Here's why Apple is in big trouble

If it's really the software company Tim Cook thinks it is, he'd better make way for a visionary CEO immediately.

By TheStreet Staff Apr 23, 2013 11:21AM

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The Apple Inc logo is displayed on the back of the new MacBook Pro David Paul Morris Bloomberg via Getty ImagesBy Rocco Pendola

If I have the chance to meet Tim Cook, I will give him a big hug right after he punches me.

The Apple (AAPL) CEO not only needs, but deserves a hug. Steve Jobs put Cook in an impossible situation.

He wasn't what Apple needed, he's not what Apple needs and he will never be what Apple needs post-Steve Jobs. This, of course, assumes Apple wishes to remain Apple and not a mediocre dividend-upping, buyback-increasing sleepy cash cow.

Some companies require good managers -- MBAs such as Cook -- to run the show. Others must have a visionary to lead and set the tone with the textbook guys taking orders and executing in the background. Apple needs a visionary (TheStreet).

Without monumental change, Apple is screwed. Had Jobs recruited a Jack Dorsey or Dick Costolo instead of promoting Cook we might have witnessed a relatively seamless transition at Apple. But he didn't; and now, here we are.

It's doubtful Tim Cook will say anything on Apple's Tuesday afternoon earnings call to satisfactorily address the greatest areas of concern (TheStreet). Number one, what's next, if anything, that is as big and innovative as the iPod, iPhone or iPad? And number two, if Apple really is a software company as Tim Cook says, will it ever start making good software (and services) beyond its core operating systems?

I address number one throughout my article history at TheStreet. I give number two the treatment, here and there, but not quite as much.

If Apple believes in the fairy tale that it -- a company that derives about 90% of its revenue from hardware sales -- is a software company, it better start coming through with top-notch software and services.

It's the beautifully designed, premium-quality, intuitive hardware that makes the Apple user experience second to none. The OS and iOS provide the foundation that makes it all tick. However, beyond the broad ecosystem, Apple software and services are run of the mill.

Outside of the operating systems, I can't think of Apple software or services I use by choice. It's almost always by default. Because I love Apple hardware so much, I accept less-than platforms -- e.g., iTunes, iCloud, Calendar, iMessage -- because they're just more convenient than better third-party options. When it's possible or there aren't too many hoops to jump through, I almost always use software and services from other companies, ranging from Microsoft (MSFT) to Google (GOOG) and Yahoo (YHOO) to developers most of us have never heard of. (Microsoft owns and publishes Top Stocks, an MSN Money site.)

So, yes, Apple's software and services make the OS/iOS-powered ecosystems sticky, no doubt. But we shouldn't correlate Apple devising a situation where you have to use more of its software than you might otherwise freely choose -- all else equal -- with the notion that that software is any good.

Herein lies where Apple is most screwed. If it is indeed -- and needs to be a software company in a world where Google, for example, has come to play -- it doesn't have the right person leading from out in front. Tim Cook has probably never coded a thing in his life. But, beyond that, even if we don't compare Cook to Jobs, he simply does not walk, talk and act like the type of visionary CEO Apple needs.

It needs a guy like Jack Dorsey who saw the future with Twitter and keeps on seeing it with Square. Or its present leader, Dick Costolo, who took Twitter over as Dorsey exited and not only hit every beat, but keeps making things better.

These guys know software and services; leave the supply chain and other back office and back cover details to guys like Cook. But, for their own sake and the sake of Apple's future, keep them in their proper place.

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Apr 23, 2013 12:00PM
Rocco Pendola is engaging in sensational journalism, nothing to do with business theory. Despite a cult following, Apple grew too large, has too much competition, and its technical gizmo (consumer handheld phones/tablets) are entering the commodity phase. Jobs created two gizmos (Mac and iWhatever) - he was very lucky. Hit technical gizmos that propel a company to the top are very rare and mostly luck.
Apr 23, 2013 12:12PM
Where the heck is an article from Anthony Mirawhatever today. Dr. Doom has to wait another day to put out his "The Sky Is Falling" news. He'll probably come up with something. Must be nice to never be wrong.
Apr 23, 2013 12:58PM
Mr Rocco. 

Are you a investor, or just someone who needs to be right?   I've read your recent posts on this stock, all negative.  Investors put there money were their mouth is.  Are you a short?   One article going on to bash the "experts" as having no clue.  Another cheering yourself for being" right", (so your not one of "them", right? And how is it you know, if "they" don't?  Doesn't that make you some sort of "expert?")  since the stock dropped from the mid 400's.  Good call by the way, if YOU own the stock?   And today's finale.  Well in a few short hours we see the streets response to AAPL earnings. ?????  Regardless.  Why MSN gives you a platform, on a investment site, to express your childish and emotional opinions, that reek of guilt of those you criticize, is beyond me.  

Oh that's right, your a journalist, not a investor.  
Apr 23, 2013 1:31PM
What Apple needs is less talk like this, it's not only the people who run the Apple, it's the fact that they have an inferior product(s) compared to the competition and people are starting to realize that...
Apr 23, 2013 12:47PM
if apple decides to get "flash" added to their os i think it will boost everything apple owns!
Apr 23, 2013 12:40PM
Sorry, but as good as Apple is their user experience is not 2nd to none.  iOS UX has grown stale and behind the times. Software like iTunes are awful.  What makes Apple is the dedicated user base and the Apple is hip vibe. If Apple loses that then Apple will plummet even with the rock solid hardware.
Apr 23, 2013 1:59PM
Wow, so the author thinks Steve Jobs was a coder; software developer? You got to be kidding. Gates and Jobs were computer software visionaries but couldn't code their way out of a paper bag. Apple and Microsoft are doing just fine while Google gives away their socialist software.  You don't compete well with McDonalds by selling cheaper plastic chicken parts and ground road kill. In-N-Out knows hamburgers and Rocco knows how to flame and generate clicks.
Apr 23, 2013 3:59PM

Apple needs a visionary, because every other company does their products. better.   Blackberry did the Newton better.   Microsoft did PC OS better.  Samsung has now done the smart phone and tables better.


Why do you think Apple marketed Final Cut Pro?  So people would have a reason to buy a Mac.


Apple needs to make a car or an airplane, something where they are the only player in the market for years, because they clearly can't compete.   How about toasters?

Apr 23, 2013 3:07PM
Even though Apple has been the dominate innovator, people are tiring of proprietary nature of apple products. iTunes does not play well with other applications. Without flash, the iPad/iTouch experience is limited. Finally, other companies have brought out competative, less expensive, and better products. Samsung phones are very amazing and are excellent phones. The Windows 8 based tablets are more than iTouch's on steroids. The Windows 8  Pro based tabkets are flashe enabled full functioning devices that run the "apps" as well as full software functions. No doubt, the next iPAD will work as a full functioning devise, otherwise, it will become extinct. Apple has counted on the "kewl" factor and the stupidity of the consumer "needing" every single device update, instead of software updates. It has worked. But when folks realize they are spending "thousands" of dollars in a two year time frame for new hardware, it runs out of time. Apple may indeed continue to re-invent the tech market, and if so, will prosper. However, if it can't, the bottom has yet to be seen.
Apr 23, 2013 2:32PM
Typical business/stock writer, everything is all about the stock price.  I contend it has very little to do about the stock price, but whether the company is making money &/or making products or services people want.  Just like commodities like oil - these stupid speculators keep driving up the cost of oil and I contend there is nothing positive about $4/gal gas, it's a total drain on the economy and it makes everything more expensive.      
Apr 23, 2013 4:06PM
Apple has appeal to people with money.  It's hardqware/software is expensive and you have to play in 'their' sandbox.  To many users they are fine with that and they llike it.  To others, they enjoy having control over their environment so they chose non-Apple products.  I use both because I own/work for a software company but our main software is Windows server based.  To be honest I play games and look at the weather on the IPAD and sometimes read my magazines that I also receive in print.  But it will not replace flipping through the pages of Wired Magazine while I pay homage to the porcelain god!  LOL 
Apr 23, 2013 4:35PM
Most of you on here are nuts!!!! 54 billion in Revenue, up 17.7%, earnings $13.81/ share. Quit your gloom and doom Apple demise and go buy you POS Samsung and Rimm. See how far you get!
Apr 23, 2013 5:08PM
Does Pendola get paid for writing this crap!!.....

Sheep will buy Crapple.  Everyone else, with their own mind, soon realized that Mac OS is not superior in any way to other operating system.  Crapple just puts higher end hardware into their junk.  Spend $700 on any manufacturer's tablet and it will out perform any Crapple product.

Apr 23, 2013 5:11PM
They have $130 billion in cash in banks. Spend some of it on ideas. Spend billions on lots of ideas, like two cameras facing the reader and can be programmed to see when the reader reaches the bottom of the page and goes to the next page (I mentioned this idea to my wife before Samsung said the feature would be in the Galaxy 3 phone). The iPad-X could also follow your eyes to icons on the screen, you blink twice and the icon is considered clicked, and boots whatever program is associated with it. Focus on an object, blink 3 times, and move it by shifting your eyes to the place on the screen where you want it. How about a 4K screen that uses polarization such that you can view the screens in 3D without glasses? You can see buttons or other info at different depths, reach into the screen's 3D image and bring more important things forward or move them backward? How about the cameras doing a 3D retina scan of the owner, and will not boot if someone other than the owner has the pad?
Apr 23, 2013 5:11PM

What this journalist fail at is understanding that Apple's products are actually software. Anyone can draw a picture of a slick looking phone and conjure all kinds of slick features but can they write the code to make them function?  


Apr 23, 2013 1:32PM

Today, after the bell, Apple will release its' earnings reports. Then we'll see how good or bad, at least in the short term, business is at Apple. If EPS comes in higher than expected, you'll see a little increase in its' stock price. and if it comes in lower than expected, I believe that will cause much havoc with not only its' own stock price but the whole Nasdaq indices' as well since Apple is a still a huge component of that indices.



Apr 23, 2013 4:40PM
Just another ridiculous article predicting Apple's impending doom yet if Apple's TV arrives later this year and is the game-changer that everyone (but haters) is hoping for...What then?

I guess the iPod, iPad, Imac were huge duds? Dumb.

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