So what's Apple up to here? Are they going to try to keep up with the latest hardware advancements by introducing new stuff twice as fast?
No this is just the mask for the underlying problem. Apple needs a new "next big thing". Looking back at the pace of prior "next big thing" releases, they needed to launch one this year (in 2012) to maintain the accelerating pace of those rollouts. By "next big thing" I don't mean a new version of an existing product but something that would be seen a version 1 of a brand new innovative offering.
Because Apple is under pressure to keep the growth slope steep, they are launching in more and more countries on day 1. They used to launch in the U.S. and then gradually roll out to the rest of the world. However, over the last few years, they've launched to more and more countries on day 1 and rolled out to many more (sooner than what they used to do in the past) quickly. Why? Because they need to book those revenues of old "next big things" faster and faster to maintain that revenue growth slope. Why? Because they haven't launched a new "next big thing" since iPad launched to be fresh (entirely new product) fuel for propping up that slope.
So, in booking sales of old "next big things" (updates) faster and faster, they need to roll out new versions of the existing legs of the table faster and faster. Else, the revenue growth slope will roll over and then the stock will really feel the pain.
What Apple needs is a new big innovation (a brand new leg of the table). And based on the past big innovations, they need a whopper in early 2013 and maybe 2 more whoppers in 2014. Riding one "next big thing" for 2-4 years (of updates) doesn't work as well as the revenue numbers get bigger and bigger. Eventually, iterations of old "next big things" will need to launch to all markets everywhere at the same time to generate a quarter's revenue targets. And, if you do that, you'll need something else for the global market to buy in the next quarter to try to meet its target.
We can rationalize it as "keeping up with competition" and all of that other stuff but if you can look at the situation objectively and you look to past companies that had revenue growth slopes like Apple, the story is always the same. Even supporting clues are right in our faces:
- remember how Apple events used to focus on products that were pretty much ready to launch. Now, we see more and more stuff that seems to be reaching forward in the pipeline to tout now and launch later (even missing target launch dates)
- Remember how launches were usually fully-baked products. Now we seem to be getting some stuff that might be called "mature beta" at best.
- Etc.
All of which might be viewed as signs that the demands per the growth slope are challenging Apple to try to keep up. Without having big things ready to launch now, they are instead pressured to pull back the curtain more than in the past and show us some stuff that might be 80%+ ready. If I was guessing why so much money has fled the stock lately, it's because the "smart money" has seen this movie many times before.
Solution: a genuine, must-have "next big thing" rollout in the first quarter 2013 on par with the "shut up and take my money" fever of iPod, iPhone and iPad. Unfortunately, I'm not sure that the rumored television product might be "it" but that seems to be the only working rumor of something that would seem to be a genuine new leg of the table. I think Apple could reinforce the slope with just one "next big thing" in 2013 but they will likely need 2 in 2014 to keep it going. Can you imagine 3 new big innovations on par with iPod/iTunes 1, iPhone 1 and iPad 1 over the next 25 months? I hope Apple has.
