By John Gruber
Atoms: We are not selling shoes this time…
There’s always a lot of jackassery in the wake of an Apple event, and this week it seems like there’s more than usual. But this hit on Yahoo Finance from Hilary Kramer (of Kramer Capital Research fame) really takes the cake. I’ve transcribed it below, but you really have to see it to believe it. The Apple bit starts around the 2:00 mark, right after she got done extolling the virtues of Roku as an investment.
At the end of the day, Apple is a hardware company, not a software company, and that’s proven by the prices dropping so significantly on their monthly subscriptions. Hardware companies come and hardware companies go. There’ve been plenty of them — names like Wang, for example. So ultimately that’s the problem.
Plus, when it comes to — we’ve looked at the demographics. I’m not just talking about millennials. I’m talking about that 12 year-old to 25 year-old group. They want Android. They’re going into the Microsoft store. They’re upset, they’re upset. You know, everyone has found that there’s some vulnerability that they just got hit with, whether it’s that the battery goes really quickly on your phone, whether it’s breaches in security, whether it’s the incredible expense to get a new iPhone and then you need another one. It’s just over. It’s over for Apple.
This rant is insane. It’s not just a bad opinion, it’s unhinged from reality. The only statement in the whole thing with any basis in reality is that Apple is a hardware company.1
As best I can figure, “prices dropping so significantly on their monthly subscriptions” is her way of saying that the $5/month subscriptions for Apple Arcade and TV+ are lower than she expected. Apple didn’t drop prices on any subscriptions this week — they’d never announced prices for Arcade or TV+. And Apple’s Services revenue is the fastest growing segment of the company (well, tied with Wearables) at 88% growth over the last three years.
Wang? Wang? None of the 12-25 year-olds she goes on to talk about have ever been alive while Wang was a functioning company. The implication here isn’t that Apple is headed for a drop but that Apple is headed out of business. It’s been a long while since I’ve seen that one.
As for the rest, Piper Jaffray’s April survey found that 83% of U.S. teens own an iPhone and 86% expect their next phone to be an iPhone. I’ll bet teenagers don’t like AirPods, either. And Microsoft Stores? They’re ghost towns. You don’t have to be a research analyst to walk past stores and see how crowded they are. Kramer would be more accurate if she got on TV and claimed that what teenagers want is more homework and longer school days.
Even this statement — that Apple is a hardware company — is something I agree with only in terms of finances. Where do Apple’s revenue and profits come from? Mostly from selling hardware products. But functionally Apple’s not really a hardware company in the sense of the company mostly being focused on hardware. Certainly not in the sense that PC and Android hardware makers are. Apple’s software is the whole reason people want to buy Apple hardware. Look no further than the current MacBook lineup — people aren’t buying them for the keyboards or dearth of USB ports. If you want to understand the company’s finances, you can just look at the hardware. But if you want to understand the company, if you want to understand why Apple has an ever-growing number of customers, you have to look not just at software, too, but at the fusion between hardware and software — the way Apple creates an entire product experience. ↩︎