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Apple has slowly lost their way since the death of Steve Jobs. Tim cook has improved the finances, margins, and operations, but his visionary leadership is significantly lacking. Why is this a big deal?
Apple’s position in the market is one of leadership. People look to the company almost as a sign of the future and the products to come. However, when all that Apple is announcing is a thinner computer, a faster phone, and a better camera, people begin to wonder why they are still one of the most valuable companies in the world.
Amazon is working on drones to deliver packages, SpaceX is working on reuseable rockets, and Facebook is attempting to create an entirely different (virtual) social world. Apple, on the other hand, has had their glory days of shaking up the entire industry and are now in defense mode, rather than innovative offense mode.
Apple has over $250 billion in cash. This isn’t cash that has to go towards running a building or department, it’s cash that they have are just sitting on. With this cash, they could buy Snapchat, Priceline, Starbucks, Capital One, JD.com, GoPro, First Solar, Tesla, Netflix, Lululemon, Ford, Twitter, or even Disney and still have excess cash coming in from their actual operations. Just to understand how much cash they have, if we took only their cash, they would be the 44th largest country according to GDP.
The Obvious Options for Investments:
If you were to google “potential acquisitions for Apple” you will get these three recommendations for what Apple should do with their cash. People want Apple to go more into the TV service and content producing world. While this may be a good idea, every company is going for this and so it will lead to a bloodbath, something that Apple can handle, but could easily avoid.
Twitter – Apple is wanting to build a stronger TV service, but don’t have the social platform that Twitter has to distribute it. Twitter has lost a lot of value lately and people think that it’d be a great purchase.
Tesla – When they were thinking of building autonomous cars, this would have been a great purchase and, with Elon Musk on the team, they would have a visionary leader once again.
Disney – This purchase would, once again, be a strategic move to build up their television service. Disney owns Pixar, Marvel, ABC, and LucasFilms, which all have produced some great movies lately. Additionally, they own their own cruise line and ESPN. The cruise line will help them get technology in front of consumers on vacation and they could use it as a testing ground for new tech. ESPN would allow them to compete with sports streaming rights.
While all people think that Apple should compete in the TV business, I am not sold on that decision. Venturing into the blood bath with Hulu, Netflix, Amazon, and all other soon-to-be Virtual Reality platforms doesn’t look like the best use of cash.
Sadly, Apple seems to be leaning that way and this is why – they want to remain relevant in today’s society so they put their cash towards the “popular” technologies that are up and coming. Here’s the catch, Apple needs to be unique, but they are only wanting to be unique in the content that they produce, rather than the products that they launch (i.e. do what everyone else is doing, but with a slight spin on it).
Apple needs to be a thought leader and the innovator. But they are wanting to essentially be the slow bully that shows up late to the fight and wins it since they are the biggest one. Compare this mentality to Amazon and other tech leaders, which are the first into the industries. While this may seem cliche to say, a leader is the one that is first into battle and is willing to lay down their life for others, not the one who stands behind and comes late to the party.
The Not So Obvious Investments:
So if those investments are obvious and won’t put them back as the leader, what will?
WeWork – This is a co-working space that essentially rents out spaces to small companies, entrepreneurs, or freelancers. The acquisition would provide Apple a way to get even more into real estate, while staying in business realm. With WeWork’s plan to expand to travel, finance, etc. it could be interesting service build out for Apple. Or, Apple could take it a different way and start getting into apartments.
Leap Motion – With Apple’s mistake on not buying Oculus Rift, this would be there recovery. This augmented reality system boasts of incredible experiences and games to come. Apple could easily pair their technology with Leap Motion’s in order to up their phone game and make it revolutionary technology once again.
Next Transportation – As seen in the last post, this company is looking to not only take on Uber and Lyft in a means of ride hailing, but also public transportation. This would be an incredible move of Apple to get into the transportation industry, but also get their tech in front of hundreds of thousands of people.
An Island or Country – Really, a country? While it seems absurd, imagine having a country run as efficient as Apple? Furthermore, this would help companies and individuals realize that they could help the government more and build a utopia that a lot of tech CEOs want. Costa Rica and Panama have a total GDP of about $120 billion, which would allow Apple to buy them and then have another +$100 billion to design a new city, government, etc.
Each of these four investments will give Apple a leg up in the future industries or even possible future realities (in the case of #4). While they might seem far off, that is the exact thing that Apple needs to do – create the unknown or unbelievable a reality.
In conclusion, Apple has so much capital that they are sitting on they could really disrupt transportation, augmented reality, living, or even governments as we know it. Tim Cook will struggle to make any of these acquisitions, seeing that he tends to focus only on the numbers and not the innovation. But, by making this decision, not only will he change his risk-averse CEO image, but also bring the innovative reputation back to Apple.
Image Courtesy of Flickr user Mike Deerkoski via Creative Commons 2.0