The Macalope Daily: We didn't start the fire


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The heat is on.

Florian Mueller is a smart guy who knows a lot about patents. Which is why the Macalope doesn’t get how he wrote this piece.

“Soft stance on patents would cost Apple’s shareholders hundreds of billions of dollars” (tip o’ the antlers to Sean).

The Macalope’s mostly going to ignore the patent talk, because that’s Mueller’s area of expertise. But there’s plenty of other stuff to sink his antlers into in this piece.

There are so many people who have invested in Apple, and so many analysts who kept extrapolating past results into a future that actually looks far more challenging than promising, that any caveat concerning Apple’s mid-term to long-term prospects is unpopular and elicits heat, not light.

Hang on a second. First, look at it from our perspective. Throughout Apple’s 15-year journey from ignominy to the largest company in the world, we’ve been told “Just wait, the [Zune, netbooks, Ultrabooks, Windows Vista, Windows 7, Windows 8, Surface, Motorola Xoom and 10,000 other crappy products] is totally going to kill Apple.” And yet, here we are. At some point you just snap and create an online alter-ego with a head like a Classic Mac and antlers and …

Uh, I mean, you say, “No, the onus is on you to prove that Apple’s doom is nigh or just shut up until it actually happens.”

Last week the horny one linked favorably to a piece by Michael Lopp in which he laid out some reasons why Apple might have a hard time innovating in the future. There’s nothing wrong with speculating why it might happen. What’s wrong is saying categorically it’s going to happen.

One example of those “heat, not light” reactions is that people claim Apple’s primary problem is supply, not demand, sometimes pointing to long queues in front of Apple’s official stores. This supply-not-demand-is-the-problem argument is downright moronic.

Hmm. “Moronic.” Is that heat or light?

I have yet to find even one person who bought an Android phone or tablet because an iPhone or iPad was sold out somewhere and they couldn’t wait a week or a month for their next phone.

Neither has the Macalope. He suspects there probably are a handful out there, but not enough to really drive the current market share numbers.

See? We’re agreeing!

What’s the unique selling proposition, in a technological sense, of an iPhone or iPad? There is none.

Aaand there goes the agreement.

Build quality, usability, and ecosystem may be harder to objectively judge as qualities, but they do exist as factors that users take into account when evaluating devices, whether they do it consciously or not.

Apple is strategically losing market after market, segment after segment, to Android.

If by “losing” you mean “maintaining.”

I even know people who were considered die-hard Apple “fanbois” (I know it’s a controversial term) …

And Mueller cranks up the thermostat again. “Controversial” is the wrong word, Florian. Try “dismissive.” Or “jacktastic.”

… but switched to Android over the last couple of years.

You can’t refute an anecdote like that! Anecdotes are irrefutable!

I’ve heard this argument before: no matter how well Android does, all that matters is Apple’s sales and margins.

And the Macalope has heard every ridiculous counterargument to that fact, so lay it on him.

Those who make this point ignore that because of the problems the Mac had in a “Wintel” world, Apple was on the verge of bankruptcy and was saved by a Microsoft investment.

Wait, what got Apple there? Was it the fact that Wintel machines were more ubiquitous and cheaper, or was it that Apple licensed its operating system, letting other hardware makers eat its lunch, and was run by a series of executives with the collective IQ of a half-eaten Mounds bar?

If history repeated itself, Apple would at some point need a lifeline from Google or Samsung.

Google? How much money is Google actually making from Android? Most of its mobile revenue comes from iOS, and the total amount it makes on mobile is a drop in the bucket compared to what Apple makes on the iPhone.

Mueller complains about Apple boosters “extrapolating past results into a future that actually looks far more challenging than promising” but when confronted with the fact that Macs are currently the only PCs selling well says “Yeah, but they weren’t in the 1990s.”

Check a calendar, Florian.

Mueller’s argument boils down to “Smartphones are commoditizing and soon prices will be too low for Apple to keep up with and everyone will instead buy Android phones. And you can’t say ‘Look at the Mac’ because Windows and the Mac OS are different while Android and iOS are virtually the same.”

This will come as news to those of us who were told for years that Microsoft had completely erased the Mac’s advantage.

It took Android only a few years to beat Apple’s platform in pretty much every country on this planet, and in pretty much every market segment. Apple’s continued innovation efforts didn’t prevent this from happening.

And, boy, it sure hurt the company’s bottom line and the viability of its platforms, didn’t it?

In another few years, Apple won’t even be a top five company in the industry unless it manages to fend off Android …

The Macalope still doesn’t quite get what Mueller thinks is going to happen. If Android and iOS are effectively the same, why does Apple keep attracting more customers every year? Yes, Android is gaining more by getting more of the flip phone users to switch to a free Android phone, but no one other than Samsung has figured out how to make any real money off of that.

Apple’s primary shareholder value concern must be to extract the greatest possible returns out of the revolution it brought about. And it’s clear that continued innovation—however important it may be—does not come close to the 20-year term of protection that the patent system offers.

This may be partly true for markets that the company has already revolutionized, but again completely ignores the Mac. Apple’s business model is to reinvent markets and then differentiate itself with high-end design. And it’s worked for 15 years.

Make no mistake, Apple has plenty of challenges. Maybe it will somehow fail to keep differentiating itself in existing markets and fail to reinvent any others. But with the highest revenue, margins and cash reserves in the industry, it’s Apple’s game to lose.

And, if you don’t want the heat, Florian, stop making tired and incendiary arguments.

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