It’s true that Blackberry is the best match to corporate infrastructure as it exists today, and touch screen or not doesn’t change its supremacy there. As I keep saying, Apple does not need to confront anyone in their core market. iPhone is Apple’s first step towards the infrastructure of the future. Apple neither wants nor needs to tie itself to obsolescent and parochial infrastructure just because someone else is making a good living at it. Apple will leave that to third parties, just as they leave TV tuners to third parties.

Missed Opportunities

Even if there are not a lot of actual red flags and roadblocks out there for Apple right now, there are plenty of opportunities that Apple has missed, due, it seems to me, to Steve Jobs quirks, much as we all admire him.  My top 3 Apple misses:

1)  Games.  If Steve Jobs had even the slightest interest in computer games, there would be much more in the way of games not only for the Mac but also the iPod/iPhone.  Games are a huge driver of purchases for large segments of the target market, and a moderate driver for ever a wider audience.  Apple should use some of its cash to either acquire a gaming company, or build one from scratch.  Imagine if there were some breakout awesome games just for the Mac platform.

2)  Movie Rentals.  Perhaps this is coming in 2008, but why didn’t it happen in 2007?  Just about everybody has cut broad rental agreements with the major movie studios.  If Apple did so, it could have made AppleTV more compelling for a lot of people (by the way, I use my AppleTV nearly every day, its a huge hit if Apple can get enough good video content to the platform, rental or purchase).

3)  Advertising.  Steve seems more interested in taking shots at Microsoft than touting his own products.  The ads are funny, and do have some impact, but I question whether Apple could drive even more sales if they showed people actually using iLife, etc.

Maybe I’m getting greedy.  AAPL is doing just fine without the company grabbing every opportunity.  But when you are trying to claw your way back to substantial OS market share, you should make the most of every chance you’ve got.

Games - agreed - maybe the right opportunity hasn’t come up. The games publishers probably ask for a lot of money to port the games, which even then would be second best to the Windows version, and the market may be moving towards dedicated consoles for all but the addicted. Boot camp brings the Windows games anyway.

Movie rentals - not for want of trying, I think. Apple wants certain use rights and probably pricing to do it, and the Studios are frightened and imagine they might succeed without Apple.

Advertising - MS has a monopoly. I suspect most people think Microsoft invented windows and icons, word processors and spreadsheets, web browsers and mail programs, and do not naturally give themselves mental “permission” to buy anything else. It takes heavy handed coverage to shift entrenched attitudes. You don’t see Apple taking shots at MS in iPod or iPhone advertisements. I think it’s calculated rather than obsessive.

Thank you to everyone who has contributed to the topic. The insights are helpful.

I reply to the original post.  But like Tommo, I wish to do so in context.  My normal case was expressed a couple of weeks ago when I posted my strategic observations .

But if I must find a snake in the wine, it is government.  The biggest threat to Apple’s success in the next 5-7 years is government.  In the U.S this manifests itself in the possibility of crippling tax increases or protectionism.  The economy is resillient, but very much not immune to political train wrecks.  In Europe the threat on the table right now is the courts over regulating how companies can do business with each other, though taxes and trade issues could pose threats there too.  In China the visible danger is that government will not protect intellectual property; other less visible dangers also likely lurk.  And make no mistake, those competitors who are losing will do all they can to get the government everywhere to help them fight those who are winning.  Include plaintiff lawyers in this category, too.  Patent lawsuits, class action stickups, etc. are always a threat to tech companies.  Just ask Rim or Qualcom.

It will certainly be challenging for Apple to prosper in the music business of the future, but they are best postioned of any company I can think of.  When disruptive change is taking place in a business, the advantage goes to those with capital, brand, and ability to innovate.  It is also an advantage to be fearless.  Nonetheless, risk is high.  Mistakes will be made.  New players will emerge.  Success is far from certain.

Good thread.  Interesting discussion.  Thanks to all.

You guys have nailed a great many of the key risks, though I’m surprised there remains one glaring omission…

Unless we’re all falling victim to the hubris risk, I think we all do tacitly realize that there will, someday, be a Mac virus. Not some FUD-based lab-hatched not in the wild virus, but a bona fide, MS-quality, sh*t we’ve gotta fix this AND FAST sort of virus.

When that day comes, the stock will no doubt plummet at least 10-15%, and Steve Ballmer’s face will explode with glee. Depending on the severity and prevalence of our security issue, the stock will no doubt recover over time, but there will still be a chink in our armor. One of our biggest switching incentives will come to an end and although we will likely lose few who had already defected to the Mac camp, the en masse exodus from other OSes will likely slow. Obviously the later this happens, the better. It could be next year, it could be the year after. I for one am hoping for 2012 or later.

But I think we would be deluding ourselves to think that we will be impenetrable in perpetuity, and not acknowledge that this seemingly inevitable dark day will mark the end of much of what separates “us” from “them” in the minds of many.

MacGuffin

[quote author=“MacGuffin”]Unless we’re all falling victim to the hubris risk, I think we all do tacitly realize that there will, someday, be a Mac virus.When that day comes, the stock will no doubt plummet at least 10-15%

That doesn’t really count as a quantifiable risk in my eyes, nor a serious concern with regard to the stock. A virus is the least of my worries

The virus threat is like the hedge fund threat. Both are short term aberrations that don’t alter the fundamentals. In a perverse way some may see the OSX virus as a coming of age and afford the operating system a little more respect.

Advertising - MS has a monopoly. I suspect most people think Microsoft invented windows and icons, word processors and spreadsheets, web browsers and mail programs, and do not naturally give themselves mental “permission” to buy anything else. It takes heavy handed coverage to shift entrenched attitudes. You don’t see Apple taking shots at MS in iPod or iPhone advertisements. I think it’s calculated rather than obsessive.

And you can’t ignore the entertainment value.

[quote author=“MacGuffin”]You guys have nailed a great many of the key risks, though I’m surprised there remains one glaring omission…

Unless we’re all falling victim to the hubris risk, I think we all do tacitly realize that there will, someday, be a Mac virus. Not some FUD-based lab-hatched not in the wild virus, but a bona fide, MS-quality, sh*t we’ve gotta fix this AND FAST sort of virus.

I’m not suggesting their isn’t a risk but the two platforms are strikingly different. For one, Mac OS X is based on Unix which has been refined and improved for almost 40 years. If it weren’t for the fact that the old AT&T was a highly regulated monopoly with restrictions on its ability to make and market ancillary products, I bet Unix (and its derivatives) would be in the place Windows is today.

Second, the underpinnings of OS X have been released to the Open Source community. There are thousands of engineers improving the foundation upon which OS X is built everyday.

Third, one of the biggest vulnerabilities of Windows is its backward compatibility and the number of potential entry points. The legacy vulnerabilities can not be satisfactorily closed.

Apple’s decision to break with the past is one of the OS X’s strengths. Again, I’m not saying viruses aren’t a risk, but IMHO the risk compared to what happens with Windows is much diminished.

[quote author=“Tommo_UK”][quote author=“MacGuffin”]Unless we’re all falling victim to the hubris risk, I think we all do tacitly realize that there will, someday, be a Mac virus.When that day comes, the stock will no doubt plummet at least 10-15%

That doesn’t really count as a quantifiable risk in my eyes, nor a serious concern with regard to the stock. A virus is the least of my worries

You and DT know much better than me, but I disagree that this should be pooh-poohed. I don’t mean to sound like the doom & gloom camp, which I certainly am not, but I think it is inevitable that we will have a security issue some day, and it will have financial ramifications.

Besides whatever (admittedly meager) weakness may be inherent in the system, there are also the factors of human error and corporate sabotage to contend with. Witness the havoc just a smidge of simple social engineering wrought upon the stock back in June (“Internal Apple Memo: iPhone delayed until October!!!”) and now think what an actual mole or an employee with an ax to grind can do. Again, I’m not saying this is *going* to happen, merely that it CAN, and that is what I construed the intent of this thread to be.

(And before anyone says, “But this can happen to *any* company in any industry,” please realize the enormous difference in scope not only in the attention it would garner happening to Apple, but also in the size of Apple’s Achilles heel. How would/could an attack of even a fraction of this magnitude be launched on a John Deere or a Nike?)

That said I certainly hope I’m wrong, and we remain as virus-free as a newborn for all our days.

MacGuffin

[quote author=“MacGuffin”]

You and DT know much better than me, but I disagree that this should be pooh-poohed. I don’t mean to sound like the doom & gloom camp, which I certainly am not, but I think it is inevitable that we will have a security issue some day, and it will have financial ramifications.

Besides whatever (admittedly meager) weakness may be inherent in the system, there are also the factors of human error and corporate sabotage to contend with. Witness the havoc just a smidge of simple social engineering wrought upon the stock back in June (“Internal Apple Memo: iPhone delayed until October!!!”) and now think what an actual mole or an employee with an ax to grind can do. Again, I’m not saying this is *going* to happen, merely that it CAN, and that is what I construed the intent of this thread to be.

(And before anyone says, “But this can happen to *any* company in any industry,” please realize the enormous difference in scope not only in the attention it would garner happening to Apple, but also in the size of Apple’s Achilles heel. How would/could an attack of even a fraction of this magnitude be launched on a John Deere or a Nike?)

That said I certainly hope I’m wrong, and we remain as virus-free as a newborn for all our days.

MacGuffin

Your concerns are noted.

I’m not suggesting a threat doesn’t exist and a virus can’t happen. You are correct in that as OS X becomes more popular the threat increases. The illusion of OS X as being “bullet proof” is a threat in itself.

The absolute worst a virus could do is require a clean install for all infected systems. As soon as it is identified, infection free networks behind NAT routers (the majority of home and small business users) are going to be safe with just some extra dilligence until a patch arrives.

You have to distinguish the impact on fundamentals, which cannot be that big, and the transient impact on the stock price from media hype, which would be a concern to us all.

Of course, with Time Machine you can just restore your system back to the hour prior to the virus taking hold.

A virus attack would only push AAPL higher, one could think. Just ask Microsoft how MSFT managed the 55000 % climb up to Y2000 with NT(all versions) getting busted multiple times every day.

The press reacts: “A new MS NT-worm was discovered toady”
Wall Streets instant rewards: “Microsoft shares climbed today”

No virus attack has ever managed to push MSFT down, no matter what. WS does not really care. WS also knows that OSX is safe(est) and well designed from the ground up. Automatic virus propagation in Mac OSX is really really hard to achieve.