The Macalope Weekly: A fundamental disconnect

Crazy Flakes aren’t just for breakfast anymore. No, as this week’s cast of pundits will show, the tasty treat is for breakfast, lunch, dinner, and all those extra meals hobbits eat. Apparently, some bit has switched somewhere—like a Manchurian candidate being triggered—and everyone is willfully ignoring the state of things in Cupertino. Samsung, meanwhile, gets a note from its doctor to skip Ethics 101, and a writer for The New Yorker uses some bad examples to show how “badly off” Apple is.

Reality distortion polarity shift

Investors, it seems, are like babies. If you take something out of their immediate line of sight, they think it no longer exists.

For months we’ve heard that Apple is done, that the company is simply going to try to eke out whatever growth remains in its existing product lines and never introduce another groundbreaking product ever—because if it were, it would have already done so in the last year since Steve Jobs died.

That’s not hyperbole. That’s the actual argument presented by many who don’t believe that something that they cannot see actually exists, no matter how many times Apple’s shown them that it does.

And the Macalope predicts that Tim Cook telling them it exists won’t have any effect whatsoever:

“Obviously we’re looking at new categories—we don’t talk about them, but we’re looking at them,” he said.

Well, say what you will, Tim, but the Macalope knows this not to be true, because a continuing series of carnival barkers, rabble-rousers, and dull-witted naysayers have repeatedly said that Apple is done innovating. Like Veruca Salt (the character, not the band), they want a golden goose and they WANT IT NOWWWWW.

Investors may not believe Apple, but they will believe Wall Street rumors! On Tuesday, the day before Apple’s shareholder meeting, Doug “Easy Money” Kass tweeted that Apple would announce a stock split, and investors dutifully said “Sign me up for some o’ that!” Apple’s stock jumped about 10 points on Tuesday afternoon.

So, all those market geniuses must be rolling in double the shares they bought.

Except that Apple let the market fairies down (again!) and did not announce a stock split at the shareholder meeting.

Oh, well. At least Kass’s shares, which he bought on the cheap after trash-talking Apple back in the fall, went up briefly. So it worked out for someone.

Meanwhile, the paper of record for investors, the Wall Street Journal, is doing its part by making sure that every bit of good information about Apple is portrayed in the worst possible light. For example, Good Technologies released a report detailing how iOS continues to dominate the enterprise market, and the Journal’s takeaway from it was “Android Tablets Gain on iPads in Business Market.”

Yes, Android tablets inched up in 2012 from 2.7 percent to 6.8 percent, but iOS activations went up from 71 percent in 2011 to 77 percent in 2012.

There is a fundamental break from reality going on here, as Ben Bajarin notes:

Since [Steve Jobs’s] passing his reality distortion field still exists but it has moved from inside Apple to outside Apple. Mainly to the many on the street and the mainstream media (just looking for headlines) who have caught the reality distortion field syndrome and now live in a reality distortion field and believe in a reality that does not exist.

Not convinced? (The Macalope knows you are, just play along.) Try this one on for size.

Élyse Betters at 9to5Mac spots a Forbes pundit who simply decides when Fortune’s polling stops making sense. Brad Chase speculated that Apple would drop from #1 in Fortune’s most respected company poll. It didn’t, but that’s OK, because Chase has it covered:

Apple has been the “world’s most admired company” for five years running, and there’s a chance Fortune will defy logic and give Apple the crown once more for posterity. If Amazon somehow fails to leapfrog the bumbling Apple and the pugnacious Google this year, it’s clear the algorithm is flawed. One way or another, the drop has begun.

When did the algorithm go wrong? When it failed Chase’s preconceived notions.

When reality gives pundits lemons, pundits pretend to take a long, thirst-quenching drink from an empty glass.

Poor, misunderstood Samsung

Let us harken back to a year ago when our pal Dan Lyons (disclaimer: not actually a pal) was telling us mean Apple bloggers to leave Samsung ALOOOOOOONE!

Gruber and people like him really believe that Samsung just sits around making copies of Apple products.

Well, we didn’t say the company did it well.

Anyway, we’re past that now, right? Current conventional wisdom is that Samsung is the leader in slapping features on phones, which passes as innovation for some people. Surely, no one could argue that the company’s still copying Apple …

“Samsung takes a page from Apple’s Passbook with new Wallet app”

Feel free to click through and bask in the innovation Samsung applied. Which appears to be putting a little black space between the items in the wallet. Where do they get such great ideas? As The Verge noted, “the Passbook influence is quite evident.”

Speaking of great ideas, how great an idea is it to do right by your friends? TOTALLY GREAT, RIGHT? Well, get ready for a heartwarming tale of two friends: Samsung and the UK judge who ruled in its favor, telling Apple that it had to publish an apology to poor Samsung.

“UK judge who issued extreme ruling for Samsung against Apple hired by… Samsung!”

Aw, so nice!

Apparently an ex-judge who is invited to rule on a case involving a given party is not barred by existing UK rules (though this case here may spark a debate over whether some reform is needed) from being hired by the same party in another litigation outside the UK less than four months later. [emphasis the author’s]

So, not illegal by any means. Just sleazy. But what’s a little sleaze between good friends?

Also not illegal but still sleazy was Samsung’s decision to try to block iPhone functions for the blind. Congratulations to Samsung on finding just that right combination of unlikeable legality. That’s the sweet spot.

Hey, you don’t like Apple? That’s OK. There are valid reasons not to like Apple. And the Macalope can even see liking Samsung’s products, if you’re the kind of person that needs a giant-ass phone that includes a stylus and that you can root.

But being a Samsung booster? That takes a certain kind of willful myopia.

Re-beleaguered

Somehow even The New Yorker has gotten a whiff of whatever noxious gas pundits are sniffing that’s causing them to see Apple doom.

James Surowiecki asks “Will Apple Keep Thriving?” (Tip o’ the antlers to pf.)

Not long ago, Apple was almost universally venerated … What a difference a few months make.

Surowiecki’s premise is, of course, horribly flawed. What he means is that up until last summer the masters of the universe on Wall Street had Apple fever. And now they don’t. Outside of Wall Street, things remain pretty much the same: Apple products continue to be wildly popular.

Now there’s a deluge of forecasts stating that Apple is “in big trouble,” “losing its cool,” and just plain “doomed.”

Based on rumors, conjecture, and things pulled from places from which people should not be pulling things.

And it’s not only pundits: the activist hedge-fund manager David Einhorn has capitalized on the crisis by pushing the company to hand over its giant cash reserves to shareholders.

Which Surowiecki seems to be implying is somehow indicative of Apple’s poor performance, as opposed to Einhorn’s desire to roll around in a pile of Krugerrands. At any rate, Einhorn has now dropped the suit, so the Macalope expects that next week we’ll hear about how everything’s on the upturn for Apple HAHAHAHAHAHAHAHA.

There were a few missteps: a tepid launch for the iPhone 5 …

Doy?

OK, so we’re into the “just making crap up” stage. Second paragraph. That’s about standard for these things. We’re right on schedule.

But there’s a more concrete reason: Apple’s competitors are finally doing a better job of making the kinds of phones that customers want.

Is that right?

The most notable of these is an oversized phone dubbed “the phablet”—Samsung’s Galaxy Note is the leader in the category.

Holy shlamoley with the Galaxy Note thing. The Macalope doesn’t even …

Seriously. It’s somewhat popular. But Samsung has sold maybe a bit over 20 million of them in the year and a half since it’s been out. Apple sold more than twice that many iPhones last quarter. The Macalope doesn’t know where this pundit meme originated, but it makes about as much sense as … well, any of the other pundit memes.

And, unfortunately for Apple, there is no iPhablet.

Yes! Soooo sad that Apple can’t cash in on sales that are a fraction of what it’s selling now.

The analyst Peter Misek, a managing director at Jefferies & Company, told me that he had been an Apple optimist until last fall. “We assumed, as Apple did, that a buyer of a smartphone would also be a buyer of a tablet, so you’d have one device for mobility and one for surfing the Net,” he said. “But what we’re finding is that, especially in lower-income areas, people can’t or don’t want to buy both. So they’re buying the one device that combines the two.” This means that phablets are eating away at both iPhone and iPad sales.

Peter Misek. Really. This Peter Misek:

More often than not, though, Misek’s track record is just comically wrong …

Peter Misek. You’re really going with that.

Oookay. Back to you, Surowiecki:

Still, the company’s fundamentals are simply too good to justify panic.

Ah! We’re four wordy New Yorker-style paragraphs in and finally we’re told not to panic about the company that continues to report record results every quarter. Balance!

Failing to build a phablet or a cheap phone may well have been mistakes, but they’re fixable mistakes.

Like that mistake Apple made by not shipping a netbook. Say, how’d that ever turn out?

[Apple]’s always been the proverbial bumblebee: it shouldn’t be able to fly but it does.

Translation: How does Apple work? Heck if I know! Magic? Maybe it’s magic! Like bumblebees! Hey, speaking of which, how does “science” work?

The bumblebee analogy is more apt than Surowiecki details. The reason this myth started was because people tried to apply formulas to bees that weren’t apt. Just like a bee is not a fixed-wing aircraft, Apple is not a steady growth company like Johnson & Johnson, or a market-share chaser like Amazon.

A more interesting treatise that Surowiecki could have undertaken would have been explaining how applying traditional models don’t apply to Apple. But here we are.

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