NEW YORK (TheStreet) --
Or not. "@ppearlman: people will look back and note how $AAPL was not nearly aggresive enough relative to $FB & $GOOG. Howard Lindzon (@howardlindzon)
Feb. 19 at 04:42 PM
Or not. Sing it, sister.
Before we get into why Apple
(AAPL - Get Report) will not regret not following in Facebook's
(FB - Get Report) or Google's
(GOOG) footsteps, let's just lay it on the line like it is.
The 16 or 19 or whatever billion dollar deal where Facebook bought WhatsApp
only exposes what amounts to a shell game in Silicon Valley.
I'll "invest" in this "company" and then this other "company" will go public and then this company over here will buy that company while this other company buys this company and then we'll "invest" in this awesome new company that Jiz Rock started because we really need in on this deal because, of course, somewhere down the line somebody will buy his company or he'll take it public ...
And we'll all make out like pigs moving money around in these hollow financial transactions while the jock sniffers on Twitter
and in the media take what we do so seriously they legitimize it.
Great gig if you can get it. And you wonder why these albeit misguided souls in San Francisco have resorted to smashing shuttle bus windows.
Apple has no reason to participate in this game. And I'm not sure why anybody of sound and sane mind and body would imply that it should.
Do the people who think Apple should have purchased YouTube
even understand its business?
Apple derives a vast majority of its revenue and killer margins by selling hardware.
People buy multiple Apple devices and regularly upgrade them because they work. As computing devices and such they're near flawless so, after you have made your first Apple purchase, it becomes pretty much a no-brainer that you'll make more. Not only do they work, but they're beautiful and they're cool
Every so often we see stats that some huge percentage of Internet traffic -- often e-commerce activity -- takes place on Apple devices. This means people not only use and love Apple hardware, but Apple -- thanks to its intuitive and thoughtful user interfaces -- makes it easy for people to do stuff via iPhone, iPad and Macbook. These devices combine to sell more units than all Windows PCs. That's because, again, they work.
So that's Apple's bread and butter. It is the area
where it dominates. There's no logical case to make that says Tim Cook should veer, even a little, from that business model. At least not with billions of dollars. With a tiny fraction of Apple's cash
... sure, go ahead, knock yourself out.
It seems completely counterintuitive for Apple to say we're going to buy an app or a software and services platform or a car company and blow our margins to bits just so we have direct and purely symbolic access to their billions of users (or high-tone drivers who already own multiple Apple products).
That would accomplish nothing.
Are you telling me Apple will regret not being "aggressive" and buying WhatsApp
because all of these people who apparently use the messaging platform because they're poor would have run out and purchased an iPhone for $600 or whatever it ends up costing them where they live?
Apple would have basically taken on a problem it doesn't need. Different, but simultaneously similar to the headache it would bring on itself if it took out Tesla Motors
, Apple would have had to figure out how to monetize the platform's 450 million users beyond $1 a year after the free trial period. So you tell me WhatsApp
adds one million users per day. OK. Cool. So, by the end of the year, they'll have something like 800 million users.
$800 million. What's that worth to Apple? It's worth a pain in the ass or a hole in the head Tim Cook doesn't need. Or whatever my mother used to say.
The fact that Apple doesn't participate in this insanity should soothe you if you're a long-term AAPL investor or you just want to see the company and/or stock do well. The fact that Apple has not taken some knee-jerk leap at some company that has nothing to do with its core business proves that a) Tim Cook has his eye on the ball and b) will, in typical Apple fashion, disrupt and destroy when he's ready
Non-participation in Silicon Valley farces the media laps up and legitimizes might actually be, beyond the hardware story, the best long-term investment thesis underlying AAPL right now.
... not nearly aggresive (sic) enough ...
Please. Give me a break. And I thought Facebook buying WhatsApp
for $16 or $19 billion was the nuttiest thing I heard all day Wednesday.
-- Written by Rocco Pendola in Santa Monica, Calif.
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