Apple's Problems - Bad to the Core? 56 comments
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The first quarter of 2008 was the most successful in Apple’s history. The company boasted revenue of $9.6 billion and a net profit of $1.58 billion, compared to revenue of $7.1 billion and a net profit of $1 billion in the third quarter of 2007. But its second quarter results were down ($7.51 billion in posted revenue and $1.05 billion in net profit) from the first quarter. Some people think this downtick signals the beginning of an unfortunate trend-line … or worse. I hope not. But there is certainly more going on here than meets the eye.
In the eighteen months since Apple dropped Computers from its name, the company has greatly expanded its reach. However, with massive growth have come security flaws, software bugs, faulty hardware and a plethora of other puzzling problems.
While Steve Jobs’ operation is known for its quality products and devoted fan boys, it seems that the company has compromised quality for growth. So much so that even Apple’s most devoted supplicants (like me) are beginning to lose faith.
While Apple has had small production problems for years, lately the company has experienced an eerily high amount of bad press for malfunctioning electronics. The major problems began with the release of its new Leopard Operating System.
While the system works great on new Macs (where it is pre-installed by the factory) users running older machines, who tried to make the update, experienced what can only be described as “the blue screen of death,” a complaint that gets its name from fatal crashes in Microsoft Windows. Days after the release of Leopard, message boards erupted with complaints from angry users, many of whom still pray at the Jobsian alter. But many of whom have long memories.
While the Leopard Chronicles were widely covered, the problems in Cupertino did not stop there. In fact, they actually got worse, culminating with the release of the 3G iPhone.
Apple has been promoting the new iPhones as “twice as fast, half the price.” But are they? Not so much. While the hype for the 3G iPhone was ungodly, the phone also received a fair amount of bad press from pundits who noted a significant increase in the cost of data and lackluster battery life. Regardless, the 3G iPhone sold over a million units in its first weekend on the market.
That same Friday, July 11, Apple decided to open its Application store, launch MobileMe (an updated version of its .mac platform, which includes access to a broadband cloud), and release a software update for the original iPhone.
iPhone 1.0 users were vocal about the problems associated with the software update, which caused many iPhones to become plastic bricks. A quick Google search for “iPhone Brick” will yield 2,080,000 results from very sad iPhoners. No matter how you spin it, Apple was unprepared for the launch.
Nothing has been more indicative of Apple’s growing pains than its ultra flawed MobileMe service. The service, which was a large update to its existing .mac platform, has been universally panned. One of the talked-about problems with MobileMe was that a small percent of users lost email service for a few days. The problem was so serious that a colleague of mine got an email from his girlfriend last weekend while sitting on the beach next to her. Puzzled, he asked her if she had just sent him a message from her iPhone. She said, “No.” He showed her the email. She barely recognized the message because she had sent it a week earlier. This was last weekend, a month after the initial problems were reported, and reportedly fixed. The service has been so bad that Apple even publicly stated that its performance has been sub par, and has given subscribers three extra months of service for free. But what good is three free months if the service doesn’t work properly?
Apple’s problems don’t stop there. The company announced that they would replace iPod Nanos (which caught fire) and MagSafe power chords, which broke or melted. Speaking of fire, the company also had a major problem roughly ten days ago when a fire erupted at its Research and Development building on the grounds of its headquarters on the infamous 1 Infinite Loop campus. Small disasters, to be sure, but when you add them up, you begin to see a pattern.
With rumors of Jobs’ declining health, security bugs, the options backdating scandal, engineers canceling appearances at hacker conferences and the continuing saga of 3G iPhones’ awful performance on AT&T’s 3G network (including this week’s pending class action lawsuit citing poor iPhone performance), Apple cult members are in a tizzy. Will the Street be next?
Can the House of Jobs get back on track? Despite major problems in the last 18 months, Apple still tops the ACSI’s customer satisfaction survey — ten points higher than closest competitor, Dell. And sales are robust. Apple shipped 2,319,000 Macintosh computers which represented a 44 percent growth in units sold and a 47 percent increase in revenue for the quarter year-over-year. iPod sales were up five percent in units (22,121,000) representing a 17 percent revenue increase year-over-year and, the faithful purchased 2,315,000 iPhones during the same quarter. Nice numbers.
So, to paraphrase the immortal words of Donnie Osmond, “One bad apple don’t spoil the whole bunch, girl. Oh, I don’t care what they say, I don’t care what you heard.”
Disclosure: No positions
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This article has 56 comments:
www.reghardware.co.uk/.../
Therein lies the truth.
Trolling for hits here?
Whenever you have new products...OR ... old products. Some will have problems, some won't last, some will need replaced.
Contrast the LOVE that consumers have with APPL, to the FUD you are spewing in this article. Do you REALLY think that people would be this passionate about Fords, or Dells? No. People know that they are cheap crap, and they live with the problems, KNOWING that they bought cheap crap.
With Apple, they expect PERFECTION, and when that doesn't happen, they bitch and BITCH and MOAN.
Eventually the problems are fixed, replaced, or repaird.
And they BUY THE NEXT Apple product, some even standing in lines to do so.
Then they have the FUN of bitching AGAIN that the newest product or service isn't PERFECT.
See, they expect PERFECT, with the DELLS and HP's, they expect crap.
If you cannot reconcile your whinefest with this, you have written an article without honest merits.
>>>>Apple still tops the ACSI’s customer satisfaction survey — ten points higher than closest competitor, Dell. And sales are robust.<<<<...
That is really the be all, and end all, isn't it?
"The company boasted revenue of $9.6 billion and a net profit of $1.58 billion, compared to revenue of $7.1 billion and a net profit of $1 billion in the third quarter of 2007. But its second quarter results were down ($7.51 billion in posted revenue and $1.05 billion in net profit) from the first quarter. Some people think this downtick signals the beginning of an unfortunate trend-line … or worse."
It seems difficult to take this article seriously. Isn't the first quarter the holiday selling season? And the second quarter is Jan 1 - Mar 31? Does the author just totally dismiss this?
No doubt with greater volumes comes more glitches, but overall, in terms of quality can one realistically say that Apple products exhibit significant issues and they are rotten to the core? That's a huge stretch. Puffy piece here.
cheers!
second i have an 850 dual g4 running leopard with out a crash EVER as well as a first generation mini there are a lot of idiot users who screw with the main libraries and have crash problems or have stupid things like pram batteries from the year one going bad and their clocks and dates are always different messing with directories. people do not know these need to be replaced every 5 years or so
dragging out the health issues at this point is just ignorant the only thing you left out of this laundry list was Gil Amelio allowed too many motherboard designs to be produced at once.
i wish you were bright enough to pull off a hatchet job like this
heres an idea (since you apparently have none of your own) for your next article
"Apple sells too many computers and phones in the back to school season, record profits will be difficult to top by christmas is this the beginning of the end for jobs?" or " piles of money at Apple causing dangerous stress on floors of company vaults"
Just unbelievable what people get paid for. You call yourself an analyst!
More like ANAL ist! Like in you have your head so far shoved up your back side your blind to what is really going down in the tech world.
iJah420 says your FIRED!!!!
Apple still tops the ACSI’s customer satisfaction survey — ten points higher than closest competitor, and yet your article starts out saying Apple is bad to the core and here you contradict your own article with documentation that Apple has great customer satisfaction rates, would the satisfaction rate be high if Apple had serious problems.
As a prior person stated Apples problems wil eventually be solved.
Another thought. Apples march quarter reported $1.16 however if you include the deferred income Apple's earnings would have been $1.45, approximately 25% higher. Those who complain about Apples high PE should consider the deferred income when calculating the PE for Apple which would yeild a much lower PE.
Read this link to the AAPL Manifesto, which I found on the web. It explains the Apple Stock in detail better than this "Seeking Alpha".
web.me.com/filmflamtv/...
muddlinginvestor.blogs...
To all flamers: I bought Apple stock in 1999 and 2000. Probably before you knew about the company at all.
Disclosure: long AAPL.
Well, S&P does have this as a sell...
"Bad to the Core"... How fricking original. Send this FUD peddler back to the loser table in the high school cafeteria.
AAPL users are by far the single biggest reason to avoid their products all together.
Anyway, another typical article fanning the flames of those looking for a chink in the armor. EVERY other business in Apple's field wishes they had their 'problems'...
If you want an example of how bogus this whole article is, look no further than this paragraph.
The fire was apparently caused by some welders installing a new AC unit. The second floor of a building about a mile away from 1 Infinite Loop was affected. The building houses mostly internal support staff. Anyone with 30 seconds could pull up a heap of San Jose Mercury articles covering the whole thing.
Trying to extrapolate that into "major problems" in its "R&D building" is really showing how gullible or perhaps outright malicious this blog author is .... naturally, the rest of his article is riddled with factual holes and wishful thinking too.
This article is one of the worst I have read, and I read too damned many of them... It's all FUD. Major problems for Apple in the past 18 months? You kidding me? You wanna see major problems, look at the PC industry (not including Apple). Cash that check from Bill Gates and Michael Dell before they go bankrupt. :-)
Back to work...
For the record, the "issues" with the iPhone 3G are not entirely with Apple, but with the poor technology of AT&T. Apple only made the phone, but the service, and such are with AT&T, they provide the network.
Secondly, if you look at the percentages that Apple has with their products in the industry, compared to others, they are by far above.
This writer is simply trying to make a catchy headline and fill peoples heads with crap. As with ALL technology, some people are able to operate machines easily, and others have problems, this is the case if they are using a Mac or PC, it just the way it is!
Lay off Apple, bash on Microsoft once in a while for its crappy OS. I have several Mac's and 1 PC, I have more problems with my PC than I EVER had with a MAC!!!
Oh, and I thought it was typical of AAPL to have a down quarter to quarter almost every year, but the down quarter has always been up good year over year. The down quarter ends up being "off season". Hardly a reason to be concerned.
A good day to buy the stock though.
There is no logic nor rhyme in here. One or two more such articles and Seeking Alpha will be on my block list for it's not worth my time.
Nothing to see here. Move along.
Disclosure: LONG on both stock and products.
This weekend I saw a Toyota Camry on the side of the road and it was on fire. Hey, one Toyota on fire and ALL Toyota owners are at mortal risk, right? Does this mean that Toyota has lost its way? Apparently it does in Shelly's World. Tin hat, anyone?
Yes, one class action lawsuit proves that Apple has a major problem. Gee, an ambulance-chasing profession (lawyers) that might be a tad tempted by a $20 billion cash pool. I would never have thought it. Particularly when the idiot customer filing the suit had 30 days to return the product, no questions asked. (This isn't a relative, is it? The IQ-resemblance is remarkable.)
I am willing to concede that Apple may be releasing products before they are ready for prime time. However, Apple has proven time and again that while there may be initial-release issues, they DO get it fixed in short order. Example: OSX 10.5.0 was buggy when released on 10/26/07 --- some could not even install it. 10.5.1 was released 3 weeks later, but it was still buggy. Those disenchanted with Leopard, at this stage, simply stuck with Tiger (10.4.x). With 10.5.2 on February 11, Apple got it right, fixing most of the major annoyances with the original release. Since then we've gotten 10.5.3 on 5/28, 10.5.4 on 6/30, and 10.5.5 on 8/19. Five major updates (and one more rumored on the way in a bit) to the major release, all in the course of 10 months. Result: Leopard is now a magnificent OS and is finally all that it was touted to be. It was quite good and acceptable with 10.5.2 and has only gotten better since. I find Apple's update pace to be exceptionally good. How many updates has Vista had in its 21 month existence? I count one. (But gee, Vista works so well that it doesn't need any sort of update. And to prove it, why not launch a $300 million ad campaign to convince you of it?)
We see a similar level of support with Apple's iPhone firmware. Released on June 9, we are have the second update in the intervening 11 weeks. Yeah, Apple should not have released it when they did, but their record of updates already tells me that they're in the shop working on it. In Steve we trust.
Is there any wonder about the millions of hits for "iPhone brick" with the first iPhone when all but this foolish .... author? .... knows that a very small but very vocal group of hackers made a very public attempt to jail break their phones? And broke them in the process (aka "bricked them")? Two million iPhones were bricked? Because of this gang of software vandals, Apple was "unprepared" to release the original iPhone? Are you really that dumb, Shelly?
(Incidentally, if you do a quick Google search for "Shelly Palmer idiot" you get 13,000 hits. If it's of any consequence, "Shelly Palmer moron" only returns 4,350 hits. I guess you're more of an idiot than a moron.)
And of course, my favorite: "security flaws." That always gets a headline, doesn't it? Care to name just one Mac user whose machine was corrupted by such a flaw, Shelly? Just ONE. I don't want some purported hole where if one group of security experts did this and then got me to go to this page on that browser using that guy's 3rd party driver, all at a conference specifically convened to attempt to do this task (they couldn't do it, I should add). Just one "John Smith from Scranton, PA" who has had his Mac violated .... oh, I dunno .... in the last five years. Come on, Shelly, the list must be HUGE .... you can name just one guy, can't you? (Crickets chirping.)
Yes, millions of happy, loyal Mac customers (fanatics, actually) and exponentially growing daily. How can markets speak so loudly but not hear your learned pleas, Shelly? Frankly, I'm surprised that your iTunes playlist got Donnie Osmond mixed in with your Milli Vanilli standards.
I've seen a lot of remarkably bad blogs in the last year, but this one takes the cake as the worst of the worst. After reading your bio fluff piece, if I could name my response it would be "National Academy of Television Arts & Sciences: President's Upstairs Office Vacant."
I've used Apple computers since 1984. I also owned an XP Fujitsu tablet for a couple of years. In summary, the Fujitsu had been out of service (due to Windows software clitches) for more time than my entire 22 years worth of countless Apple's. The one Mac I did have problems with was replaced after a less than 5 minute call to Apple. The only other spent a day in the shop.
No one likes problems like Apple has had lately. But they are insignificant within their competitive group.
So, where you gonna go? Nowhere but with the best and that's Apple. In six months all will be forgotten.
as for the comments - most idiots are blind to the obvious and there is no better idiot than the consumption obsessed morons known as the general public
I'm having problems with my Treo 700 on Sprint and looking to switch to iPhone, but until it's clear that Apple has fixed the 3G iPhone, I'll sit tight.
The .Mac to MeMobile transistion has been a fiasco. Fortunately, I've been able to work around it, but MeMobile is much more difficult to use as a backup drive, because it has problems transferring several files at a time. I also think its documentation is shallow and, generally, unhelpful. When my seldom-used $400 iPod died, I didn't replace it.
I'm waiting for the next generation of iMacs and MacBook Pros before I replace my 5-yr-old iMacs. My 18-mo-old HP Pavillion laptop is ok, but I prefer my wife's MacBook Pro when we're on the road.
I couldn't care less about the drama around Apple. However, it's amusing how much interest this painfully uninformed and amatuer writer gets by virtue of its brand. The price chart (representing supply and demand) gives me all I need to know.
Besides, why pay twice as much for a Mac? I havne't had any problems with my PC since XP came out.
I've been on pc and macs (apple) since 1985, and I know the woes of both. The 'mac is more expensive' argument hasn't held water since 1998 - but what does hold water is reliability and after-sales-service... something DELL capitalized on in the 90's, and also something AAPL systematically approaches. How well they maintain this facet of their operations in the face of growth is a key factor in holding their long position.
However; watch for movement in the iPhone similar to what happened with iPod once market cracks and hacks force production changes (replaceable battery, flash ROMS, etc.) then AAPL, following any range drops (wcs: $110 - $140 lows), could be in for a sweet ride over $200. The laptop division has yet to meet the small design challenge put up by Sony, etc., but is on it's way, with AIR being a transition to "the design and lifestyle package" Jobs has envisioned.
I just don't see any other individual competitor offering consumers a package and AAPL may well end up being the 'bigbox-onestopshop' for a range of personal and
home designer goods few else can offer. And they have really yet to expand overseas in a serious way.
So, now all they need is a toaster, coffeemaker, blender, fridge, and oven to sync with iTunes and they will be set for a mindless, wireless, cookie-around-the-neck surging experience where they can cash-in on an industry swirling in directionless products.
They are one of the few "interesting" companies in the pool. One day the romance will end, but in the meantime they have a chance to dance. Should be interesting to see what they do.
...oh, I skipped Panther and Tiger entirely on my old 12" G4, but Leopard runs sweet. Skipped the iPhone and iPod, too. Skipped Vista, too. But I also skipped breakfast in order to write this and I'm not going to skip lunch.
;o)
The vast majority of this article is simply made up and/or exaggerated. Apple and Steve Jobs aren't perfect - remembering the round mouse - but 9 times out of 10 when I think I disagree with something they do, I have to admit later they know their business better than I do. Imagine that.