14 December 2012

Your Good Mother, Part the Third

To bend an old adage, "Apples to Apples, dust to dust". The share continues to fall, with nearly as many explanations as there are stock pundits. So, here's mine.

As the quote from Eccles says, consumers are the endpoint (to use a clinical trials metaphor). The problem for capitalists is, they want to kill labor (the Foxconn guy is on the march to replace all his workers with robots). If only one does that, then he makes a killing, at least in the short term. If they all do it, well then there's no one to buy their tchotchkes.

Apple's MO has been to supply high price, low-ish volume widgets; leaving the rest to produce "commodity" level widgets in high volume. As some of the pundits have now begun to figure out, most of Apple's differentiators have been style, not substance; Apple buys parts from the same suppliers as everybody else. It's all COTS. The move to the A6 cpu is only a minor diversion, and doesn't represent innovation on Apple's part.

So, what's not to like? Two things: not just the pundits, but also the consumer has figured out that Apple parts aren't all that better, and that with the shrinking of the middle class, Apple (with the aid of the rest of the Rand-ian fringe) has killed off its customers. Does one really need to spend $2,000/year on a phone, no matter that it supplies other modes of distraction? One also needs to keep in mind that Apple didn't innovate new product genres, only waited for the first movers to stumble, then built a differentiable alternative. Rectangles with rounded corners isn't really an innovation.

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