Archive for July, 2008

AAPL reported fantastic earnings this week but got pounded for a few reasons, one of them being lowered margin guidance in 2009.
 
It’s smart to set expectations in this way.  Everyone is gunning for Apple… so things will be more competitive.  And if the world economy catches cold, that will make things even more competitive.
 
But there’s speculation that Apple may be gearing up to kick out less expensive Macs… for the first time, take on the PC juggernaut on price.
 
The perception is that Microsoft has stumbled badly with Vista… and that Apple can press its advantage NOW.
 
20 years ago, the Mac enjoyed a similar advantage over Windows 2.0, an OS that was generally received with the same kind of, uhm, enthusiasm that Vista is receiving today.
 
More to the point, 20 years ago Apple had rock solid evidence that a similarly priced Mac would destroy a graphical PC:  Mac had 10% marketshare in business selling a $2K Mac vs. a $1K PC… but had 90% marketshare in schools selling a $1K Mac vs. a $1K PC.
 
But 20 years ago, AAPL did not press the advantage when they had their GUI foot on Window’s neck… much to the horror of all of us loyal Mac developers desperately screaming for Apple to increase marketshare.
 
I remember Jean-Louis Gassee, Apple’s charismatic head of product development, used to hold up a Mac at conferences exclaiming, "what can we take out to make the Mac cheaper?"  To which developers inevitably heckled, "how about your margins!"
 
But AAPL did not cut margins.  Or make the Mac cheaper in any way… until it was too late… until Windows caught up.
 
The result?  The Mac languished as a low-single digit also-ran in the computer industry — for almost two decades!
 
So, if AAPL wants to reduce its margin guidance with the thought of going to war — and coming out of the war with 25% or 50% marketshare — more power to ’em and they better get cracking… history has taught us that you CANNOT give MSFT too much time because they will, eventually, get it right.
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Everyone knows I’m a big believer in technologist running technology companies.
 
Did Jerry Yang, the returning founder and inserted technologist CEO of Yahoo, blow it?
 
The answer has to be yes… despite me wanting to really, really answer no.
 
I’d break my response into three parts:
 
(1)  He inherited an awful, terrible mess.  Terry Semel, former NON-technologist CEO of Yahoo, fleeced YHOO shareholders for over 1/2 billion dollars while being obliterated (growth-wise) by GOOG.  That’s a pretty lousy torch to pass.
 
(2)  Unfortunately, Jerry tried to "fix" the company from the stance of a profitable company — hard to blame him for that since YHOO is.  However, he clearly underestimated how burnt shareholders felt and how much they wanted to see action & blood… i.e., he should have tried to "fix" the company like it was horribly broken and out-of-money.
 
(3)  As such, it’s hard to blame him… he never got the chance to be a technologist CEO… because once MSFT went on the prowl, what they needed was a deal-maker.
 
Alas, CEO’s don’t get cut any slack.  Certainly Jerry isn’t.  Unfortunate but part of the job description.
 
 
P.S.  I know what you’re thinking… maybe Semel was that guy after all?
 
NO WAY.  Semel had years to pull the trigger on a MSFT deal (at values rumored to be in the $40’s).
 
I’m not an analyst.
But, I observe.
When everyone thinks one way (“oil is going up, up, up”)… and there is multiple news stories that should make the price of oil go higher but it doesn’t (like the news announced today that inventories fell)… that feels like a top to me.
There.  I’ve hung my butt out.
What happens in the future depends on how serious we are about alternative energy.
In this regard, it’s not hard to like good old American spirit.  Heck, even a Texan oil billionaire like T. Boone Pickens has raised a rallying cry.