The Future of Apple May Soon Be Decided
A wise man once said, "Simplicity is the ultimate sophistication."
That simplicity principle is the main reason why Apple became the largest U.S. company by market capitalization, and Google became the world's dominant search engine.
In Apple's case, simplicity meant focusing on a few products and making those few products count. In Google's case, simplicity meant having less clutter on the homepage while delivering the best possible search results.
A fork in the road
Although Steve Jobs has since passed, Apple is still sticking to the principle of making a few great products. By opting for quality rather than quantity, Apple has not launched a game-changing product since the iPad in 2010.
The delay in launching new products in new categories has made life for Apple CEO Tim Cook hard. As a rule of thumb, investors expect their stocks to rise. If a company's stock does not rise and the company CEO has some levers he can pull to change the situation, some investors will try to get the CEO to pull those levers.
One particular set of investors have opined that Apple would take the Samsung approach and offer a more diverse set of products. They believe that Apple can grow by acquiring products through mergers and acquisitions and slapping the Apple brand on them.
Other investors, with Carl Icahn among them, have asked Apple to use some of its $145 billion cash pile to do a larger share buyback. Although Icahn recently conceded defeat in his activist campaign, the pressure on Cook to manage the stock price is not over.
Perhaps because of the pressure, Cook broke the news that Apple recently bought back $14 billion in shares in just two weeks. The announcement by Cook was likely an attempt to address Icahn's concerns and a tactic to make a short-term floor for Apple stock.
Big expectations
The public is accustomed to Google doing new things because people have been conditioned to expect it. The company seems to launch a new beta product every month. If the product bombs, Google can get away with it because Google has many sticky features, and most of the new products are tangential to the company's core search product.
A product bomb for Apple, on the other hand, would positively hurt the company. Because people have been conditioned by so many past successful Apple product launches, the public expects nothing but the best from Apple. Anything less could tarnish Apple's brand and damage Apple's cash cows -- specifically the iPhone and iPad.
To avoid that scenario, Apple has taken its time to launch new products. The long wait may soon be over, however, because Cook recently stated that Apple will launch new products in new categories this year.
The bottom line
If the new products dazzle, Apple can remain a company with a few focused products. If the new products falter, Apple may have to resort to a bigger buyback plan, or resort to the Samsung approach of having many products in many categories. The latter scenario is probably not what Jobs would have wanted.
A Mona Lisa-caliber painting can only be created once. Whether Apple can follow up with The Last Supper or resort to painting like everyone else is still anyone's guess.
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The article The Future of Apple May Soon Be Decided originally appeared on Fool.com.
Jay Yao has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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