In case you didn’t know, Apple’s doing really well. With net margins near 25% – pretty good for a company making most of its skrilla on hardware – and incredible popularity, it seems that Apple can’t do any wrong. Today, Apple released new Q4 numbers that were, just like last year’s, disappointing by measure of most analysts. Like any best-intentioned company on Wall Street, Apple’s stock price is levied on the expectation of never-ending growth and ever-accelerating performance. In a post-Jobs era, how long can it last?
But something happened when Apple reported their Q1 2012 numbers, the quarter immediately after their disappointing pre-holiday round: they not only beat expectations, they shattered them, selling record numbers of iPads and iPhones, their first quarter with the delayed 4S on the market. Now a year later, if Apple can’t beat even those numbers, what does that say about the pace of the company going forward?
Steve Jobs Pushed Forward, Tim Cook Is Holding Steady. Jobs was a product guy and he was adventurous in his pursuit of new markets to steer Apple into, most of the time to great success. What we’re seeing now is a story of iteration, one that Cook just can’t push as hard as Jobs could with his ‘reality distortion field’, and a story that Apple is fine with an operating system that is becoming increasingly stale and hardware that is merely +1 to previous devices. Devices can only get so thin, displays can only get so dense, where is the next big Apple move?
Apple Is Looking To Sacrifice Profits To Expand. The new iPad Mini, with a smaller, almost-eight inch screen will on the market soon, but Apple will be eating more margin on this than before. While the physically smaller Mini will be sold at nearly $180 less than that of its bigger brother, and the components won’t be quite as daring as even older iPads, the bill to make an iPad Mini isn’t shrinking proportionately. Therefore, just as Tim Cook announced on the company’s earnings call today, the iPad Mini will arrive with below-average profits for the company. That’s a win for consumers, but if moves like this are indicative of where Apple’s going toward, the crown may slide right off their narrowing head.
The world will, of course, be waiting on bated breath to hear the new Apple narrative.