The $100 Billion Dollar Apology

November 4, 2012 by · Comments Off on The $100 Billion Dollar Apology
Filed under: Business, Technology 

What do you do when you are the most valuable company in the world, you have a cult following your products even when you make huge mistakes like placing the antenna on the wrong place? You become arrogant.  The iOS6 maps disaster has really been a problem for Apple despite the fact that they have an amazing lineup of products.  Google has been improving the Mapping apps for years, so Apple decides to 1-up them for iOS6 and screws up big.

Granted, Tim Cook apologized to Apple fans a few days after.  It took Steve Jobs weeks to acknowledge the “death grip” and that didn’t even make the stock blip.  On the other hand, iOS maps has been more than a blip.  A few days after iPhone5 was announced, AAPL hit above $700 / share.  last week it dipped below $600 meaning more than $100B in market cap loss.  Granted, not all can be explained  by a lousy app, but a big chunk of it can.  Don’t get me wrong, I’m not saying that iOS6 maps itself is to blame for the whole $100B,  but it signals what Apple rarely does: screw up functionality.

As I commented here Samsung is starting to become a real competitor thanks to an aggressive product development lineup and a very, very different strategy. They are both vertically integrated, although in a different way.  Samsung fabricate the chips and make the displays Apple uses, but they don’t have the software ecosystem Apple does.  But with the new Galaxy III and Note lines, they are really, really whipping out outstanding products.  Thanks to Android, they have also improved, in this blogger’s humble opinion, the smartphone experience.

But anyway, Apple strategy is a few products, very well done,  not leaving anything to chance, whereas Samsung is a “shotgun strategy” by doing lots of products and then next generations of those who are successful.  Neither does marker research in the traditional sense, but they both know their markets well.  This product development strategy has worked well for both, but has hindered Apples ability to anticipate new needs, like larger screen on phones or smaller screens on tablets.  Apple has just matched Samsung’s successful lineup to a certain extent.

Another difference, again, in my opinion, is recognizing what they do well and double down on it.  Samsung is a strong hardware company and uses third party software to complete the products.  Apple believes they can do software better than anyone else.  That’s their DNA.  I guess Apple’s recent apology that automatically hides itself from users of their UK site kind of proves that.

Well, my loyal reader (singular), they were wrong.  Google Maps is years ahead of iOS maps and that is where arrogance played.  The $100B loss is not due to the maps app, but it is the market recognizing that Apple’s arrogance took the best of them in what could have been the best product they ever made.  I wonder how many consumers decided for Samsung when they were on the fence, just due to Map?   That is one of the most critical in a smartphone!

Now what will Apple’s most faithful followers do is, of course clear.  But since there are also rumors of Samsung doing their own OS this is all for grabs.  If that happens, it will render this blog totally wrong.  But in my defense it will not be the first or the last one like.