On Monday, March 25, Apple (NASDAQ: AAPL) CEO Tim Cook
mounted the “what Steve Jobs created big stage with a huge screen” to make
announcements, soon joined by a couple of senior executives recently hired to
implement Apple’s vision for a streaming service and some A-listers. Maybe he
wasn’t wearing a black Jobsian turtleneck, but this is the way Apple announces
stuff. They televise the production; analysts hang on every word. Apple is
one of the most important companies on earth, always in the top five in terms
of net worth, with an unmatched tech-creative cachet.
The big focus before the presentation, to which dozens of
Hollywood celebrities were invited (and some participated), was spelling out
Apple’s new entertainment-driven streaming services (Apple TV+ and Apple News+).
With Netflix, Amazon, Hulu, YouTube, etc. out there for years with corporate
valuations in the stratosphere, reaching tens of millions if not billions of
individuals, consumers – especially Apple aficionados – were waiting for the
big announcement were expecting for Apple to flex its might and send shivers
down the backs of its competitors. The Hollywood community believed (and still
believes) that Apple was simply going to buy a massive content-generating
library (e.g., a major studio or an existing mega-streaming service). Disney
just spent over $71 billion just to buy a studio (Fox) to provide enough
content for their new streaming service. Nope. Not today.
Instead, Mr. Cook opened up with a discussion of the
disappearance of cash and the movement toward digital monetary transactions for
which Apple was now particularly well-suited to implement. Apple was issuing
the NextGen credit card along with an underlying financial package, complete
with personal tracking and analysis. More on this later. The streaming
announcement was… well… er… a bit underwhelming and somewhat confusing,
presented in part by Mr. Cook with two respected TV executives from Sony TV,
Zack Van Amburg and Jamie Ehrlich hired by Apple two years ago. The March 26th
FastCompany.com explains:
“On Monday morning [3/25], Apple finally gave the world a
peek at its highly anticipated foray into producing original TV shows and
movies, a bid that will put it in direct competition with the likes of Netflix,
Amazon, and even Disney. But the announcement, which took place at the Steve
Jobs Theater on Apple’s campus in Cupertino, California, felt less like a
show-stopping Apple launch and more like an old-school, network-TV upfront
presentation, replete with celebrities standing uncomfortably on a dark stage
while reading awkward jokes off a Teleprompter.
“There was also remarkably little information shared.
Apple’s new shows, which will be part of its new Apple TV+ app that’s launching
in May, will be available sometime this fall. It’s unclear how much a
subscription to Apple TV+ will cost, if anything. (Another new service
announced on Monday: Apple
News+, which will give users access to over 300 magazines and newspapers
like the Los Angeles Times and the Wall Street Journal, and will
cost $9.99 a month.).”
Indeed, Mr. Cook told the audience that the new service was
going to be “unlike anything that’s been done before.” We all know that with
Apple designing the technology, the underlying infrastructure will probably
blow existing technology all to hell. But people don’t watch technology; they
want programming, and what was presented did not seem to provide much in the
way of a new creative direction. But that “new” looked more like a redone
“same-old/same-old.”
“For now, all there is to judge of the shows are the names
involved with them, which are uniformly A-list in keeping with Apple’s
obsession with the highest quality, but therefore also highly predictable.
Unlike Netflix’s initial original programming choices, there are no evident
risks or bets on daring series, such as Orange is the New Black. As one TV
producer noted, ‘Spielberg opens up to announce . . . a 57-year-old comic and a
40-year-old show,’ in reference to Apple’s reboot of Amazing Stories,
which Spielberg is producing through his Amblin Entertainment company, which
produced the original series in the 1980s.” FastCompany.com.
Back to that shiny new Apple credit card: “This is Apple
Card: the credit card Apple is releasing both as a tangible credit card and a
virtual card inside Apple Pay, in conjunction with Goldman Sachs and
Mastercard. Announced at yesterday’s [3/25] live event in Cupertino and due out
this summer, Apple Card marks a strategic shift for the technology company:
Don’t just sell consumers shiny new gadgets; sell them enticing lines of
credit, too.
“In terms of the Apple Card’s features, some are great–like
no annual fees or late fees on payments. Likewise, interest rates won’t
increase with missed payments, and Apple and its partners have agreed not to
sell your spending data. Others are just okay, like 2% back on purchases, and
3% back on Apple purchases. Interest rates will range from 13.24% to 24.24%
(based upon your personal credit score placed atop the rate baseline in March’s
Federal Reserve data). But this is Apple. It’s not just promising you any old
credit card. It’s promising a credit card ‘designed for a healthier financial
life,’ according to Jennifer Bailey, VP of Apple Pay. As such, the card offers
all sorts of handy, Apple-designed visual metrics to help keep your spending
clear. It’s a crucial problem in 2019. We’re on the edge of a recession. As
many of 41.2% of
Americans have an average of $5,700 in credit card debt and less
than half of Americans have the cash on hand to cover a $1,000
emergency.” FastCompany.com.
So, what this March 25th dramatic Apple presentation gave us
was: 1. The very late entry of yet another streaming service in an era where
consumers are beginning to be overwhelmed with paying for streaming services
and 2. One more offer for another credit card. I am acutely aware of never
underestimating Apple. In terms of innovation, creative thinking and virtually
unlimited financial capacity unmatched by any other company on earth. iPhone
sales are down. Tablet sales are down. Laptop and desktop computer sales are
down. Does what Apple presented on March 25th fix all that? The market was not
impressed.
“How underwhelming? Netflix (NASDAQ:NFLX) was
widely expected to face a tough competitor in AAPL’s new Apple TV+ video
streaming service. Finally! A competitor with really deep pockets. But instead
of Netflix stock taking a hit on the announcement, the script was flipped: NFLX
closed up 1.45% while Apple stock was down 1.2% at the end of the day.”
InvestorPlace.com, March 26th. Home-grown entertainment services based
primarily on creating new material take time to grow. A lot of time. Years.
Until (note I did not say “unless”) Apple implements a more aggressive
acquisition strategy, investors seem to be expecting Apple shares to languish
under the scenarios presented at the March 25th Cupertino event.
I’m Peter
Dekom, and Tim Cook and Eddie Cue, we just want more!
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