Apple, Bitten

Apple's market cap has fallen $118 billion since Google Maps was removed September 19th.

Other companies (GE, Microsoft, Cisco, AIG) have fallen further in market capitalization, but Apple's recent drop is nonetheless remarkable in a non-crisis year. A scant 44 days ago AAPL had been rising on the heels of the iPhone 5 announcement and the rumored iPad mini. Then the new operating system, IOS 6, was released.

The premature removal of Google Maps was one of the greatest blunders in Apple's 36-year history. Apple knew that it was taking a chance but underestimated the negative reaction:

in breaking with Google and giving iPhone users worse maps than before, Apple has gambled on three things. First, that users will like its maps’ embedded content. Second, that it will be able to improve fast. And third, that the allure of the iPhone and the loyalty of Apple’s fans will buy it time. After all, people do not buy smartphones for the maps alone, and queues for the iPhone 5 were every bit as long as for previous incarnations of the revered device. But Apple has more catching-up to do than it expected. In a market where brands can rise and fall fast, it may also have less time than it thought.

The removal of a single app, important as it may be, wasn't the reason that the market values Apple $118 billion less. Now that Steve Jobs is gone, Apple is beginning to look like just another good but not extraordinary company. The revolutionary product in the pipeline may well be a myth.

It's going to be an uphill slog back to $700 per share.

[Disclosure: I am long Apple.] © 2012 Stephen Yuen

Cheap But Not Stupid

The car wouldn't start because the battery was drained. (I was in the City, 30 miles from home, so solutions were limited.) I called AAA, and the tow truck came in less than an hour. The driver took less than a minute to jump-start the engine and five more minutes to fill out the paperwork. I was soon on my way.

For most of the 38 years that I've been with triple-A I mainly used the membership to get free street maps. Now that paper maps are obsolete, I had briefly considered canceling the membership, but common sense prevailed. A person whose cars average 15 years of age needs to have a roadside assistance plan. It's okay to be cheap (see reference to 15-year-old cars in previous sentence) but not stupidly so.

Raising the hood not only signals the tow truck but invites birds to perch.

Left by the Side of the Road

Hard to miss a turn with Apple's Maps

Apple's new-product releases introduce technologies that become industry standards. Nearly as significant are the technologies that Apple stops supporting along the way. Apple was one of the first to discontinue built-in floppy disk drives, then optical drives, on its computers. Steve Jobs provoked a furor when he explained "why we do not allow [the widely used Adobe] Flash on iPhones, iPods and iPads."

The iPhone 5, set to be released on September 21st, has at least two "left behind" features amidst all the cutting-edge hoopla. The iPhone 5 has a new connector that doesn't work with ancillary equipment built for the iPod, iPad, and old iPhone. Some Apple customers have to spend thousands of dollars upgrading or adapting their equipment.

Google Maps has more detail.

But the most criticism seems to have been reserved for the abandonment of Google Maps in favor of Apple's own Maps application.

The criticism poured in world-wide as users of the new maps found misplaced labels for businesses and landmarks, cities with missing roads and erroneous features like a fractured river in Ann Arbor, Mich. A search for the Golden Gate Bridge yielded a marker roughly four miles away in San Francisco.

Apple has a history of gauging just how much inconvenience its customers are willing to tolerate without jeopardizing sales of its latest offering. I suspect this controversy will blow over as well, especially as Apple Maps is improved in later versions of the operating system.

Note: Google Maps is far from perfect either. Yesterday a colleague had a meeting at NVIDIA headquarters in Santa Clara. He typed in the address, 2701 San Tomas Parkway, Santa Clara, and Google Maps sent him to a location north of Highway 101.

If he had just typed "NVIDIA," Google Maps would have steered him straight. He would have exited south from Hwy 101 and gotten to the meeting on time.

© 2012 Stephen Yuen