The stock has done well after the bad earnings. This is great news for Apple. It seems that for the time being, the stock has found a bottom and most importantly, found a spot where it is not expected to do anything great. So the pressure of the analysts is off. Of course, it cost the company hundreds of billions of dollars in market cap to kill the expectations. Quite a price to pay for killing something. So is the real worth of Apple what it is valued now? Rest of the value was expectations? One can't blame Cook for the expectations. For inaction maybe. He could have perhaps done something to reduce the damage. In any case, the results and the guidance indicates that it may not be easy for AAPL to beat even the reduced expectations. The pressure from competition will remain, and it will continue to face a dilemma in positioning if it wants to penetrate the price conscious emerging markets in a big way. Unless, of course, it is a great marketing move which will be able to create two levels. Some other companies have failed at this. So a better way forward is obviously bringing out some great product (not just a slimmer iPhone) which will start to build some expectations for the future. Innovation can come out from smaller companies that own good technologies but do not have the platform or the strength to use it. Several patent infringement lawsuits confirm this. e.g. A subsidiary of Marathon Patent Group (MARA) recently filed a lawsuit against Sony, Dell, Siemens and the likes for an infringement which is potentially huge. Marathon is also on a patent acquisition spree to further leverage the potential of the business. Even Apple is fighting lawsuits against small companies. It will be good if it can create or acquire some great technology which will make it rise again. It surely owes it to its investors.
A good, thoughtful post regarding innovation, but I wonder if the smartphone market is something so unique that we won't see the likes of it again for at least a generation. My argument is at almost a philosophical level, but I think it bears consideration;
The personal communication device, that can link users to the world of friends, family, information, gaming, finances and shared visual experiences is really the culmination of the invention of the telephone, internet, personal computer, digital camera, gps, electronic financial transactions, and artificial intelligence - all rolled up into one small device. Moreover, it is easily subsidized (manufacturer paid up-front and in-full) due to the fact that it involves communication - i.e. to the user it becomes indispensable and utilized on a daily or hourly basis. NO OTHER device, real or conceived, is set to replace this for at least a generation. Apple is not the largest market cap company in the world because of iPod, iPad, or iMac - it is because of the iPhone ALONE (remember 70% of profits come from iPhone)
So, though a slimmer, larger screen, or otherwise re-invented iPHone doesn't seem very 'cool' or 'innovative' to us, it may very well be what can move this stock upward with tremendous velocity. If Tim Cook understands what the smartphone market means, and doesn't lose it like Nokia and RIMM did in the recent past, Apple may yet become a $1000 stock or beyond. In my opinion, how Apple performs in the smartphone market and how they drive innovative upgrades to the iPhone (or morph the iPhone) is the only thing that matters. Tangentially, any new product that drives consumers toward iPhone may also be a boon for the stock - but it has to have direct implications for increasing iPhone marketshare.