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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."
...they're certainly not gaining points through engineering and innovation lately, that's for sure.
“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...
I have a really fat 50 year old business book (over 3100 pages) and the end part of it basically suggests that once any business has enough financial leverage / savings that it's best to just get into financing/lending/banking, period.
So, once you amass enough money that paying someone else to shove it in their mattress becomes irresponsible from a financial standpoint, you get into the mattress business.
Seems logical enough to not validate this as some kind of magical "prediction", and more like common sense and business investing 101.
This has far less to do with a company dying on the innovation vine as it does leaving money on the table by not participating in the financial sector, especially when you have the funds to back it. Doesn't matter if you're making a popular smartphone or rubber dogshit. Get a business big enough, and you will up in banking, because it's a solid revenue stream.
Why not? Apple could start leasing their phones out, with or without data and voice plans attached. Minimum contract 18 months / 2 years.
It's probably the only way some of their poorer customers could afford the expensive new shiny things they crave.
It could be a (financially) clever move.
That is because his "predictions" are for things that have already happened. For example he "predicted" this last year:
"The H-1B visa problem will NOT go away. Immigration reform will have little actual effect on H-1B visa abuse".
Oh wow. Massive prediction there from 2017. Here is MY Prediction for 2019: "The H-1B visa problem will NOT go away. Immigration reform will have little actual effect on H-1B visa abuse"
Everything he listed is a multiyear issue. Completely idiotic.