Can Apple ever be doomed again?
Some tech pundits ask, on occasion: Is Apple doomed? The answer right now is most certainly not. In fact, the better question to ask is: Can Apple ever really be doomed again?
What is doomed
First, the history: What do writers mean when they suggest Apple is doomed? In June 1997, when Wired magazine’s cover showed the Apple logo with the tagline “Pray,” there was at least a reasonable argument to be made about Apple’s long-term viability: The company was struggling with a messy product line, numerous ill-fated products, seemingly unstoppable competition from Microsoft, and more.
Recall that 1997 was the year Microsoft invested $150 million in Apple’s continued growth—and Apple seriously needed that money. That situation—needing that relatively small influx of cash from a serious competitor to stay afloat—does sort of have “doomed” written all over it, right?
But let’s look at Apple today.
Apple today has more than $120 billion in cash on hand. For complicated reasons—reasons which I best understand as “lowering its tax burden”—Apple holds much of that cash hoard overseas. But regardless, the fact is this: Apple has tons of money.
Now, that fact alone makes it a lot harder for Apple to earn that “doomed” label anytime soon. $120 billion buys an awful lot of breathing room and mistakes. That is, if Apple were to grossly misstep on multiple projects, it has the financial cover to weather such problems. If research into an ill-fated iPad Maxi required $2 billion, plus another $1 billion advertising push, and a Doonesbury comic doomed the hypothetical four-foot tablet to failure, then Apple would swallow hard, but survive, with “only” $117 billion left in the bank.
That’s an awfully nice position to be in. Of course, you can only rest on your incredibly massive bank account for so long. In Apple’s case, that “so long” could be years: In 2012, the company said its operating expenses totaled $10.4 billion, with research and development adding another $3 billion. I’m no economist, but those numbers suggest to me that if Apple’s cash earned no interest and the company sold absolutely no products, it could continue paying its employees' salaries and R&D costs for nine years.
Still, as nice as Apple’s eye-popping savings account is, it’s not the only reason the company can’t truly be classified as doomed anytime soon. The other key supporting argument is the fact that Tim Cook’s Apple isn’t sentimental or overly proud when it’s time to make key business decisions.
Kill the weak
Cook killed Ping—well, formally, at least—when it became obvious that no one cared about Apple’s lame iTunes social network; he’s not the type to throw good money after bad. That Cook isn’t too proud to recognize when Apple makes a mistake, and to then course-correct as needed, bodes very well for the company’s future.
Remember that Cook is also the guy who aimed to shorten the life of the “iOS 6 Maps are kind of lousy” story by not merely apologizing to Apple’s customers about the problem, but also suggesting folks try offerings from competitors like Google and Microsoft instead.
If rumors prove true that Apple is working on a lower-cost iPhone to target the prepaid market (possibly a big if), that will show that Cook has also learned the positive lessons of Apple’s history, that—despite its reputation—Apple can do quite well with lower-cost products like the iPod shuffle, the Mac mini, and the iPad mini. And Apple historically is quite comfortable releasing such products, even if they eat into sales of other products in Apple’s catalog.
So the next time you hear a pundit claiming that Apple is doomed, that the company’s fortunes will collapse imminently, or that some upstart competitor running a platform built by Google, Microsoft, or someone else will sentence Apple to certain death, remember this: The company has bucketloads of two important things—cash and leadership moxie. Armed with both, it will take a prolonged, cascading pile of defeats and mistakes for Apple to fail, and that just doesn’t seem likely.