Apple News & Analysis : Three Guys And A Podcast

Apple’s Next Strategic Move

by: E. Werner Reschke | Dec 06, 2010

In business there is nothing like having enough cash to do what you want to help your business grow. Whether that is hiring key talent, purchasing new equipment or buying out a competitor, having money in hand is important. Matter of fact the number one reason businesses don't make it past year #1 is cash flow. Having enough “walking around money” to take advantage of key opportunities that may only happen once is a critical factor to a business' success.

Fortunately, Steve Jobs and Company know this all too well. Almost every financial quarterly conference call contains a question about, "What is Apple going to do with their billions in cash?"

A Few Quick Observations About Steve and Apple

  1. Steve is not only proud of what Apple has done (and done well) but he is also very proud of what they have not done and said "No" to. Many businesses Apple's size can easily lose focus and try to do many things and often fail. Apple has been frugal in what it has chosen to pursue and kept a narrow focus.
  2. Steve has said he wants to use the cash to make one or two really big moves.
  3. Apple doesn't enter a new market unless they can dominate it. The way Apple dominates though is by creating value, not by creating a commodity. The Mac is a computer but its value is better than a PC. The iPhone is a phone whose value is far better than the commodity feature phones when it entered the market. Same goes with the iPad... it wasn't just a tablet computer, it contained great value out of the shoot.
  4. Apple's strength is writing good software for beautifully designed and manufactured hardware. So it takes both to make a winning Apple product (not so with Google, Facebook, Dell, Microsoft, Sony, etc).
  5. Apple doesn't usually buy big companies. They tend to buy small and relatively unknown start-ups and then leverage the talent, code or design to achieve a particular Apple objective.

So what is Apple missing and also something that would fit these characteristics? I've said before I think Apple's biggest threat in the upcoming decade is Facebook. Facebook is not a just social networking site. No, it is a platform. The Facebook platform could make Apple's innovative hardware and software far less relevant than it is today. If more and more of online traffic moves to Facebook (which is the trend), then what matters is not how many apps your operating system has or whether your computer is the best looking or the thinest. What matters is whether your device runs Facebook or not.

Until Ping Apple stayed out of social networking. It's not clear whether Ping will become a major player or not going forward. Therefore Apple must both protect and expand its platform before Facebook becomes the platform of choice for application development. To do that — by developing its own social networking platform or through buying a controlling share of Facebook —may just take most if not all of that walking around money.

Recent Articles

1 Comment

  1. Kevin ~ December 06, 2010 16:49

    FaceBook is heavily used by just about everyone and their dog! To see this moving into music, videos, live streaming, they are a big force to watch over the next two or three years. Probably most interesting is what Google will do about FaceBook?... Probably buy them out before Apple can get a chance to do so as FaceBook crushes Google's ad business model much more so than hurting Apple. #

Leave your reply (* = required field)

* :
* :
:
*
* Comment:
 

Stay Connected