Oppenheimer: Apple 'lacks the courage to lead the next generation of innovation'

Posted:
in AAPL Investors edited December 2016
Oppenheimer analysts have issued an unusually scathing Apple investor memo, charging that the company is headed in the wrong direction and poised for a "decade-long malaise" as a result.




"We believe Apple lacks the courage to lead the next generation of innovation (AI, cloud-based services, messaging); instead will become more reliant than ever on the iPhone," senior analyst Andrew Uerkwitz wrote in the memo, seen by Business Insider. "We believe Apple is about to embark on a decade-long malaise. The risks to the company have never been greater."

Apple has often been accused of being too dependent on the iPhone, which by far represents the biggest share of its revenue. In the September quarter for instance the company generated some $28.16 billion from iPhones, but a little under $5.74 billion from Macs, and still less from iPads.

Since the death of former CEO Steve Jobs in 2011, Apple has only introduced one new device category -- the Apple Watch -- which has sold better than most smartwatches, but is still marginal to the company's bottom line. Most of Apple's efforts have been devoted to revamping or expanding existing categories, for example overhauling the Apple TV or adding more iPhone and iPad models.

Oppenheimer's complaints refer to things like the Siri voice assistant, which critics have complained is less powerful than similar assistants from Amazon and Google. Apple did introduce major enhancements to Messages in iOS 10, including support for built-in apps, but the platform is still iOS/Mac-only and lacks some of the features in alternatives like Skype or Facebook Messenger, such as bots.

Reports have hinted that Apple is working to fix gaps in Siri, and indeed release a smartspeaker in 2017 that could compete with the Amazon Echo and Google Home.

Uerkwitz is keeping a "Perform" rating for Apple stock, arguing that for now investors will be attracted to "strong profitability, a cash hoard for protection, and one last 'growth' hurrah from the tenth-anniversary phone."
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Comments

  • Reply 1 of 200
    I believe this to be true. Apple has done little to excite the tech world since Jobs. We need them to dream the future and push the timeline on when it is delivered.
    boredumbanantksundaramRoger_Fingasspacekidviclauyycindieshackbigpicsdurandal_1707applecoredadonissmu
  • Reply 2 of 200
    calicali Posts: 3,495member
     I love how Apple and only Apple is expected to innovate. All other tech companies can copy Apple all day but only Apple is criticized to move technology forward  because if they don't, "Apple can't  innovate anymore". 
    stevehdjkfishermike1pscooter63roundaboutnowquadra 610Mikeymikethepixeldocrob53Jdmr1701
  • Reply 3 of 200
    ceek74ceek74 Posts: 324member
    Yet another ploy to lower APPL stock values for future investments.
    stevehmike1roundaboutnowMikeymikecalirob53thinkman@chartermi.netStrangeDaysMarianoGiustieideard
  • Reply 4 of 200
    NY1822NY1822 Posts: 601member
    This report was released on Nov 21
    The_Martini_CatrepressthisSpamSandwichjas99
  • Reply 5 of 200
    lkrupplkrupp Posts: 7,315member
    Well, some progress has been made. At least these analysts aren’t predicting Apple’s imminent demise anymore. I guess they finally figured out that pile of cash will prevent that happening for the foreseeable future. So where is this guy coming up with “a decade-long malaise?” Why 10 years? Why not 20, or 5, or 6 months? Of course this is fuel for the fodder for the “long time loyal” Apple owners turned Apple haters on AI.
    roundaboutnowtmaycalithinkman@chartermi.netStrangeDaysbadmonkrepressthisration aljustadcomicsjas99
  • Reply 6 of 200
    boredumbboredumb Posts: 1,416member
    In some ways, it's hard not to concede they may have a point, to some degree.
    I still love my Apple products (most of the time), but I've been feeling there's been a slide...

    Specifically, I always felt that Apple wanted everything it "made", hardware or software,
    to be cosmically as close to perfect as they could get it.   More and more often, it "feels" as if
    they are willing to settle for "better, or what we can argue effectively is better, is good enough".
    And, that this is an acceptable standard, so long as stock options are still vesting,
    and nobody "ahems" too loudly when they are cashed in.

    Still, it's in their history to suddenly astound with something we didn't even know we were missing.
    But the longer that goes without happening (and they've set that bar so high), the harder it is to assume
    that patience will pay off...
    anantksundaramJdmr1701avon b7viclauyyczimmermannentropysapplecored
  • Reply 7 of 200
    jungmarkjungmark Posts: 6,716member
    Opie: we expect only Apple to innovate. Those other companies that were lagging behind Apple innovation the previous 15 years are poised to leapfrog past. Sure none are making money. But innovate. Innovate. Innovate!
    stevehroundaboutnowquadra 610calibadmonkrepressthisration aljustadcomicsjas99brakken
  • Reply 8 of 200
    I love it when people that can't create a single thing ... claim to know who can or can't create the next big thing.
    fotoformatMikeymikecalirob53thinkman@chartermi.netration alequality72521georgie01justadcomicsjas99
  • Reply 9 of 200
    I think Apple is doing plenty of innovation. However, the issue for me is whether it's in the current management's (and Board's) DNA to do something really bold, something that can move the needle given its behemoth size. I have no clue what that would be, but I could certainly see the car, education, (still) the living room, and India as serious possibilities. I am not so sure about health, since it's an incredibly complicated, messy business. 'Social', music accessories (e.g., Airpods, Beats) and music subscriptions are definitely not 'it' for me.

    Also, I also feel like some really interesting acquisition possibilities -- e.g., Harman Kardon -- have been left on the table or lost to competitors. Even a McLaren (or a Ferrari, now that it's a publicly traded company) would send a tremendous signal.

    edited December 2016 pscooter63cali
  • Reply 10 of 200
    jkichlinejkichline Posts: 1,336member
    People don't understand the word innovate. Innovate is to take an existing idea and improve upon it. That's what Apple does. They didn't invent the computer, they just made the best and most marketable one. They didn't invent the MP3 player, the cell phone, the laptop, the connected TV, the smart watch, WiFi... none of these things Apple invented. But what they did do was make the very best version of each of these. Apple makes cultural technology-based icons.

    So to say they don't innovate means that the writer does not understand the meaning of the word. What he wants to say is "invent". But Apple is not known for invention. Yes they do R&D and have a huge patent portfolio, but they don't come up with new classes of computing.

    All the things that are mentioned that Apple isn't doing, I can guarantee you they ARE doing. But they aren't going to announce it to the world because most of them are probably business flops. What they will do is hone that technology until it's ready and then market it. Apple always maintains the element of surprise.
    pscooter63roundaboutnowMikeymikerob53charlesgresJdmr1701ai46jungmarkkudubadmonk
  • Reply 11 of 200
    Same old same old, doom and gloom. How many times has Apple been copied after they introduced something? They may not have to be first, but try to be the best. They have more money than they can spend last I checked. Plus they are very strategic when spending it. Evolution happens in small increments over time. Waiting on new chips from Intel has probably been their big hold-up. The Mac Pro & iMac are probably on the next updates. Hopefully.
    calibadmonkration alequality72521georgie01jeffharrisjustadcomicsjas99
  • Reply 12 of 200
    AI, cloud services, and messaging.  With a neural network API in iOS, collaborative work through apps in iCloud (not to mention option to put your home directory in iCloud), and a messages app opening up to third party extensions, to me it looks like Apple is working all three of these areas (and I'm sure there's much more in each one available to a diligent researcher.  I'm just a casual observer).  Does Oppenheimer have specifics about his vision of the innovative future (that Apple looks like it is already shaping) or is he just spouting buzzwords?
    calisockrolidbadmonktdknoxequality72521daveinpublicjustadcomicsjas99
  • Reply 13 of 200
    gatorguygatorguy Posts: 21,117member
    The Apple that developed the iPhone was a different Apple from today's. The old Apple was leaner, a whole lot less wealthy, driven and more desperate for a home-run product. Today's Apple doesn't have the same motivation or urgency IMHO. $200B sitting idle in the bank makes a difference in the way a company conducts itself. This Apple can easily afford to be much more patient, with "betting the farm" no longer a driver to push hard and fast on a new product. Just my .02
    hypoluxaBWYS_NWYBavon b7ration alentropysbuzdots
  • Reply 14 of 200
    The problem here is that some people expect Apple to be releasing game-changing, groundbreaking new tech products every year. Making the iPhone faster, waterproof, with a better camera, screen, etc. isn't enough for many who seem to expect some wild new shape or case material, just because it's what they think is necessary for an item to be "new". Just like the frame-less screen demand, when it really doesn't do anything for your user experience, especially with a handheld item where your fingers are going to cover some of the screen. Other manufacturers in tech and in most other product categories are not held to the same standard, nor do we expect / demand that any automaker create some new hyper fast, oblong shaped, carbon-fiber-magnesium-fabric skinned car that floats and doesn't use any energy form. But it certainly feels like a vocal minority of tech-crazy people expect this of Apple.
    caliThe_Martini_Catbadmonkration alequality72521StrangeDaysjas99TomE
  • Reply 15 of 200
    lkrupp said:
    Well, some progress has been made. At least these analysts aren’t predicting Apple’s imminent demise anymore. I guess they finally figured out that pile of cash will prevent that happening for the foreseeable future. So where is this guy coming up with “a decade-long malaise?” Why 10 years? Why not 20, or 5, or 6 months? Of course this is fuel for the fodder for the “long time loyal” Apple owners turned Apple haters on AI.
    The "decade-long malaise" is pulled directly from his, 'you-know-where'.  That's where it's coming from.
    edited December 2016 randominternetpersonjas99TomE
  • Reply 16 of 200
    Did "Urkel-witz" type his report on his Android tablet, while managing his music via Echo, and checking his Google-wear watch for his deadline? His next piece? Slamming Ford for depending more and more on cars for profits. 
    edited December 2016 equality72521daveinpublicStrangeDaysjas99brakken
  • Reply 17 of 200
    eightzeroeightzero Posts: 2,492member
    There is a ring of truth to this. My AppleWatch suddenly had battery issues under watchOS3. Airplay stopped working in some apps under tvOS10.0.1. It seems one of the best parts of macOS, Time Machine, is going to be outsourced to third party routers. iCloud is...unintuitive at best; the desktop file storage thingy is an absolute hot mess. AppleTV has an app coming that does...what now? Provide a sales platform for others? Airpods are available...when? But hey, the macbookpro is uber thin! and USB-C reasons! and iOS allows me to get spam calendar things, but not delete emails all at once. D

    Don't get me started on Siri. Who actually uses that?

    And here's an ad for a samesung VR device with people enjoying it. 
    anantksundaram
  • Reply 18 of 200
    They don't need to innovate constantly and no company innovates forever. Do they have a business model that lets them stay in business? I think so. Will other companies, ones that haven't even been formed yet make big new products and create new markets? Yes. They always have. Does that mean Apple will become unprofitable? Apple was a company in search of a business model when Jobs came back. They were failing. They found a few things that let them stay afloat...and by afloat I mean becoming one of the wealthiest companies in history. But nothing lasts forever. Just ask IBM and Microsoft and Yahoo and the list goes on, especially in technology.
    equality72521adonissmu
  • Reply 19 of 200
    Translation: "Apple, why don't you collect data like everyone else?"

    Perhaps there's a legitimate fear that Apple will be targeted (again) by the powers that be for not collecting data to be used for "advertising".

    Break out the labor concerns, the tax concerns. Apple will be the biggest offender ever!
    caliadonissmu
  • Reply 20 of 200
    I would agree. Rather than a drive to expand and innovate, there's been retreat to the iPhone cash cow. Apple could make it's existing products better. Instead they languish until they're removed from the market.
    Roger_Fingas
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