We live in a strange world. We cheer the underdog; and when it’s not the underdog any more and is now the Top Dog, we cheer again–for it to fail. Then, when it has fallen, we take it in and accept it again as one of our own.
This strange cycle has been repeated throughout the history of Western civilization.
And so it is with our own Apple, Inc. computer company. Started in his parents’ garage in 1976, Steve Jobs and his partners Steve Wozniak and Ron Wayne soon defined a counterculture movement to the business-oriented Microsoft and IBM. The company became a huge success story and things looked good until, in 1985, Jobs apparently became too much of a tyrant and was forced out by his own board of directors.
Probably the best thing you could say about Apple from 1985 to 1997 is that it had lost its way. There seemed no clear focus or company strategy…instead, there were many products, some of which overlapped into each others’ markets. Tech and financial pundits–writers whose job it is to cover and report on those particular areas–forecast that the end of the company was near.
Apple almost died. It wasn’t until Steve Jobs was brought back–and he fought hard to rescue it–that it was saved. A visit with rival Microsoft’s Bill Gates to seek an infusion of $150 million in badly-needed cash was one of his first moves. He also trimmed–no, make that slashed–the product lines of wasteful goods, and began the research and design of products that would eventually become household names–iMac and iPod among them.
It’s been called “The Greatest Second Act in American History.” Soon Apple had become the most valuable company on Earth. And that’s when the dissent started.
Apparently, it’s okay to be struggling…as long as you stay that way. Be assured that these days, with $120 billion in cash on hand, Apple is definitely not struggling.
They cheer for you to reach the top…then they can’t wait to knock you back down.
Which brings us to the topic of the above headline. Despite claims every week from pundits who point to things like a drop in Apple’s stock price or less-than-projected (but still better than last year’s) earnings or missteps like the ill-fated Maps app as proof that it’s definitely in the cards and the company is doomed, an article on Macworld.com suggests the reality is, that’s far from the case:
Some tech pundits ask, on occasion: Is Apple doomed? The answer right now is most certainly not. In fact, the better question to ask is: Can Apple ever really be doomed again?
What is doomed
First, the history: What do writers mean when they suggest Apple is doomed? In June 1997, when Wired magazine’s cover showed the Apple logo with the tagline “Pray,” there was at least a reasonable argument to be made about Apple’s long-term viability: The company was struggling with a messy product line, numerous ill-fated products, seemingly unstoppable competition from Microsoft, and more.
Recall that 1997 was the year Microsoft invested $150 million in Apple’s continued growth—and Apple seriously needed that money. That situation—needing that relatively small influx of cash from a serious competitor to stay afloat—does sort of have “doomed” written all over it, right?
But let’s look at Apple today.
Apple today has more than $120 billion in cash on hand. For complicated reasons—reasons which I best understand as “lowering its tax burden”—Apple holds much of that cash hoard overseas. But regardless, the fact is this: Apple has tons of money.
Now, that fact alone makes it a lot harder for Apple to earn that “doomed” label anytime soon. $120 billion buys an awful lot of breathing room and mistakes. That is, if Apple were to grossly misstep on multiple projects, it has the financial cover to weather such problems. If research into an ill-fated iPad Maxi required $2 billion, plus another $1 billion advertising push, and a Doonesbury comic doomed the hypothetical four-foot tablet to failure, then Apple would swallow hard, but survive, with “only” $117 billion left in the bank.
That’s an awfully nice position to be in. Of course, you can only rest on your incredibly massive bank account for so long. In Apple’s case, that “so long” could be years: In 2012, the company said its operating expenses totaled $10.4 billion, with research and development adding another $3 billion. I’m no economist, but those numbers suggest to me that if Apple’s cash earned no interest and the company sold absolutely no products, it could continue paying its employees’ salaries and R&D costs for nine years.
Still, as nice as Apple’s eye-popping savings account is, it’s not the only reason the company can’t truly be classified as doomed anytime soon. The other key supporting argument is the fact that Tim Cook’s Apple isn’t sentimental or overly proud when it’s time to make key business decisions.
So the next time you hear a pundit claiming that Apple is doomed, that the company’s fortunes will collapse imminently, or that some upstart competitor running a platform built by Google, Microsoft, or someone else will sentence Apple to certain death, remember this: The company has bucketloads of two important things—cash and leadership moxie. Armed with both, it will take a prolonged, cascading pile of defeats and mistakes for Apple to fail, and that just doesn’t seem likely.
Part of the reason for this behavior could be due to the dislike many individuals have for the company and its products, for whatever the reason. It’s the same way with a company like Microsoft–I’d bet there are some that are positively jumping up and down over the generally lukewarm public reception to Windows 8 and Surface RT.
The biggest fear a company of that size has is that the failure will come from within. Ideas stagnate, workers become complacent, management fails to lead effectively…that’s happening at Microsoft now, it’s been reported–and it can happen anywhere.