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Cringely's Final Predictions: Apple Becomes a Financial Service and Hedge Fund (cringely.com)
For 22 years technology writer Robert X. Cringely has been making predictions for the year to come -- but this year may be his last. So at age 66, he's promising his 2019 predictions will also "take a look out several years...because I sense the tech industry about to enter an unprecedented correction."
And last week he unveiled his first prediction -- that Apple under Tim Cook "emulates GE under Jack Welch.... Jack Welch took GE into financial services in 1981, transforming the company and increasing its market cap by 4000 percent over his 20 years. "
Tim Cook has already started in 2019 along the same path forged by GE's Jack Welch back in 1981. This strategic shift started to show just this week with Apple directly financing iPhone sales in China and announcing an Apple credit card with Goldman Sachs... Look for Apple to start financing lots of things in 2019. Remember your car dealer would rather lend you money than have you pay cash for that ride because financing is its own profit center. So iPhone prices will continue to rise, but iPhone payments will probably decline as Apple cuts out middle men and efficiently sucks-up that aspect of the phone supply chain. This is how Apple will arrest iPhone market share declines -- by assisting sales and making even more money in the process.
I expect Apple to not just make strategic investments, but participate in strategic financing as well.... What Apple is probably closest to becoming is a hedge fund -- a very big hedge fund in fact. Apple's available financial power is approximately equal to that of the world's two largest hedge funds -- Bridgewater Associates and AQM Capital Management -- combined. So when someone tells you Apple is in decline or doesn't have a clue, they are wrong. Apple will continue to compete in its established technology markets as well as new ones. But Apple has also found a $200 billion hobby that will keep it growing for the next decade no matter where the Information Technology market goes.
Cringely notes that services "are more profitable than hardware." But Cringley has always been gracious about entertaining other opinions. In 2000 he answered questions from Slashdot readers, and last week he reminded his readers again that as technology completes its next great transitions, "I'd really like to hear your thoughts, too."
As dramatic changes (including AI) kick off what may be a new 50-year-cycle, "Everything is changing and nothing -- nothing -- will ever be the same again. I hope that's a good thing."
And last week he unveiled his first prediction -- that Apple under Tim Cook "emulates GE under Jack Welch.... Jack Welch took GE into financial services in 1981, transforming the company and increasing its market cap by 4000 percent over his 20 years. "
Tim Cook has already started in 2019 along the same path forged by GE's Jack Welch back in 1981. This strategic shift started to show just this week with Apple directly financing iPhone sales in China and announcing an Apple credit card with Goldman Sachs... Look for Apple to start financing lots of things in 2019. Remember your car dealer would rather lend you money than have you pay cash for that ride because financing is its own profit center. So iPhone prices will continue to rise, but iPhone payments will probably decline as Apple cuts out middle men and efficiently sucks-up that aspect of the phone supply chain. This is how Apple will arrest iPhone market share declines -- by assisting sales and making even more money in the process.
I expect Apple to not just make strategic investments, but participate in strategic financing as well.... What Apple is probably closest to becoming is a hedge fund -- a very big hedge fund in fact. Apple's available financial power is approximately equal to that of the world's two largest hedge funds -- Bridgewater Associates and AQM Capital Management -- combined. So when someone tells you Apple is in decline or doesn't have a clue, they are wrong. Apple will continue to compete in its established technology markets as well as new ones. But Apple has also found a $200 billion hobby that will keep it growing for the next decade no matter where the Information Technology market goes.
Cringely notes that services "are more profitable than hardware." But Cringley has always been gracious about entertaining other opinions. In 2000 he answered questions from Slashdot readers, and last week he reminded his readers again that as technology completes its next great transitions, "I'd really like to hear your thoughts, too."
As dramatic changes (including AI) kick off what may be a new 50-year-cycle, "Everything is changing and nothing -- nothing -- will ever be the same again. I hope that's a good thing."
Well, I guess since Tim Crook is terrible at technology this is a good course for Apple. I just hope for the sake of everyone they stop making their awful products. It's been long enough under Tim Crock that Apple is unlikely to ever innovate again.
Ah good old Cringely. I remember the days when Slashdot had a man-crush on him and would post every article he wrote like a besotted schoolboy. Of course that was Apple pre-iPod and wasn't the juggernaut they are now; they were Slashdots underdog darlings going up against the "evil Microsoft".
This is the link to the actual post by Cringely with the Apple prediction: https://www.cringely.com/2019/...
...they're certainly not gaining points through engineering and innovation lately, that's for sure.
Bob's predictions haven't been right all the time. But never at 50-50. More something like 75-25 or even 80-20.
The good part of Bob's predictions is how acute and sharp he's been so far.
And not just the predictions, but also any other piece he'd added to his blog (or whatever else you define it), one or a kind.
Going far beyond the pure appearance and surface, adding thought value by interconnecting news and facts from different sources and, of course, putting in a good dose of his own sharp intelligence.
I would suggest anyone how likes seeing things under a different light and yet getting most of those right, go heave a deep read to that blog.
It's worth every single information bit.
Sent as ripples into the electromagnetic field. No single photon has been harmed in the process.
“Assisting sales”, financing phones, or even dramatically lowering their profit margins is in itself not enough to arrest the decline of market share. Apple needs to offer compelling reasons for us to not buy Android, the mobile OS that everyone else is using. Switching between OSes is a giant pain in the rear, so they have some leeway there, but if Apple hardware, their OS, their services and integration with other services start to lag behind, people will switch and likely not come back. Having a walled garden is a liability if you do not take good care of it: most people (myself included) know the walls are there but we cannot see them for all the lovely trees in the garden, but Apple hasn’t been watering and trimming them very well lately, and things are starting to look a little shabby. And there are a couple of very good Android phones out there these days; time perhaps to move to greener pastures.
Google seems to better understand how to care for their ecosystem, not just the core OS but all the services around it: mapping, translation, voice recognition, and so on, all top of the bill stuff. Apple’s services are also-rans. If Apple doesn’t keep up innovation and doesn’t invest some of that vast capital into making their ecosystem the very best, sales will decline. And that means Apple will decline as a tech company. Even with billions in the bank. Same as the guy down the street running a video rental store; he made a killing back in the 80s and saved enough to comfortably retire on, but he keeps the doors to his shop open. Good for him, but I wouldn’t exactly consider him a relevant factor in local commerce.
If construction was anything like programming, an incorrectly fitted lock would bring down the entire building...
0%. Apple is trying to get people to buy devices, not create a financial powerhouse.
Apple has lost its mojo in the loss of Steve Jobs, he was not only a visionary but also a great salesman for Apple products. I can't get through a Apple event anymore without thinking how boring and uninspiring they are without Jobs. Apple is another Sony who ironically was a company who copied Apple to being a electronic maker who also was thought of as a premium maker of technology. Nothing inspiring about Apple anymore, and I doubt ever will be.
In Brazil, things don't really have a price... Well, they do, but the price of things, especially electronics, is utterly unreachable by the common man. So, what they do is they put the price in tiny tiny print, but the big font is the monthly payment. That's how people buy things in Brasil - by the monthly payment. It might be 6X or 12X but usually it's short term, but still a very high payment and interest rate.
With cell phones getting in the over-$1000 range, we can expect similar market shifts.
Apple will license its brand to Chinese / Vietnamese appliance manufacturers and we will soon see Apple branded hair dryer, Apple branded toasters, Apple branded carpet cleaner, and then Apple branded cat food.
As per tech giants, Google, Facebook, Netflix, Microsoft, Amazon will end up like AT&T / Verizon / Sprint of the telephone/net provider, or Sony / Paramount / Universal of Hollywood, doing the same half-dead thing, over, and over, and over again, and yes, they will also be overcharging the consumers in the process.
As for innovation in 20 to 50 years all meaningful innovation will be from China, India, Brazil and Vietnam.
loan sharking. Apple will become a huge loan sharking operation that uses their phones to get into your wallet (instead of the more traditional sports book). How else is Apple going to get people to spend more and more on new phones? They're already over $1k. Right now ATT and Verizon are capturing all that revenue. I can't imagine they are going to be very happy about Apple's moves to take that revenue from them.
The same thing is happening in many industries. Corporations are buying up individual and group owned dental practices and doing a lot of advertising on TV. Under their careful and care-full management, many, many more people get the dentures they "need" for "affordable monthly payments". A word of advice: if you spend more time talking to the staff about financial arrangements than you do with the dentist, find another dentist.
up until chapter 11 it was one of the largest health insurance companies and a bank that just happened to make cars.
when the hardware becomes a commodity and profit margins drop, you suck up all the money spent around your hardware
APK kicked the living crap out of you slashdot assholes https://it.slashdot.org/commen... showing everyone how fucking stupid you losers are.
Every single company that decides that "services are more profitable than productivity" eventually fails big and has to correct.
I've worked for GE, Honeywell, and a couple of other fortune 500s, and each time I got to witness the destruction from the inside that comes from the CEO and board deciding that they want to be a services company rather than a company that makes things.
I got to witness the wholesale destruction of jobs as each company outsourced those services to low-cost countries and had only a staff of "front men" in the US to pretend they were the competence behind those services.
It worked great until their customers realized they could just outsource those services themselves and not have a middleman.
What Apple looks like it is trying to do is lock its stupidly hyper-loyal fanbase into a cycle of insurmountable debt, turning them into modern-day digital sharecroppers. "Sure we've raised the price of our phones to $1200, but we'll finance it at high rates and a term longer than the lifetime of the product, and when it dies and you need a new one, we'll conveniently refinance the rest of the loan into the loan on the new phone. And oh by the way, if you don't buy a new phone with this convenient rollover financing, you'll have to pay off the note on your dead phone in full right away because we've lost our security."
Predatory lending at its best.
GE is a shambles of the gigantic manufacturing company it once was. Jack Welch is now regarded as a big, big part of that problem. So when Cringely predicts Apple will be ok because of following down the path of GE, that doesn't make sense. I don't think any company would want to go through the downfall GE has faced in the past several years.
I hate to break it to you, but Apple isn't GE and we're not in 1981. In the age of information and interconnected, you really hope Apple is able to make a stride in the financial business? Only if they invest (read: waste) billions and billions of dollars buying up all the fintech and spending billions of dollars trying to gain a position in the banking industry. Apple is simply out of depth here, 1981 is long gone and Apple is no GE.
I liked reading Cringely when it was really him on InfoWorld, not the cheap imitators.
> and announcing an Apple credit card with Goldman Sachs
My grocery store chain has a credit card too. So does that mean they're a financial services company too?
> Jack Welch took GE into financial services in 1981, transforming the company and increasing its market cap by 4000 percent over his 20 years
And then lost almost all of it when people stopped being enamoured with a single number on the quarterly reports. And I'm sorry, but Tim Cook does not inspire the same sort of loyalty among money men as Jack Welsh did on his worst day. Sturm und Drang is not his thing.
What are his predictions doing on the first page? He is wrong most of the time, and then he cheats next year when he awards himself "I guessed it mostly correct", lol. His predictions are a big joke. Ask him about Minecraft though :)
Goldman is overrated, and the people who partner with them usually end up losers. Goldman is like the IBM of finance.
So good news for my Apple stock, bad news for my desire to buy a worthwhile replacement for my 7-year-old MacBook Pro.
At this rate, I'll be calculating my Apple stock dividends on a Linux laptop a couple of years from now.
This makes sense to me - If you look at Apple.com right now you already see lots of financing offers for their products. Seems to be a new focus that they've borrowed from car dealers.
Unlike me, who just bought a refurbed Galaxy S7 for couple hundred bucks cash, very few people I know with high-end iPhones plunk down the thousand bucks to buy them new - They finance them through their wireless carrier under contract and then replace them every three years, repeating the process. Seems to me that's prime pickings for financing revenue that Apple is leaving on the table - Both interest and profit margin on the phone.
Add in the fact that Apple is easily able to put forced obsolescence into the phone via iOS upgrades, and a strong user base and it seems to be win win.
The downfall of Sears began the day it sold off it's credit card business.
Sears was multiplying the profit it made on every washer and dryer sold with the Sears credit card. For many families they could get a washer and dryer put on the card, and the monthly payments would be less than going to the laundry mat, so it was a win/win for everyone.
That argument might be viable if Apple wasn't still actively supporting phones first sold back in 2013. No Android phones that old still get updates. Most don't when they're even half that old. Apple COULD do the route of forced obsolescence, but they've found that a long support life means high resale value and a larger installed base.