For a company that’s been around for 40 years, it’s somewhat astounding that Apple remains incredibly misunderstood. As a quick and somewhat broad example, Apple over the years has been consistently criticized for pricing its products too high, even though the company’s core business model has always been the sale of premium products at a premium price. And even though Apple over the last 15 years has demonstrated an arguably unrivaled ability to generate cash via a steady stream of new products and ancillary services, the company remains a popular target for analysts and tech observers who have a penchant for claiming that the company’s best days are behind it.
The most recent example of analysts getting Apple completely wrong came to light just last week. Ahead of Apple’s earnings report, many analysts were busy predicting doom-and-gloom scenarios for the iPhone X. Amid speculative reports that Apple had slashed production, a narrative asserting that the iPhone X was a huge disappointment, if not a colossal failure, began to take hold.
Of course, Apple’s earnings report revealed a completely different story. Not only were iPhone sales strong, Tim Cook explained that the iPhone X was the most popular iPhone model for every single week during the March quarter, a rather impressive feat given the device’s $999 starting price.
In light of analysts completely misreading the popularity of the iPhone X, I thought it would be a good time to open up the history books and take a look back at some of the more boneheaded Apple predictions of all-time.
The iPhone will be a failure
While most people were blown away by the original iPhone unveiling, not everyone in the tech world was enthusiastic about the device at first. Recall the following remarks from former Palm CEO Ed Colligan:
We’ve learned and struggled for a few years here figuring out how to make a decent phone. PC guys are not going to just figure this out. They’re not going to just walk in.
And of course, we also have former Microsoft CEO Steve Ballmer’s cherished take on the matter.
The iPhone is “is the most expensive phone in the world,” Ballmer confidently stated in January of 2007, “and it doesn’t appeal to business customers because it doesn’t have a keyboard which makes it not a very good email machine. So, I, I kinda look at that and I say, well, I like our strategy. I like it a lot.”
Ballmer would later admit that he was wrong about the iPhone, sort of.
“I wish I had thought of the model of subsidizing phones through the operators,” Ballmer said in a 2016 interview. “People like to point to this quote where I said the iPhones will never sell. Well the price of $600 or $700 was too high and it was business model innovation by Apple to get it essentially built into the monthly cell phone bill.”
Here’s another laughable iPhone gem from Matthew Lynn who wrote for Bloomberg at the time:
The iPhone is nothing more than a luxury bauble that will appeal to a few gadget freaks. In terms of its impact on the industry, the iPhone is less relevant
The iPhone is a defensive product. It is mainly designed to protect the iPod, which is coming under attack from mobile manufacturers adding music players to their handsets. Yet defensive products don’t usually work — consumers are interested in new things, not reheated versions of old things.
Apple will sell a few to its fans, but the iPhone won’t make a long-term mark on the industry.
The iMac needs a floppy drive
20 years ago this week, Steve Jobs introduced the world to the original iMac, an all-in-one machine with an eye-catching translucent blue shell. One of the more intriguing aspects of the original iMac design is that it shipped without a floppy disk drive, a design decision that was somewhat controversial at the time.
Case in point, here’s what The Boston Globe had to say about the original iMac back in 1998.
The iMac will only sell to some of the true believers. The iMac doesn’t include a floppy disk for doing file backups or sharing of data. It’s an astonishing lapse from Jobs, who should have learned better…. The iMac is clean, elegant, floppy-free — and doomed.
Truth be told, the iMac was a runaway hit for Apple. More importantly, it helped make Apple a relevant player in the tech space.
The iPod is boring and too expensive
More than the iMac, the iPod is what restored Apple to tech prominence. Though just a humble music player, the iPod was a game-changing product that fundamentally changed the way the world listened to music. Still, its release in 2001 wasn’t exactly the cause of celebration among analysts.
To wit, analyst Tim Deal stated at the time:
However, I question the company’s ability to sell into a tight consumer market right now at the iPod’s current price… Clearly Apple is following Sony’s lead by integrating consumer electronics devices into its marketing strategy, but Apple lacks the richness of Sony’s product offering. And introducing new consumer products right now is risky, especially if they cannot be priced attractively.
Slashdot’s famous first impression on the device read: “No wireless. Less space than a nomad. Lame.”
Apple retail stores are bound to fail
Steve Jobs decision to develop Apple retail stores in high-end shopping locations is undoubtedly one of the smartest decisions he ever made. Especially at a time when Apple products were relegated to back shelves, Jobs realized that the only way for Apple products to be displayed front and center would be if Apple were in complete control of the entire shopping experience. Today, there are hundreds of Apple retail stores across the globe. Moreover, Apple’s line of retail stores are essentially money-making machines and currently generate more revenue per square foot than even Tiffany & Co.
Still, the idea of Apple spending significant amounts of cash to build out retail stores was viewed as poor decision making at the time.
Analyst David Goldstein back in 2001 said: “I give them two years before they’re turning out the lights on a very painful and expensive mistake.”
Steve Jobs and NeXT can’t save Apple
With Apple teetering on the brink of bankruptcy in the late 90s, the company in late 1996 acquired NeXT in an effort to address glaring shortcomings in its existing operating system. A commonly held perception at the time, though, was that the acquisition wouldn’t have much of an impact on Apple’s ongoing business.
To wit, Microsoft CTO Nathan Myhrvold at the time said: “The NeXT purchase is too little too late. Apple is already dead.”
Now to be fair, it would have been hard for anyone at the time to predict that Jobs would return to Apple with a vengeance and — in about 10 years time — churn out an impressive string of revolutionary new products.
Bonus Prediction: Apple will disappear and become irrelevant
This prediction is so dumb it’s only worth bringing it up in jest. That said, Global Equities Research analyst Trip Chowdhry back in 2014 said this foolishness: Apple only has “60 days left to either come up with something or they will disappear. It will take years for Apple’s $130 billion in cash to vanish, but it will become an irrelevant company… it will become a zombie, if they don’t come up with an iWatch.”
No comment needed on that, I suppose.