Apple is back but questions remain

by admin on June 4, 2014

AppleOn September 21, 2012, Apple reached $700 per share for the first time, only to go back down to $390 six months later. The company has had a fantastic run since 2010, but its current price of $628 is still under the $700 of those glory days in 2012. Apple invests huge amounts of money in research, design, and development, but it seems that the company may now suddenly be suffering from the perfectionism syndrome. This was the syndrome that killed Duke Nukem, one of the best games of all time.

The original Duke Nukem game was so successful that the team unrealistically committed to creating the perfect sequel – a sequel that unfortunately never saw the light of day. George Broussard, one of the owners of 3D Realms, the creator of the game, forced his team to re-start from scratch every time a new gaming technology was available (which at the time seemed to be almost every day). After Broussard and his partner Scott Miller had spent $20 million of their own money over a span of 12 years, they disbanded all development at 3D Realms in 2009. In the quest for the perfect sequel to an original game released in 1996, nothing was ever released.

This is one of the most interesting stories of success paralysis in recent history.  A similar challenge seems to be plaguing Apple lately. It’s not clear whether they are perfecting the Apple TV or Apple smartwatch, but something is clearly in the works. Is Apple waiting for the perfect moment that may never arrive? In contrast to 3D Realms, Apple is one of the largest companies in the world, and while I don’t think they are going anywhere anytime soon, they do risk stock stagnation if innovation and product launches stop (Don’t believe me? Just asked Bill Gates). In November 2012, I reduced my position in Apple ahead of business expenses and increasing competition, but even after that slight reduction, the stock still comprises 9.6% of my entire portfolio. In May, Apple was my best performing position with a 7.3% gain.

Although Apple is getting back on track, many questions remain. Will Apple really be able to launch a game-changing product again? iTunes radio was a complete fiasco. It never got better, it was difficult to use and glitchy, was years behind of rdio, Spotify or even Pandora. I just canceled my subscription and moved on to a different service. I am curious to see what develops after their recent acquisition of Beats – especially since Apple is a company that hasn’t done a lot of large acquisitions in the past. I’m still invested in Apple for the long run, but since questions remain I plan to keep a close eye on it.

 

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