computers?
Apple only makes money when its products are as Steve Jobs once said, “insanely great.” Creating insanely great products is something really only a non-diverse workforce of straight White men can do. No company filled with gays, or women, or non-Whites at the executive level and board has achieved insane greatness. That is a job ONLY straight White guys can do.
The new CEO, Tim Cook, is openly gay, according to Gawker, and the most powerful gay man in America.
Can you say “Uh oh?”
It is likely doubtful that Cook has the charisma and personal dominance to see off the diversity crowd. Even worse, as a gay man it is almost certain that he believes it himself. Apple went from having Captain Kirk at the helm of the Starship Enterprise to a shaman who believes in voodoo and magic for navigation and everything else running the spaceship.
Because Cook is a gay man, the pressures to conform to the gay-diversity agenda will be enormous. Apple will become, very quickly, a copy of the juggernauts that are Kodak, or HP, with the products that reflect that great insanity. Rather than insane greatness.
Apple is a high-margin company. Infotainment companies with near monopolies, like Hollywood, or Television, and historically publishing, have been able to extract high margins and live in an uber-PC world, celebrating “diversity” but that required a monopoly. The web crushed that in publishing (with e-books) and newspapers. Old content competing with new content is eroding that high margin for Hollywood, why buy the latest Bourne movie when you can watch “the Mackintosh Man” with Paul Newman on Netflix instead? Ask the magazine publishing industry how well their monopolies lasted. Its a race to bankruptcy for most of them.
Apple requires a lot for their customers. They have to shell out more, and get less (in content, in applications, and so on). That works when the marriage of hardware and software, fully integrated, is just insanely … great. When things just work, smoothly and wonderfully. When using the things they sell becomes pleasurable in and of itself. For that, Apple’s customers will pay plenty. Just for the pleasure of it.
But that requires the pleasure exist. That it be created. It does not just happen. Women engineers have shown little talent or even interest in creating something new and exciting. Even all the me-too social media internet companies are created by straight White guys, almost exclusively. For non-Whites, it is even worse. A few, such as Yahoo’s Jerry Yang, created something new and useful. But most of the marriage between technology and design, are the province almost exclusively of straight White guys. Not will.i.am. Who is Intel’s “Chief Creative Officer” … a laugh in and of itself, and a reason not to buy Intel alone (that they feel the need to pander to such diversity idiocy). Guaranteed, will.i.am will not only be short capital letters, but won’t be designing the latest Intel chips, much less finding new and creative uses for them in embedded devices.
The fantasy is that “diversity” does not cost. That there is not a price to be paid, in ever stagnant technology and science, given the utter failure of women and non-Whites to push boundaries, to act like aggressive nerds, to be the kind of people that Steve Jobs and Steve Wozniak were, or Linus Torsvald is, today. The fantasy is that you can replace the straight White guys and not pay a severe price for having a company like Kodak or Xerox decline into bankruptcy.
Diverse workforces are good at: anti straight White guy jihads, enforcing group think, terminal magical thinking, and not much else. The proof of this is when entrepreneurs have their money and reputations on the line in internet startups. They don’t rush out and hire “diverse” workforces. Nope. They get the nerdiest, hungriest, most talented, and driven … straight White guys they can find. When Mark Zuckerberg started Facebook, and realized he could make billions, he did not hire someone like Ursula Burns of Xerox. Nor Tim Cook of Apple. Just straight White guys, straight up.
Apple’s greatest enemy is PC. And this time, there is no Steve Jobs to bail them out.