On Being Bullish on Apple

I was recently presenting some of our big picture technology trends to a group of venture capitalists. As is so often in these discussions Apple came up. They were asking me questions about the landscape and where Apple fit, and how they can compete, can they keep it up, etc., and after several remarked they were suprised how bullish I was on Apple. I shouldn’t find it suprising but I am continually inrigued when others are suprised I am so bullish on Apple.

To clarify, I am bullish on Apple the company. Apple the stock, is a very different conversation and one where the future is more hazy than clear. With regards to Apple the company I am extremely confident in the health of the company and I have written extensively so. However, with Apple the stock, I really have no idea what happens. Much of this has to do with the fact that I am not a financial analyst so understanding the games in which the stock market is played is not more core area of expertise. I, of course, have my thoeries as to why Apple’s stock is treated as it is, and I will flesh more of those out over time. But the core of the issue is that Wall St. uses a standard template to anlayze Apple when it there is nothing standard about how Apple operates. Perhaps more to the point, it appears Wall St. devalues Apple’s stock because of the competitive landscape the standard template they use influences their thinking. Google and Amazon can only have the ridiculous P/E ratios they have because Wall St. seems to view them as having no real competition.

We will continue to see over time things that Apple is able to do that competitors simply can not. This is what I call the vertical advantage. When you can build hardware, software, and integrate services all tightly together with a singular vision and customer experience in mind, you end up with a highl differentiated product. One that is differentiated both objectively and experientially. I’m yet to be proven wrong in this point by a non-vertical company who uses someone elses software to run on their hardware.

I’ll put out a teaser for our Insiders. I am planning a series for Insiders only, where I plan to make the case that Apple has no actual competition. In that, I will hopefully make some points that can end up being used as a new template to evaluate Apple. I know it sounds ambitious, but I believe it to be true and more importantly I feel I have enough data and support to make the case.