Steve Jobs Finally to Realize His Henry Ford Dream

Apple bought a chip company, Intrinsity, putting Steve one step closer to his dream:

I want a computer factory that takes raw beach sand in one end and outputs fully assembled computers on the other

Steve is following in the footsteps of Henry Ford, who was fanatical about controlling all aspects of the Model T:

[H]e built a new manufacturing complex near Dearborn Michigan called the Rouge and where he consolidated his entire business there in 1928. This complex controlled the production, assembly and transportation of his product. He next purchased a railroad, coal mines, timberland, freighter ships, and a glassworks plant. He also built his own sawmill. At the peak of his success, Henry Ford owned businesses in 33 different countries that all contributed to his automobile product. 

Apple is of course infamous for a fanatical devotion to secrecy and legendary control of its platforms. A leak of the next iPhone has led to criminal investigations, a bit over the top. Apple is also known as having strong NIH (not invented here), eschewing partnering. It is said not to be acquisitive, being inclined to build rather than buy, but it has made a number of acquisitions recently, especially around control over the platform down to the chip level. He picked up a really interesting mobile technology, Siri, which combines voice recognition with mobile apps, letting you (for example) ask the phone to find you a nearby restaurant and check on availability. This would voice-enablemany of those iphone apps, further embedding them (and you!) into AppleLand. 

The iPad has hit some criticism for being a big iPhone rather than a tablet Mac. Apple has reserved the name iSlate, so a flat Mac may be in the offing; but the over-hyped iPad launch raises the question: has Steve's marketing magic hit its limit?

The criticism misses the mark. Apple lost to Microsoft in the PC wars due to insufficient apps, much in the same way it is commonly argued that Beta lost to VHS due to fewer video titles at the precursors to Blockbuster. (I actually attribute VHS's success to being the first to record 2 hours - hard to record a movie with a one hour tape while out and about - but this early lead was translated into architectural dominance due to more VHS titles at video stores.) 

With the iPhone's pre-eminence in apps, Apple is leveraging a huge lead over its closest rival, Google's Android platform, and almost a complete sweep of the rest of the field of Microsoft, Blackberry and Symbian. Palm, sadly, has already faded in the AppPhone race. An iSlate tablet Mac would have launched way behind tablet PCs with Windows 7 on them. 

The strategic question is whether the conditions have changed so a fanatically-controlled closed platform can win against the more open alternatives, especially Android. Will Apple get an early lead, as Ford did with the Model T, and Apple did with the Apple II, only to lose out to a broader competitive community, as Ford later did to GM, and of course Apple did to Microsoft? 

The key difference this time is that Apple is peddling a consumer lineup. 

Microsoft benefited greatly from selling to businesses, who could afford to hire expertise and support their users. It took a decade or more before the PC became a consumer item, and even then the early users would piggyback on an IT department back at their employer. Support complexity for apps and PCs themselves drove standardization, whereas with mobile phones a proliferation of platforms has persisted. We saw the same with TVs and other mass-market consumer items; proliferation rather than standardization. 

The pull we see with consumer technology was not over openness per se, but content. Openness is much less an advantage with consumer devices, since it turns the consumer into its own IT department. Highly-integrated devices win, especially those like the iPod which are tied to a web-based service like iTunes. The integration allows a more elegant and consumer-friendly experience. 

By turning the cellphone into an apps-phone, Apple has created a content advantage, a huge pull towards the iPhone over other apps phones, the same sort of "pull" we saw with VHS vs Beta. Apple may win and stay closed.

Apple was rumored to be seeking an additional content advantage with the iPad: a $30/month cable service, via iTunes. What made its iPod drive to huge success was not the design nor the marketing magic, although they helped, but the tie-in to a new music model via iTunes and the $1 downloadable song. Second time around, this new video model was not to be at iPad launch, although it still may come.

Content his is not where Apple is vulnerable. It is hard to envision a competitive platform gaining such a content advantage over Apple, especially with Steve as chairman of Disney.

Where Apple is vulnerable is in a failure to expand to meet changing consumer needs. The fanatical devotion of Ford to efficiency ("you can get any color you want as long as it is black") allowed GM to rush by Ford with a proliferation of brands, styles and segments. A simple look at Apple's lineup, however, shows Steve has cleverly populated about every price point. 

Steve has learned not only from Henry Ford's mistake in the '20s, but the earlier Steve Jobs' mistake in the '80s. Hard to see the chink in the armor other than the quirkiness of Steve himself. It is said he views every product as a reflection on him, as if it were the clothes he were wearing. As long as his tastes stay close to consumer desires & dreams, he can realize his own long-standing beach of a dream. 

Chart courtesy BoyGenius. Picture courtesy TheOnion, showing Steve launching his latest product, himself!

Comments

[Jim bob]

Excellent piece on Apple. They are doing well, almost too well. I want a few technical analysis guru's to tell me where they think Apple stock will peak. My wave count says it's done and should decline back to the 4th wave soon.

[nspolar]

Hank W. .. I am short, one of only a few that are. Maybe the only. Am ahead getting ready to go shorter. Stated such.

What is the matter with all you big shot ewavers? Are you a bunch of pussies or what? Can you real time call your shots or just play pocket pool?

vipul ... a few more days for gold, them bam! Getting ready for poot shots.

Apple is ready to crash and burn. Right in sync with Yelnicks praise of Jobbie boy.

ns

[DG]

nspolar,

If you need to believe you're the "only one" who's short, knock yourself out. Your delusions of being some kind of unsullied independent thinker are always good for a chuckle.

Anyway, yes, all three ETFs I follow have triggered new short trades. For me, that is necessary, but not sufficient to say that the top is in. Frankly, the whole "the top is in" style of trading is of little interest me at this point in the wave structure. If it's in, it's in. If it isn't, it isn't.

[Bird]

Current rally on 10 minute scale must go to new lows. A fib retracement is "mandatory" before the end of the downmove.

[vipul garg]

nspolar,
my only 2 cents : position sizing and risk management.

i ll be most happy to trade yellow metal to $ 400 though.
but happiness is not easy to come by these days!

[nspolar]

I'm short. No not really, it was just a paper trade. I didn't mean it.

Neely's record is good long term, so good he is God. Only lost 4% the since the big bottom.

No wait I take that back. Neely is not so good. He has lost 400 plus SPX points since the bottom.

But I've fixed his problems. It is all about managing risk. I've tried to tell the poor laddie. We talk regularly but he has yet to take my advice.

Well no Neely is not so good. But wait I think I'll use his LT stuff only. No maybe I will maybe I won't. Instead I will just close me eyes draw another box in time and add two more letters.

But it is all about risk and statistics. That is why I have almost no losses.

But wait, I'm short from further below. Not adding anymore capital until this resolves.

The top is in. No maybe not. The market will tells us. I have little interest now. That is why I sit here and fire off post after post.

Sound familiar?

Who is this?

DG by chance?

You think the rest of us can not read between the lines? You think we ain't been there, done that?

DG, I really do feel for you. All of us know that since you followed the worst forecaster of the last year, you have literally taken it in the ass. Nothing you say here will make any of us believe otherwise. You and a lot of others that have followed Neely are likely near tapped out, waiting for a miracle. Good Luck in getting out of the hole.

A difference between you and I is I do not sit and day trade. I have a full time job that I believe adds value to myself as well as society. So I have more to worry about than all my losses or gains or what the hell ever. Money will never make you happy DG.

Time to go to work.

ns

[vipul garg]

long ES now sl 1186.75 tgt 1225-30 and then 1250.

[Mamma Boom Boom]

Time to start looking for an exit to the short term long trade, I recommended the other day. The trend is still up, and will most likely run into Monday. But the R/R ratio is fast approaching neutral and will go negative if we get an end of day rally.

Just a word to the wise!

[DG]

DG, I really do feel for you. All of us know that since you followed the worst forecaster of the last year, you have literally taken it in the ass. Nothing you say here will make any of us believe otherwise.

What's funny is the idea that there is some kind of "belief" involved. "Belief" is for religion, not trading. The FACT is that even if I'd followed Neely's Hourly trade recommendations TO THE LETTER, I'd be down 10.7% over the past year. Put simply, I haven't followed his recommendations to the letter. Read between those lines.

So, take your "beliefs" and shove them up your ass, since you seem to have a fetish for that sort of thing. I'll stick to FACTS.

But wait, I'm short from further below. Not adding anymore capital until this resolves.

WTF is your problem? This is a best practice in trading. Why would anyone add capital to a trade if it could still get stopped out? The fact that you pulled this out of all the posts I've made just shows how ridiculous your view of trading is.

The top is in. No maybe not. The market will tells us. I have little interest now. That is why I sit here and fire off post after post.

Yes, I have little interest in making some grand "the top is in!" pronouncement. That doesn't mean I'm not interested in taking the trade. Are you capable of distinguishing between the two?

I'm short. No not really, it was just a paper trade. I didn't mean it.

I've already explained that I can get subsequent trade signals in the same direction as a pre-existing trade.

You're the proverbial guy who thinks only he "gets it", yet is so out to lunch that your views are so off-base they aren't even wrong, they're deluded.

Did you do a lot of LSD earlier in life or something?

[Account Deleted]

Respected DG !!

I have posted the daily chart on the followinng link.Please have a look at it

http://yfrog.com/b6jpt2p

Here is one more incase u require it.

http://yfrog.com/9hjpt3j

DO take a look at them if time permits and guide me with your wave count.

Regards
VB