

The Apple effect

An iPopping phenomenon


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Readers' comments


Judy Vong

Apple's high rate growth suggests the great potential of development of advanced technology companies. However, same situation didn't appear on other advanced technology firms. What special characteristics does Apple have that make this difference? It is about ability of innovation and branding. Apple is not the only company offers gadgets that fulfill the desire of people. But it outperforms the others by its branding strategy. (Also, some other aspects such as the phone case cannot be easily opened to repair also make a stable demand of its future products.) Hence, the price of its products hardly drop even though new generation of the same products are out in the market. Which definitely provides a stable income.
From my point of view, ibubble is not yet created. i-products are popping in a reasonable way.


"I recently switched from a Windows laptop to a Macbook. It is not the operating system that impresses me;......"

How on earth can you not be impressed by an OS that someone has actually thought about. I mean clicking on 'Start' when you want to stop says it all about a system still, after all these years, has DOS
underneath. In years to come people will look back in astonishment at how people managed to use
such a crass OS.


Can anyone explain the sentence "and the announcement of a share buy-back should remind investors that companies have a tendency to purchase their own equity at market peaks." - don't companies usually buy back their stock when it's undervalued? This seems to say that companies buy back their stock when its value is high. I'm sure i'm missing something...

Charel in reply to danielpfletcher

The share buyback as proposed by Apple only applies to shares issued to staff. It is proposed to avoid diluting the equity of outside shareholders and not, as stated by The Economist to reduce issued shares to its normal shareholders. As such its remarks are wrong and confuses the issue. Share price has nothing to do with this buy back.


"...It is the epitome of the modern company: short on physical capital but long on brainpower....."

Here are a couple of "Radical-Thoughts" from the FAR-WEST:

This Brain-Power, stems from the Most Valuable Resource of ANY Corporation!

This Brawn-Power -provided by an Army of Workers in China, do NOT Count or Figure in the True Number of Apple Employees!!

It's ALL about the People...............

Peace, Love & Respect.


I'm sorry but Apple did not invent the mp3 player, the smart phone, or tablets (and Apple released at least three failed tablets before the iPad, or did everyone else just forget about the Newton). The story of Apple's success is not one of innovation or technological wizardry but merely one of marketing. Whoever does Apple's advertising deserves an award (and a bonus). There is really no material justification for Apple's 30% profit margins aside from them being trendy.

Truly Yours in reply to Hindumuninc

Newton demonstrated the potential for keyboard-less user interfaces that blossomed into iPhone and iPad. Apple's culture of engineering excellence coupled with marketing vision is what generates superior margins, not advertising. Cloners can never hope to capture long-term profits.


"And America’s soft power is still so strong that it can create aspirational brands for that elite."

One guy, who runs rough shod over corporate America culture and you call him the epitome? Most of American business culture ensures conformity.


Time to enjoy the hard work by paying dividends. Why bother investing in R&D or trying to grow. It is a myth that growth will make a company more profitable.
Besides, they sell old technology with fancy look. It is the Louis Vuitton of gadgets. Useless pieces of technology that look nice and make you look trendy.


It seems odd that a company can hold large amounts of cash overseas, at 100 cents on the dollar, even though this money cannot be put to use until the domestic taxes are paid. Not just Apple, certainly, but dodgy accounting is dodgy accounting.


I cannot understand this comment:

'Even if its shares turn out to be overvalued, this would be more like a pimple than a bubble.'

How can you seriously imply that purchasing a company that may be substantially overvalued is irrelevant? I must have misunderstood this.


are you kidding me? the chinese capitalism is so-called successful, as with all other asiatic countries' success, came from knocking off products shamelessly, while deny the original a chance to have a fair fight. soy bean and plane my ___, Take a look at a google map streetview in china and name all things you can see from A to Z, which one was invented in China? don't f' compass/gunpower/paper me


when you post graphs like that, please ask someone with math skills to convert the vertical axis to a RATIO or "log" scale, rather than linear?

Linear vertical scales are prone to misleading "hockey-stick curves" just like Al Gore's infamous "Unintended" graph.


jkspepper in reply to plusafdotcom

Plus, with all this furore over apple lately, as an apple watcher of a number years, I remember the time when apple surged from below 100 upwards just as fast without much of a murmur from the international press.

But now the mainstream has picked up on it, it's big news.

I have been long apple since the days where it's stock was $100 per share and I was sure back then that it was hit $600. Now it has, and my analysis is validated.
Remember 3 years ago roughly today, the stock was at $85.

I remember when fears over Steve Jobs 'departure' was being discussed well before the main press got wind of it and how it would affect Apple. What I didn't expect was that due to this sad event, Apple received more publicity and the stock has garnered mainstream attention whereas before it could have been argued that to most lay-men, apple was a poor cousin to MS.

plusafdotcom in reply to jkspepper

and although this is off-topic, when Jobs reported that he was going to pursue "holistic" medical treatment for his cancer, my prediction at that instant was: "Dead Man Walking... 'Bye, Steve."

anyway, here's a comment which might have as much or more bearing on past, present or future stock price of AAPL.... from a friend of mine... "the iPhone is the first phone I didn't want to throw away a few months after I bought it."

my wife and i sort of like our Verizon Samsung Galaxy "S"-es, but i'm a user interface hawk, and i've seen few lousier or more "user-hostile" user interfaces in my life... and i've been looking at user interfaces since they were DOS green-screen alphanumeric.


There is a fourth factor. Apple has expertly exploited free and open source software as the core of all its offerings.


Or you could just watch science fictions movies and base your gadget design off that; e.g. iPad/2001: A Space Odyssey

Charel in reply to TMcFar






Truly Yours in reply to Duck_Hook



Duck_Hook in reply to Truly Yours

Your comments about brand loyalty are well stated. Loyalty is an excellent thing; fanaticism, less so. Brand loyalty comprises valuable goodwill and leads to long-term growth; fanaticism is what leads to bubbles. They may be highly resilient bubbles, but they are bubbles nonetheless. As an Apple loyalist, you have good reasons for your loyalty and are therefore wise in continuing to patronise their product offerings. But this is a completely separate issue to stock valuation. As an investor, I must judge how much of Apple's goodwill is due to rational loyalty such as yours and how much is due to irrational fanaticism such as that pictured in the article. If you judge that Apple's current valuation is based on nothing but solid brand loyalty, then purchasing stock is a viable consideration. But if you judge (as I do) that -- notwithstanding the quality of their offerings -- much of their present valuation is based on fanaticism, then the conditions for a bubble exist and the stock is overvalued.

As a side note, you do the high fashion houses a disservice when you denigrate them as "fashion-based marketing". The best of them adopt all of the practices that you attribute to Apple: [design] discipline, ergonomic leadership, product life-cycle management, quality control, and customer service. Steve Jobs would have been the first person to compare Apple to fashion: the design sense of the high fashion houses was one the most important goals that he strove for in each of his creations.

Truly Yours in reply to Duck_Hook

As a former product marketer happy to emulate Apple's strategies, I can only applaud the company's marketing vision. As a long-term shareholder, I'm used to naysayers predicting Apple's failure and trust that the market values the company correctly, especially today's market. As a human being, I'm thankful for Apple's example as a corporation whose motives are not simply profit-driven expediencies. Short-term speculators are a pox on the equities markets.



anchit in reply to BilBeau

when you look at it, it's a serious conflict of interest. Economist sells its subscriptions on iPhone and iPad. So, it might be pressurized to write only positive reviews about Apple. Who knows it might even be getting paid by Apple and Facebook earlier to write positive reviews about them.


Apple will become the world's first trillion Dollar company at some point during 2013.


Too many good things is not a good thing. The ever increasing pile of Money and greed is corrpting spoiling Apple.

plusafdotcom in reply to jackdeguest

jack, notice that the introduction of "pile of money... greed...[corruption]... spoiling..." are not data related at all...

they're belief/opinion-based and consequently data are irrelevant. don't get sucked down that rathole of a "discussion." not worth it.


jackdeguest in reply to plusafdotcom

Thank you plusafdotcom. I was hoping there was actually some reasons to making those critics, but it turned out to be just noise.
I am really interested and thus am watching closely Apple to see how it will manage itself through its growth. Will it become greedy like some other IT giants, or will it succeed in keeping its corporate values that contributed greatly to its success? They will, in turn, affect the possibility for Apple to reach one day the $1 trillion valuation.




Fascinated in reply to yauhooi2010

(unfortunately can't include the Kremlin in this list).

jkspepper in reply to yauhooi2010

yauhooi2010 - But then it appears you have missed the point of the article/paragraph.

Sony is Japanese
Samsung is Korean
HTC is Taiwanese

None are Chinese, none state owned, none run by bureaucrats.. that sir was the point.

yauhooi2010 in reply to jkspepper

jkspepper: Good observation, but superficial conclusion. Yes, I am aware of the different systems that these companies come from. HTC, being Taiwanese, is essentially Chinese. And so is Foxconn, without putting too fine a point on it. Of course, the Taiwanese system is different from China's.

Sony used to inspire and did very well under the visionary leader in Akio Morita. Likewise with Apple - it had a visionary leader in Steve Jobs.

It's more to do with leadership, vision, and the right environment for innovation, rather than the system of governance in a country.

jkspepper in reply to yauhooi2010

But you have yourself just validated the point that I (and the article) was making. With the rise of 'state capitalism' in China, leaders of such companies would be manned by bureaucrats rather than leaders and innovators. Hiring of talent would fall to those that have no vision themselves. Innovation would therefore be lost as a consequence.

This is the underlying concept. Could such success from innovation come from a Chinese (not Taiwanese, Korean or Japanese) company?

yauhooi2010 in reply to jkspepper

The point I was making is that no bureaucrat, in any country, would be able to dream up the designs, and in response to the sentence: "It is impossible to imagine any of those designs being dreamed up by a Beijing bureaucrat." Namely, one cannot imagine any bureaucrat in Washington, the Kremlin, Tokyo or Westminster being able to do that. Hence singling out Beijing, is particularly unfair.

Also, not all Chinese companies are manned by bureaucrats, as you were suggesting. There are some which are privately owned too. And there is nothing to stop new companies from being formed in China.

The system of governance is not relevant to innovation, and a Chinese company could succeed, provided that the corporate leaders are given full rein to run the company and innovate, with minimal interference by the government bureaucracy.

Der Perfesser








iconomyst in reply to Der Perfesser



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