When Steve Jobs was alive and Apple had a mere $25 billon in cash assets, he claimed that Apple wanted to “keep its powder dry” for a strategic opportunity. Peter Oppenheomer has continued that mantra. And yet, as opportunity after opportunity has presented itself in the TV industry, Apple continues to sit on its $110 billion cash hoard. Why is that?
This week we learned that Apple is, once again, begging for the keys to the TV kingdom. Presumably, that’s so Apple can apply its fantastic understanding of customers wants and needs, develop a revolutionary TV viewing interface, dust off its patents and put some major competitors into bankruptcy.
Of course, that isn’t going to happen. The studios know that Apple got too much control in the music industry and isn’t looking to have Apple kill their golden goose or compromise current carriage agreements. Content creators are happy to have many outlets that suit different customers, like theaters, Ultraviolet, Blu-ray, V.O.D. via carriers, Red Box, Netflix, Hulu and so on. Apple will be allowed to participate, and generate incremental revenue, but won’t be given the kind of control Apple typically wants. So what’s next?
The Next Flub
This week we learned that Apple has tried a different technique. This time, according to the Wall Street Journal , Apple has supplicated the U.S. cable providers to let Apple carry their content on (possibly) an enhanced Apple TV. According to GigaOm on Aug 15, “In a March report that Apple was in talks to get cable companies, some of those cable sources complained anonymously to the New York Post that Apple’s offer wasn’t a great deal for them, one saying, Apple wanted ‘everything for nothing…’.” [Emphasis added.]
Once again, Apple appears to be taking the approach that if only they’re allowed into the game, their expertise will amaze and delight both the customers and the other stakeholders. That approach, born of a little bit too much arrogance, hasn’t worked and isn’t going to work. Time to move on.
Sitting on the Money
Back in 2010, when Steve Jobs made an appearance at an earnings conference call, he was asked about what Apple might do with that monstrous $25 billion in cash assets. Mr. Jobs said, “We’d like to continue to keep our powder dry,” and continued, “We strongly believe that one or more very strategic opportunities may come along.”
And yet, with $110 billion now (some of it overseas), Apple seems to be sitting on that cash, solely for the sake of having it. It can become an end in itself. In fact, by one estimate, Apple will have $200 billion sometime next year.
I don’t confuse TV lawyers with real life heros, but for the sake of literary comparison, I tend to think of the boldness of an attorney like Harvey Specter (USA Network, Suits ). He knows the cards he holds, and he makes bold moves in order to win. What if Apple gave up on the idea of begging its way into the kingdom and just brought a metric crap ton of cash to the table?
We know that money talks. Content providers are always keen to make more money but are not keen to give up control. If Apple were to sit down and say, “Look, we want to buy such and such rights.” A sweeping purchase. And sugest a check that has ten zeros, Apple could have any content deal that it wants. Every show, every sport, anything. For years and years. Ten zeros. A mere 10 percent of Apple’s assets. Five percent next year.
Image Credit: USA Network, “Suits”
When a company is small, it tends to think about using some available cash to improve its competitive stance. But when one has more than a hundred billion dollars potentially available, spending a small part, still amounts to a staggering amount of money. It gives one pause. In addition, Apple is well aware of the pits other companies have fallen into by spending an inordinate amount of money to no good end.
This is different. Apple desperately wants into the TV content delivery business in a much bigger way than currently.
But Apple isn’t going to get anywhere with this camel nose under the money tent approach. I fondly remember the vision of Steve Jobs and the Big Opportunity he was waiting for. I keep wondering how long it’s going to take Apple to find it.