Wednesday, March 27, 2019

The Apple Keynote | Lefsetz Letter

Apple built its business on being late to the market but better. Starting with CD burners and iTunes, then the iPod and iPhone. All had predecessors, all worked better than they did. Furthermore, Apple worked best when it was a de facto monopoly. Like with the iPod and then the initial years of the iPhone. WHAT IS THE COMPANY’S STRATEGY NOW?

One person can make a difference. Look at AOC, working in a bar before this. And despite all the income and the money in the bank, there’s no one with vision at Apple. That’s Elon Musk at Tesla. Sure, he’s insane, uncontrollable, geniuses oftentimes are. And at this point it looks like Tesla might not survive, but he single-handedly made electric cars the norm. You don’t know it, but your gasoline-powered car is heading for the scrapheap. Lease, don’t buy, because the value of that expensive iron is about to crater. So what we’ve got here is a company playing catch-up, poorly, where there’s a first-mover advantage if the company keeps innovating, and in this case it’s Netflix.

The real innovation here is in news. Apple has already purveyed all magazines for one low monthly price via its purchase of Texture, but no one knew about it. Now all those subscriptions are integrated into the News app, and…

Analysts are reading it wrong, quizzing the hoi polloi. The truth is this is a value proposition for those magazine and news addicted. If you’re a voracious reader of periodicals, this is a deal. Is it enough to keep magazines alive? And are magazines better in print? As for the inclusion of the “Los Angeles Times”…a brilliant move by the new owner who is behind the 8-ball on digital subscriptions. And it’s different content from the WSJ, although they’re ADDING reporters to fill the niche. Either you can go it alone, like the NYT or the WaPo, or you need to be on this service.

But most people won’t pay. Most people won’t pay for ANYTHING! That’s the freemium model in a nutshell. So, this $10 a month news tier is for junkies. Magazine junkies primarily. Not a huge segment of today’s population. How many people subscribe to multiple periodicals, making $120 a year worth it? Few.

As for TV…

If the new app simplifies things, Apple couldn’t simply get its message across. Let me see, you can log in to all your favorites via the Apple app. That’s not that big a deal, one fires up their smart TV or Roku and all the apps are there. As for remembering passwords, that’s cool, but usually you set it once and are done, even if you do tend to forget the passwords. There’s just not enough innovation here.

As for Apple’s TV service, its originals… What is it again? Apple has a whole event and nobody knows the price, the launch date…

All they know is Tim Cook paraded a bunch of aged celebrities to show credibility.

Let’s see, Spielberg, the man who wants to exclude Netflix from the Oscars. Very prescient and up-to-date. As for “Amazing Stories,” it wasn’t a big hit the first time around.

Oprah… Isn’t she just Johnny Carson? Someone fading in the rearview mirror who the younger generation is unaware of? If you’re not on TV every day… Ellen DeGeneres is bigger than Oprah, it’s just the oldsters in the media did not get the message. Apple is famous for bringing out hip acts in its music events, shouldn’t we have seen Jordan Peele?

Oh, he’s too edgy for the PG-rated Apple.

Boobs are just a click away on Netflix. HBO had the Khaleesi topless. But Apple wants to be wholesome in a world so coarse, just watch and listen to the rappers. Then again, Cardi B is hipper than anybody in Cupertino.

I’m not paying another subscription fee for limited inventory. That’s HBO, and compared to Netflix it’s a rip-off. Netflix has a huge catalog of licensed material and is making new stuff at a ragged pace to create its own catalog. They’re spending, but furthermore it’s not always about money. TV is about story and people and it’s a crapshoot. Apple used to be a distributor, still is in news. But becoming both maker and distributor? That’s a recipe for failure usually. Facebook counts on users populating the site with content. Amazon makes the most money selling other people’s wares. Google search is just a vehicle to sell ads.

As for the music paradigm…

Apple’s got a long history in music, not in television. And the brand only means so much, especially these days. People used to testify about their Apple products, now even diehards are questioning their functionality. Why is it my iPhone screen always gets stuck in the horizontal position? And it’s not only me, I’ve seen it on other phones.

And why in Mail do I click on a message and get no content? Happens all the time, and on others’ Macs too. But Apple is so busy moving forward, it’s not taking care of what it’s already built.

And we criticize the behemoth because we expect it to lead. We expect Jobs’s mantra IT JUST WORKS to continue. But oftentimes it does not.

You don’t ask for everybody’s attention and then fail to deliver. Then people will stop paying attention. And Apple is on the verge of this.

And sure, video games are hot, but Google announced play in a browser and Apple…wants you to pay to play, when hand-held games are all about getting people to play for free and then getting them to pay for upgrades, can you say FORTNITE?

The days of gadgets are gone. All you need is a smartphone.

We’re living in the era of software and services.

But, once again, Apple is coming from behind and delivering little.

Jobs showed us you pick a lane and overdeliver.

But Apple is trying to do a little bit of everything half-heartedly and that’s a recipe for…


That’s right, twenty-odd years of internet tech has shown us that one player gets the lion’s share of the market, the rest play for scraps. We’ve got Google, we’ve got Amazon, we’ve got Facebook…

We used to have Apple.

We don’t anymore.


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