Apple (AAPL) became the most valuable company in the world, in part due to the meticulousness and perfectionism of the late Steve Jobs. Jobs earned the trust of millions of users that Apple products not only work out of the box, they work well.
Steve Jobs was well known for being extraordinarily demanding of his subordinates to ensure perfection in the products before they were released. If an imperfection could have been humanly prevented, Jobs prevented it. Because of his penchant for perfection, Jobs was not very popular, some even called him a jerk. The kind of fortitude Steve Jobs had for perfection seems to have evaporated from Apple.
In the just released iOS 6 Apple ditched Google (GOOG) Maps and replaced it with Apple Maps. The graphics and 3D rendering in Apple Maps is a thing of beauty. However, there is one problem – Apple Maps do not always work.
Angry users are flooding the Internet with complaints. Most of the complaints are coming from Europe and Asia. It appears that Apple worked hard on all of the ancillary items in Maps but forgot to perfect the main purpose of Maps – helping users go where they want to go every time without problems.
If Steve Jobs was alive, would he have introduced Apple Maps with rough edges? Did the meticulousness that went into Apple products die with Steve Jobs? Has Apple squandered the trust of users built up by Steve Jobs over years in one swoop?
These are the important questions for Apple investors to ponder.
The source of Apple Maps is TomTom. TomTom has been a reliable and reputable provider of GPS data for years. It appears that the problem is not in the foundation to the app which was provided by TomTom, but with how Apple created the app.
It is not atypical for a major new app to have rough edges. However, Apple is not a typical company. Apple’s persona is that its products work without glitches.
The Map fiasco is especially troubling because Apple has been heavily touting it.
These days my focus is on generating high risk adjusted returns for my hedge fund and my subscribers. If I were still in my previous life of consulting with CEOs, and Tim Cook were to hire me, I would have advised him to take a page out of Microsoft’s (MSFT) book. Microsoft does a good job of making alpha and beta versions of its products widely available to flush out the bugs. If Apple had adopted this approach on Maps, it would not be facing this problem now.
As a full disclosure, I am utilizing beta of Microsoft Office 2013 and enjoying it.
Interestingly, Nokia (NOK) has a very strong Maps offering which is part of Windows Phone 8. Is there anyone awake at Nokia headquarters to take advantage of the gift Apple has handed Nokia on a silver platter?
This is the kind of data that goes into the ‘change screen’ of my model. Accumulation of dozens of different factors including the one that is the subject of this column has reduced the probability of Apple reaching my target of $1000 to only 58%. In contrast when we first accumulated the full position in Apple stock at $131, my model was consistently showing a 90% plus probability of the stock doubling. My regular readers may recall that the previous published probability of Apple reaching $1000 was 60%.
Those Apple bulls who have completely dismissed the fact that Steve Jobs is no longer at the helm of Apple may want to take notice of the Maps fiasco.
About Me: I am an engineer and nuclear physicist by background. I founded two Inc. 500 companies, and have been involved in over 50 entrepreneurial ventures. I am the chief investment officer at The Arora Report, which publishes four newsletters to help investors profit from change. Write me: Nigam@TheAroraReport.com. Follow me here and get email notification when I publish a new article.
Full disclosure: Subscribers to The Arora Report are long Apple from $131 and have taken partial profits at $360, $525, $629 and $568.