Carl Icahn Presses for Apple Shareholder Vote on Increased Stock Buyback

[Technarchy]

Then all they have to do is find better ways to invest it in growth or save it for when there is an opportunity. Of course they aren't saving for retirement, but they should be saving for something. A buyback is meant to boost investor confidence, but how much does that benefit Apple (especially if they don't expand the company any concrete way)? There could be a better opportunity to spend in the future.

I agree, they don't need that big of a cash hoard saved up. Apple needs to expand. But if a buyback is what they really should do, it should not be one the size of their entire cash sum.

The thing is Apple is investing. They are just doing it strategically and at a moderate pace. That's smart and better for the business.

Furthermore, Apple now has damn near infinite money for R&D and supply chain control and management, which again is more valuable to the business than Icahn. Thankfully Tim Cook does have the money and clout to rebuff Icahn.

 

[IJ Reilly]

Then all they have to do is find better ways to invest it in growth or save it for when there is an opportunity. Of course they aren't saving for retirement, but they should be saving for something. A buyback is meant to boost investor confidence, but how much does that benefit Apple (especially if they don't expand the company any concrete way)? There could be a better opportunity to spend in the future.

I agree, they don't need that big of a cash hoard saved up. Apple needs to expand. But if a buyback is what they really should do, it should not be one the size of their entire cash sum.

You miss the point, I think. Companies should not save, period. Ideally, a company would hold no cash on their books at all, every dollar of free cash would go immediately back into growth, if not right away, then in fairly short order. Well-managed companies should not sit on large quantities of cash, let alone continue to accumulate more and more. This is dead capital, and it raises all kinds of questions.

When a company is generating cash at Apple's rate, the problem is finding responsible ways of investing in growth. This is by no means a trivial problem. I would not want them to pull a Google, and invest in goofy products that seem to have no obvious commercial possibilities, or build weird barges for no apparent purpose. Microsoft was doing much the same thing in the '90s, and look where that got them. A lack of discipline often comes back to bite companies. I don't want to see that happen to Apple.

Buybacks aren't meant to boost investor confidence, they are meant to boost shareholder value. That's the name of the game for public companies. Nobody is suggesting that they use the entire $150b to buyback shares. Icahn is proposing a $50b buyback, which just happens to be how much Apple will add to the cash hoard in one year.

 

[mccldwll]

You miss the point, I think. Companies should not save, period. Ideally, a company would hold no cash on their books at all, every dollar of free cash would go immediately back into growth, if not right away, then in fairly short order. Well-managed companies should not sit on large quantities of cash, let alone continue to accumulate more and more. This is dead capital, and it raises all kinds of questions.

When a company is generating cash at Apple's rate, the problem is finding responsible ways of investing in growth. This is by no means a trivial problem. I would not want them to pull a Google, and invest in goofy products that seem to have no obvious commercial possibilities, or build weird barges for no apparent purpose. Microsoft was doing much the same thing in the '90s, and look where that got them. A lack of discipline often comes back to bite companies. I don't want to see that happen to Apple.

Buybacks aren't meant to boost investor confidence, they are meant to boost shareholder value. That's the name of the game for public companies. Nobody is suggesting that they use the entire $150b to buyback shares. Icahn is proposing a $50b buyback, which just happens to be how much Apple will add to the cash hoard in one year.

Icahn's original proposal was $150Bn.

 

[IJ Reilly]

Icahn's original proposal was $150Bn.

Which he is no longer pursuing.

 

[MagnusVonMagnum]

You miss the point, I think. Companies should not save, period. Ideally, a company would hold no cash on their books at all, every dollar of free cash would go immediately back into growth, if not right away, then in fairly short order.

Isn't that EXACTLY what caused the market crash a few years ago? The banks and investment firms had little actual cash savings, bad investments up the yin-yang and the bubble burst and we got stuck footing the bill. Now the banks are doing the same crap again. And if a company has no savings, it has no reserves for a rainy day/month/year of bad sales and ends up selling part of itself off and/or its stocks plummet and so does the company's value with it since stock is a perceived value, not cold hard cash. The problem is there's a difference between what's best for the stock holder, what's best for the company itself and what's best for the general public and country that hosts the company.

Private companies don't have that "next quarter" type of pressure and it's that "gotta make money now" routine that means companies can't make good long term investments and planning since they need that new product RIGHT NOW or the jittery gambling stockholders of today jump ship to the next big thing. Ironically, most investors buy high and sell low but then most investors are just like most gamblers and the house normally wins.

Well-managed companies should not sit on large quantities of cash, let alone continue to accumulate more and more. This is dead capital, and it raises all kinds of questions.

Yeah, like how much we the tax payers will foot the next disaster because most companies don't behave responsibly and have little or no savings when things go wrong. Look at GM and Chrysler. Little savings. They would have gone bankrupt if they weren't bailed out also. Had they saved for a rainy year, as it were, they wouldn't have needed those loans so badly. And loans have to be paid back with interest. If you have the cash, you don't pay the interest. In short, we don't live in an ideal world and companies that want to survive in the long run need to think about more than just the next shareholder dividend.

 

[IJ Reilly]

Isn't that EXACTLY what caused the market crash a few years ago? The banks and investment firms had little actual cash savings, bad investments up the yin-yang and the bubble burst and we got stuck footing the bill. Now the banks are doing the same crap again. And if a company has no savings, it has no reserves for a rainy day/month/year of bad sales and ends up selling part of itself off and/or its stocks plummet and so does the company's value with it since stock is a perceived value, not cold hard cash. The problem is there's a difference between what's best for the stock holder, what's best for the company itself and what's best for the general public and country that hosts the company.

No, not even remotely. Close to the opposite, in fact. Corporations carrying large amounts of cash on their books is a relatively recent phenomenon. In the old days they'd have expanded their businesses and hired more people. With nearly every recession since the '80s at least the recoveries are slower and jobs return far less quickly and wages decline further due to the reluctance of companies to expand and hire. More and more, they've been sitting on the money instead. It's true. You could look it up.

Private companies don't have that "next quarter" type of pressure and it's that "gotta make money now" routine that means companies can't make good long term investments and planning since they need that new product RIGHT NOW or the jittery gambling stockholders of today jump ship to the next big thing. Ironically, most investors buy high and sell low but then most investors are just like most gamblers and the house normally wins.

Not exactly sure what you're on about here, but it seems to be about traders, not investors.

Yeah, like how much we the tax payers will foot the next disaster because most companies don't behave responsibly and have little or no savings when things go wrong. Look at GM and Chrysler. Little savings. They would have gone bankrupt if they weren't bailed out also. Had they saved for a rainy year, as it were, they wouldn't have needed those loans so badly. And loans have to be paid back with interest. If you have the cash, you don't pay the interest. In short, we don't live in an ideal world and companies that want to survive in the long run need to think about more than just the next shareholder dividend.

Not someone who's ever been in business, I take it. Anyway, successful business are about making products that people want, not about saving so you can get away with making lousy products that people don't want. So don't confuse mismanagement with vision.

Incidentally, and FWIW, GM did go bankrupt.

 

[koruki]

Clearly someone has no idea how corporations function.

yeah I am as clueless as the corporation you think have no idea how to spend their money. My original point proved, people on forums thinking they know better than those who helped propel a company to Apples stature

 

[osx11]

yeah I am as clueless as the corporation you think have no idea how to spend their money. My original point proved, people on forums thinking they know better than those who helped propel a company to Apples stature

If you actually read my posts and the above comments you'd understand what I actually said. I'm not telling Apple what to do. I'm simply pointing out that they are NOT using their cash. As a result, people calling for stock buybacks have a point. Most people here don't realize just how much cash Apple has. And shareholders have a right for that cash to be paid out if its not being used for anything.

 

[MacSince1990]

Yes, given this reply he is definitely the psychopath rather than you...

*eyeroll*

Use your head before you offer your opinion.

 

[MagnusVonMagnum]

No, not even remotely. Close to the opposite, in fact. Corporations carrying large amounts of cash on their books is a relatively recent phenomenon. In the old days they'd have expanded their businesses and hired more people.

Why should they hire more people? The goal of the ultra rich is to destroy the Middle Class, not help it. They want the Middle Ages all over again.

Not someone who's ever been in business, I take it. Anyway, successful business are about making products that people want, not about saving so you can get away with making lousy products that people don't want. So don't confuse mismanagement with vision.

Incidentally, and FWIW, GM did go bankrupt.

You've only proven my point. Businesses are irresponsible and the bane of society. We should not have a situation where so many jobs are dependent on a few companies like the car companies, who in turn act irresponsibly by not having enough savings to handle a rainy day. You want them to act even MORE IRRESPONSIBLY because you want your returns on your stock and don't give a flying crap if the entire country is harmed by the actions of the greedy few when things go wrong. And this is the problem you get in the long run with such disparate wealth distribution. The rich keep getting richer and the poor keep rising in larger numbers. Sooner or later there is no one to buy the products and services offered by the rich and they too go bankrupt and become poor. Eventually, the system to will break down and crash and the whole world will go into another massive depression. It's unavoidable so long as GREED rules the actions of those with money and power. It's only a matter of time. A history lesson on how businesses "should" work by you is just painting yourself into a corner because you IGNORE the giant bubbles bursting in history that are a DIRECT RESULT of the very behaviors you keep promoting. Capitalism ultimately doesn't work because it eventually collapses under its own weight based on endless greed that needs to be moderated with generosity to avoid these massive imbalances between stock holders, management and workers.

Yeah, I don't know what I'm talking about, blah blah blah. See you in the next recession/depression where you'll deny it has anything to do with massive differences in worldwide wealth distribution. We had the same disparity in the Middle Ages and society went NOWHERE. It was called the Dark Ages for a reason. People have no incentive to work hard when they're never going to make more than minimum wage in the jobs that are the only ones available and other higher paying jobs are moved to areas where they pay far far less. With no one but the top 2% making any real income, you have people with huge bank account numbers that don't spend any of it (including Apple by your own admission) and those with no savings that need to spend but can't. History repeats itself over and over and no one learns a damn thing because humans are by their very nature selfish and stubborn.

 

[JoeRito]

He's making a ton of $$on corporate rehypothecation.

 

[IJ Reilly]

Why should they hire more people? The goal of the ultra rich is to destroy the Middle Class, not help it. They want the Middle Ages all over again.

I'm not going to get into an open-ended political debate with you. I gave up on that forum years ago. So either stick to the discussion about Apple, or expect no response from me. It's your choice.

 

[mccldwll]

Why should they hire more people? The goal of the ultra rich is to destroy the Middle Class, not help it. They want the Middle Ages all over again.




You've only proven my point. Businesses are irresponsible and the bane of society. We should not have a situation where so many jobs are dependent on a few companies like the car companies, who in turn act irresponsibly by not having enough savings to handle a rainy day. You want them to act even MORE IRRESPONSIBLY because you want your returns on your stock and don't give a flying crap if the entire country is harmed by the actions of the greedy few when things go wrong. And this is the problem you get in the long run with such disparate wealth distribution. The rich keep getting richer and the poor keep rising in larger numbers. Sooner or later there is no one to buy the products and services offered by the rich and they too go bankrupt and become poor. Eventually, the system to will break down and crash and the whole world will go into another massive depression. It's unavoidable so long as GREED rules the actions of those with money and power. It's only a matter of time. A history lesson on how businesses "should" work by you is just painting yourself into a corner because you IGNORE the giant bubbles bursting in history that are a DIRECT RESULT of the very behaviors you keep promoting. Capitalism ultimately doesn't work because it eventually collapses under its own weight based on endless greed that needs to be moderated with generosity to avoid these massive imbalances between stock holders, management and workers.

Yeah, I don't know what I'm talking about, blah blah blah. See you in the next recession/depression where you'll deny it has anything to do with massive differences in worldwide wealth distribution. We had the same disparity in the Middle Ages and society went NOWHERE. It was called the Dark Ages for a reason. People have no incentive to work hard when they're never going to make more than minimum wage in the jobs that are the only ones available and other higher paying jobs are moved to areas where they pay far far less. With no one but the top 2% making any real income, you have people with huge bank account numbers that don't spend any of it (including Apple by your own admission) and those with no savings that need to spend but can't. History repeats itself over and over and no one learns a damn thing because humans are by their very nature selfish and stubborn.

You forgot "eat the rich".

 

[IJ Reilly]

You forgot "eat the rich".

No thanks, they tend to be leathery.

 

[PracticalMac]

They've got these things worked out if their economists are doing their jobs properly. They probably don't predict a big enough increase in quantity sold from decreasing the price to justify it. Cheap isn't Apple's game.

Never said "cheap". For once think about what someone says.

 

[PracticalMac]

Sales volume is fundamentally meaningless. "We lose money on every one we sell, but we make it up in volume." So goes the old joke, and not without reason. What matters, all that matters in the end, is profit. Not market share, not volume, but profit. Good, old-fashioned earnings.

All of which begs the question: could Apple use any of its cash hoard to lower product prices? The answer is, no. Any lowering of prices would be reflected in lower margins, and lead very likely to lower profits.

Apple's prior experience with the experiment of sacrificing margins for marketshare did not have a happy ending. Back in the '90s they were bullied into licensing the MacOS to clone manufacturers. The plan was supposed to increase marketshare and ultimately lead to higher profits. What happened instead was pretty much the opposite. Marketshare did not grow, margins collapsed, and profits turned into losses. It was Apple's near-death experience.

Should they run that experiment again, to see if it turns out differently? No thanks.

Right here is the problem. Apple is not a person, it's a business. Unlike you and I, they are not saving for their retirement. Corporations are like sharks (depending on the corporation, possibly in more ways than one). All of them have to be constantly moving forward and growing, or they die. The energy that keeps them growing is capital. They make and spend capital to grow to make and spend more capital. Successful corporations do this in an endless cycle. This is how they increase profits and build shareholder value.

If Apple was in the steel milling business, growth would mean spending profits on building more steel mills, growing some more, and using those profits to build even more steel mills. It happens that Apple is in a business that isn't nearly as capital intensive as milling steel, and also that their return on investment is huge. So this means they throw off far more capital than they need to continue growing.

Some companies with this "problem" often find other companies to take over. Almost always a bad idea. They can also invest in products and projects that are unrelated to their expertise, because, you know, they've got the money. This is Google's modus operandi. Companies that use their cash to pursue every random idea that comes along tend to lose their focus and become management nightmares. At the same time, their customers begin to wonder what they are and what they do. Also not a great idea.

The other option is to stick to core competencies, grow and expand on those, and use the excess capital buy back stock and pay a dividend. This is the other way to build shareholder value. For Apple, this is the best way.

To put it all in perspective: if Apple wanted to simply arrest their massive cash hoard at the present $150b, they'd have to declare an annual dividend of around $55/share, more than four times what it is today. This is the scale of the situation. This is how much money they are generating beyond their needs for reinvesting in growth.

I was not clear (but you understood anyway), volume of iOS sales compared to Android sales.

Computers do not sell becuase of hardware and OS, I am sure you agree with me.

Even game consoles are another example, their success is completely depended on the titles that run on it.

More important then an insanely great device is an insanely great media selection, and that means developers and content sources, and getting those means an installed base.

The larger installed base, the larger the potential market to tap into. Sure easier to produce software and customers with money are great, but eventually, as Windows has proven, there is a point one can make nice profits on an inferior, bug and virus ridden, platform.


So what can Apple do with all its cash?

• More iOS apps.
• Even more manpower on Maps
• More versions of iOS devices, like a 20 hour rugged/ water proof iPad.
• Buy more companies with key technologies like it did with the touch screen (lead to iPhone), fingerprint touchID and video editing companies.
• Make a dev center to make game devices that will take on Nintendo and Sony.
• To that end, license out the iOS for a company to make a dedicated game system in a unique controller (not a sap on controller).
• Reduce the price of iOS devices some, say 5~10% and perhaps only on memory upgrades. It's probably about how much the cost of mfg has gone down since iPad 1 was released with more efficient mfg process.
• enter idea here (Apple could easily afford to take risks, I wish they do).

As to the Gil Amelio days,

Apple's prior experience with the experiment of sacrificing margins for marketshare did not have a happy ending. Back in the '90s they were bullied into licensing the MacOS to clone manufacturers. The plan was supposed to increase marketshare and ultimately lead to higher profits. What happened instead was pretty much the opposite. Marketshare did not grow, margins collapsed, and profits turned into losses. It was Apple's near-death experience.

Sacrificing margins for marketshare was the least of its problems in the mid 1990's. Hell, it was probably one of the best things it did to stay afloat during the idiotic years.

 

[IJ Reilly]

I was not clear (but you understood anyway), volume of iOS sales compared to Android sales.

Computers do not sell becuase of hardware and OS, I am sure you agree with me.

Actually, no, I don't. Computers are a combination of hardware and OS. Apple has demonstrated that the device is what sells. Even Microsoft has been forced to recognize the power of being able to design what Steve Jobs called "the entire widget." Hence the Xbox and Surface.

Sacrificing margins for marketshare was the least of its problems in the mid 1990's. Hell, it was probably one of the best things it did to stay afloat during the idiotic years.

No, that was the problem.

 

[9000]

Never said "cheap". For once think about what someone says.

"The Android tidal wave is huge, and developers see quantity over quality (think Mac vs PC)."

High quantity and low quality => cheap. And Android phones and non-Apple PCs tend to be cheaper than what Apple offers.

 

[PracticalMac]

Actually, no, I don't. Computers are a combination of hardware and OS. Apple has demonstrated that the device is what sells. Even Microsoft has been forced to recognize the power of being able to design what Steve Jobs called "the entire widget." Hence the Xbox and Surface.

That's not what I meant.

The first thing most ( > 50%) people look at when buying a computer/phone/tablet is price.

If they are heavily invested in iTunes content, then they naturally incline to getting a Mac/iOS. Even then you will find those with non-Apple phones/tablets/computers.

Samsung is also working hard to build a fully linked device network, even though it runs on a 3ed party OS.

Google too, is working on a fully integrated designs.

No, that was the problem.

Apple had many far more critical issues then too small margins on .

1. Mac OS was ancient and successor was in big trouble.
2. Sales of all MacOS hardware (including clone) was declining.
3. Lost control of clone licensing, allowed 2ed party to undercut Apple hardware (it was margin on OS that was issue, not Apple hardware).
4. Windows 95 a vast improvement over 3.11, and MS rapidly released updates.
5. Far too many product varieties.
6. PowerBook 5300 series was a disaster, greatly impacted one of Apples best revenue streams. Was not fixed until Jobs took over.

In short, people where not buying Mac's becuase they where not seen as a worthwhile investment.

----------

High quantity and low quality => cheap. And Android phones and non-Apple PCs tend to be cheaper than what Apple offers.

Don't know why you insist on relating Cheap with Apple.

Reducing the cost of iOS hardware 10% does not "cheapify" the hardware, just makes it lower cost.

 

[IJ Reilly]

That's not what I meant.

The first thing most ( > 50%) people look at when buying a computer/phone/tablet is price.

If they are heavily invested in iTunes content, then they naturally incline to getting a Mac/iOS. Even then you will find those with non-Apple phones/tablets/computers.

Samsung is also working hard to build a fully linked device network, even though it runs on a 3ed party OS.

Google too, is working on a fully integrated designs.



Apple had many far more critical issues then too small margins on .

1. Mac OS was ancient and successor was in big trouble.
2. Sales of all MacOS hardware (including clone) was declining.
3. Lost control of clone licensing, allowed 2ed party to undercut Apple hardware (it was margin on OS that was issue, not Apple hardware).
4. Windows 95 a vast improvement over 3.11, and MS rapidly released updates.
5. Far too many product varieties.
6. PowerBook 5300 series was a disaster, greatly impacted one of Apples best revenue streams. Was not fixed until Jobs took over.

In short, people where not buying Mac's becuase they where not seen as a worthwhile investment.

I don't have the data to prove or even argue what 50% of people look for when buying a computer. All I can say with some certainly is that different people have different priorities, and also that they buy the entire product.

Your history is partially correct, but also partially out of chronological order. Apple never "lost control" of cloning. They were totally in control of cloning, it was just a terrible idea from the start. They were also banking heavily on the Common Hardware Reference Platform, which had it succeeded, might have given PC architecture a run for its money. Within months after licensing clones Apple's hardware market share was cut in half, and that lost revenue was not even close to made up with clone licenses. Margins collapsed as a result and losses soon followed. Most of this happened after Windows95 was released, and it was over before the next version appeared.

Much of Apple's failure in hardware during this time period can be attributed to them trying to compete with the clones.

 

[PracticalMac]

Your history is partially correct, but also partially out of chronological order. Apple never "lost control" of cloning. They were totally in control of cloning, it was just a terrible idea from the start. They were also banking heavily on the Common Hardware Reference Platform, which had it succeeded, might have given PC architecture a run for its money. Within months after licensing clones Apple's hardware market share was cut in half, and that lost revenue was not even close to made up with clone licenses. Margins collapsed as a result and losses soon followed. Most of this happened after Windows95 was released, and it was over before the next version appeared.

Much of Apple's failure in hardware during this time period can be attributed to them trying to compete with the clones.

Pretty much agree with you.
What I read about the Clones is Apple wanted the clone makers to go after other markets Apple was weak on, instead they went after the same market.
Apple also sold OS license lower then the Clones, so they could under cut Apples products by a significant margin, and that is probably where the lower margins came in.
I think Gil was so enamored by the PC way he did not want to offend the Cloners by raising the OS price.

Of course when Jobs came back he didn't give a **** and ended it as fast as possible.


Honestly I wish Jobs did allow for highly specialized clones like Industrial PC and rugged laptops (both of which usually cost 3x a comparable home PC)


BTW, back on the subject:
Boeing buys back $10 billion of its shares.

Quoted:

Among Dow Industrial Average companies, Boeing's $10 billion repurchase was in line with General Electric Co (GE.N), Pfizer Inc (PFE.N), Intel Corp (INTC.O) and Goldman Sachs Group Inc (GS.N). But was far smaller than $40 billion for Microsoft Corp (MSFT.O) and $17 billion for Home Depot Inc (HD.N).

Just sayin

 

[MagnusVonMagnum]

Pretty much agree with you.
What I read about the Clones is Apple wanted the clone makers to go after other markets Apple was weak on, instead they went after the same market.

And that's Apple's fault for not being more specific in their licensing terms. You can pretty much spell out ANYTHING you want in a license and they could have forced them to only make a specific product AND required Apple to approve it before sale if they wanted. But they were under the mistaken impression that they could just make up for two decades of PC clones in a few short years. The problem is that ship already sailed and it was too late to catch up.

The other problem is that Microsoft NEVER made its own PCs. Apple kept making their own Macs. You can't expect the same kind of result if you don't do the same thing. If you want the prices to come down and competition to do its thing you can't keep trying to sell overpriced Macs when your clone competitors are undercutting you. Either let them do it or do something else.

The real problem is that Apple doesn't want to cater to all markets. When they dumped rack-mount servers they should have licensed someone else to only make rack/blade servers that use OSX. I mean they dumped the entire market in that move. Why not let someone bear the manufacturing costs that is already making money from the Windows and/or Linux servers? It's a unbelievably small matter to get a generic PC to run OSX. It's little more than a license and EFI. Why reinvent the wheel when someone else already makes the wheel for far less? THAT is where a 3rd party license would be potentially useful and the license could limit it to only such server models. Something similar might be helpful for a "gaming" Mac. Even a small LAN Party style Mac with only two slots (one or two for the GPU and one extra) would be useful. Apple doesn't want to make it? Well someone already does make it. License them to release an OSX capable model and the market is covered and Apple bears none of the costs but potentially expands their gaming presence which can generate more overall sales in the long run as more software becomes available and it would cost Apple nothing to do so. Quite the contrary, it would pay for itself and increase the market share. After the 5 years or whatever term is up, Apple could reevaluate whether it wants to take over that segment or keep licensing it out. SMART licensing is a whole different ball game than a generic anything goes license and yet I keep hearing the same stale arguments on here about how awful it was the last time and so it's a bad idea. Yeah, that's like saying because the Newton failed that the iPhone and iPad were horrible ideas and yet we saw how that turned out.

 

[PracticalMac]

The real problem is that Apple doesn't want to cater to all markets. When they dumped rack-mount servers they should have licensed someone else to only make rack/blade servers that use OSX. I mean they dumped the entire market in that move. Why not let someone bear the manufacturing costs that is already making money from the Windows and/or Linux servers? It's a unbelievably small matter to get a generic PC to run OSX. It's little more than a license and EFI. Why reinvent the wheel when someone else already makes the wheel for far less? THAT is where a 3rd party license would be potentially useful and the license could limit it to only such server models. Something similar might be helpful for a "gaming" Mac. Even a small LAN Party style Mac with only two slots (one or two for the GPU and one extra) would be useful. Apple doesn't want to make it? Well someone already does make it. License them to release an OSX capable model and the market is covered and Apple bears none of the costs but potentially expands their gaming presence which can generate more overall sales in the long run as more software becomes available and it would cost Apple nothing to do so. Quite the contrary, it would pay for itself and increase the market share. After the 5 years or whatever term is up, Apple could reevaluate whether it wants to take over that segment or keep licensing it out. SMART licensing is a whole different ball game than a generic anything goes license and yet I keep hearing the same stale arguments on here about how awful it was the last time and so it's a bad idea. Yeah, that's like saying because the Newton failed that the iPhone and iPad were horrible ideas and yet we saw how that turned out.

Yup.

Apple is missing huge opportunities not allowing niche systems in Mac OS. iOS too.

How many potential block buster products where delayed or missed becuase Apple held its OS close to the chest.

 

[IJ Reilly]

Pretty much agree with you.
What I read about the Clones is Apple wanted the clone makers to go after other markets Apple was weak on, instead they went after the same market.
Apple also sold OS license lower then the Clones, so they could under cut Apples products by a significant margin, and that is probably where the lower margins came in.
I think Gil was so enamored by the PC way he did not want to offend the Cloners by raising the OS price.

Of course when Jobs came back he didn't give a **** and ended it as fast as possible.

Honestly I wish Jobs did allow for highly specialized clones like Industrial PC and rugged laptops (both of which usually cost 3x a comparable home PC)

The cloners (especially PowerComputing and Umax) went straight after the existing Mac user base with cheaper (and in some cases, better) hardware. They rarely advertised their products outside of Mac magazines, so they were making no pretense at building market share for the Mac. The only way Apple could have controlled this outcome was to make licenses so specific and costly that they'd become onerous. I don't think Apple had that much maneuvering room; they were not dealing from a position of strength.

Deep in the background was the tussle over the PREP/CHRP standard with IBM and Motorola, and Apple's partners increasingly apparent lack of real commitment to making a PPC platform standard workable. Motorola wasn't even committed to using the PPC internally, and IBM was moving in another direction with the processor family that didn't include Apple's needs (leading ultimately to the Intel shift). So many pieces were in motion at the time that a favorable outcome for Apple was always a real long shot.

When Steve took over and killed the clone program he referred to them as "blood suckers." That was a fairly unambiguous characterization!

BTW, back on the subject:
Boeing buys back $10 billion of its shares.

Quoted:


Just sayin

Made the stock pop nicely when announced. Investors like dividends and buybacks.

And that's Apple's fault for not being more specific in their licensing terms. You can pretty much spell out ANYTHING you want in a license and they could have forced them to only make a specific product AND required Apple to approve it before sale if they wanted. But they were under the mistaken impression that they could just make up for two decades of PC clones in a few short years. The problem is that ship already sailed and it was too late to catch up.

As above, I really don't think they were in a strong enough position to be that specific. It was a hail mary pass strategy from the very start.

The other problem is that Microsoft NEVER made its own PCs. Apple kept making their own Macs. You can't expect the same kind of result if you don't do the same thing. If you want the prices to come down and competition to do its thing you can't keep trying to sell overpriced Macs when your clone competitors are undercutting you. Either let them do it or do something else.

This was the problem, in a nutshell, but I think you come to the wrong conclusion. Microsoft never relied on hardware manufacturing to make their revenue. They were the beneficiary of a huge historical accident that created a completely freestanding hardware industry that was totally dependent on Microsoft (and the small, remaining pockets of resistance could be and were wiped out by illegal means). Apple could not afford to back into cloning from the other direction and hope for success; the need for replacing revenue was just too great.

The real problem is that Apple doesn't want to cater to all markets. When they dumped rack-mount servers they should have licensed someone else to only make rack/blade servers that use OSX. I mean they dumped the entire market in that move. Why not let someone bear the manufacturing costs that is already making money from the Windows and/or Linux servers? It's a unbelievably small matter to get a generic PC to run OSX. It's little more than a license and EFI. Why reinvent the wheel when someone else already makes the wheel for far less? THAT is where a 3rd party license would be potentially useful and the license could limit it to only such server models. Something similar might be helpful for a "gaming" Mac. Even a small LAN Party style Mac with only two slots (one or two for the GPU and one extra) would be useful. Apple doesn't want to make it? Well someone already does make it. License them to release an OSX capable model and the market is covered and Apple bears none of the costs but potentially expands their gaming presence which can generate more overall sales in the long run as more software becomes available and it would cost Apple nothing to do so. Quite the contrary, it would pay for itself and increase the market share. After the 5 years or whatever term is up, Apple could reevaluate whether it wants to take over that segment or keep licensing it out. SMART licensing is a whole different ball game than a generic anything goes license and yet I keep hearing the same stale arguments on here about how awful it was the last time and so it's a bad idea. Yeah, that's like saying because the Newton failed that the iPhone and iPad were horrible ideas and yet we saw how that turned out.

Possibly, but who is to say whether Apple hasn't explored these sorts of arrangements, but could not come up with one that met their needs? In fact when the Mac cloners were being summarily shot, the rumor going around was that Apple might continue to work with Umax (the most cooperative of the cloners). I remember on the floor of MWSF that year the buzz was that Steve had even made a visit to the Umax booth after the keynote. We were hopeful that something could be worked out, but obviously it never was. Umax was the last cloner left standing, but not for long.

 

[MagnusVonMagnum]

Yup.

Apple is missing huge opportunities not allowing niche systems in Mac OS. iOS too.

How many potential block buster products where delayed or missed becuase Apple held its OS close to the chest.

Not everything in life is about "huge". Sometimes it's about reputation. Apple used to have a great reputation among video and publishing professionals. They have badly hurt that reputation in recent years. But some people don't care because they make plenty of money selling smart phones to teeny-boppers that text too much and study too little.