Dear Mr. Berko: What do you think of the Apple Watch? Will it affect iPhone revenues? How will it affect Apple's stock?
- FS, Des Moines, Iowa
Dear FS: Many readers have been asking about the Apple Watch and how it will affect Apple's (AAPL-$133) stock. I'm probably the wrong person to ask because it wasn't until a year ago that I finally realized how important the iPhone is in people's lives. However, the Apple Watch, which has become very quiet lately, doesn't butter my bagel. Neither did Google Glass, which flopped and schlepped.
In 1969, when the U.S. put a man on the moon and most Americans were glued to their TVs, while the cameras panned across Mission Control, I remember seeing rows of sleek gray computers, tall as a man, lined side by side. Miles of connecting cables snaked under the floor, and the energy consumed was so brutal that rooms had to be specially cooled to prevent the computers from overheating. I was so impressed that I got my tutu into a tizzy. Well, today's basic, bare-bones smartphone, which can be bought (used) for $43, has 10 times the number crunching capacity of the combined computers at NASA in 1969. Not even all the king's horses or all the king's men could have imagined such concentrated computing power.
In January 2007, Steve Jobs stood before an audience of Apple acolytes, holding a slab of metal and plastic about the length of a Hershey bar and the thickness of two, exclaiming, "This will change everything!" Jobs knew how right he was, but few of us had an inkling of the prodigious potential an iPhone represented. As a registered Luddite since March 1987, I sure didn't. Apple's iPhone may have figuratively changed the shape of the wheel. In November 2011, a month after Jobs passed away, I got mustard on my mustache recommending the sale of AAPL at $400. I marveled as it marched straight up to $700 a year later, splitting 7-for-1 in June 2014. And in March, investors applauded as Apple was anointed one of the 30 stocks in the Dow Jones industrial average. So wherever Jobs is today, I suspect he and Thomas Edison are standing shoulder to shoulder with grins on their faces. And I also believe that neither Jobs nor Edison is so enamored of the Apple Watch as is Tim Cook, AAPL's current CEO. However, the iPhone is here to stay.
I agree with Jobs and Edison. The initial surge of Apple Watch devotees will be those who're obsessed with their phones, their email, texts and updates. They're lonely folks who need constant human contact. They are insecure and loudly objected to being bottle-fed as babies. The Apple Watch is an impressive toy; however, all that information is available on another device, called a mobile phone, and nearly everybody owns one. Apple Watch isn't a stand-alone device. Rather, it's another thing to carry for which you might pay $400 or $600, and it must be kept charged and maintained. Why bother? Good things come in small packages, though it seems that the screens on iPads and iPhones are getting bigger, not smaller. Guess it doesn't make sense to reduce all that data to a 1-square-inch screen. The Apple Watch will sell like ghost cakes during Halloween, but a year or so from now, I think sales will fizzle and fribble just like Google's silly glasses. And when they do, AAPL will come out with an Apple Watch 11 and then an Apple Watch V1, and Samsung, LG and Motorola will follow suit. Meanwhile, the Chinese are producing smartwatch copies for under $70 that are compatible with Android and Apple's iOS. Now what do you do with the $600 Apple Watch you just bought?
I doubt the Apple Watch will have much effect on the value of Apple's stock. However, my opinion is a minority opinion, and I was as wrong as Douglas Corrigan about the direction of AAPL shares when Jobs passed away. And I don't own an iPhone.
Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775, or email him at mjberko@yahoo.com. To find out more about Malcolm Berko and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.
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Published: Tue, Jun 02, 2015
