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TheStreet Open House

Apple's Core Is Solid, Even With Bruised Skin

Stocks in this article: AAPLNOKBBRY

NEW YORK ( TheStreet) -- After reading the negative headlines about Apple (AAPL) issuing an apology to Chinese consumers, you may understand why the shares fell in price, but does it make sense? I don't believe the media or the market made the right call.

Sometimes the media forgets the entire purpose of a company is to provide goods and services to consumers. In the free market, we allow consumers to decide which products will be made, at which price and in what quantity, etc. ... Once a company forgets who its "real boss" is, that enterprise is doomed to the corporate dust bin (absent a government bailout, of course).

The real genius behind Apple's success is the ability to meet consumer needs better than the competition. We don't have to travel far to find examples of companies that forgot who genuinely decides what is made and what companies prosper. Nokia (NOK) and BlackBerry (BBRY) are two notable examples of the market punishing failure. In the free market, you either deliver what the consumer wants, or you perish.


Apple, under pressure from Chinese media (think the government at least in part), did the right thing. Apple's leadership correctly understands that at the end of the day, success comes from serving the Chinese in the Chinese way. If the Chinese want a product warranty and service in a different way than Apple is accustomed, then Apple can decide if they want to fill that need, or leave the market.

The question isn't about right or wrong, and regardless if anyone else believes Apple should or should not kowtow to the Chinese consumer, because if they don't, someone else will. That's the free market, and as a consumer, I'm thankful for every bit of free market we do have.

Pull up a weekly or monthly chart for BBRY or Nokia, and you don't need me to tell you that an apology or change in operations to meet consumer desires is a cheap and effective method of staying on top. Make no mistake, Apple is on top and is the space leader in the one and only metric that matters: profit.

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