Apple is a Silicon Valley and Wall Street leader. The company has the most profitable and best-selling smartphone, tablet, smartwatch, and wireless pair of headphones in the market. Apple has grown its user base by 10x over the past 10 years and is bringing in nearly more revenue than Amazon, Alphabet, and Facebook combined. This level of success places a bull's-eye on Apple’s back and rightly so. Leaders should be held to a higher standard.
However, a trend has developed where a number of tech companies are said to be outperforming Apple. Despite being cast as leaders, these companies aren't judged by the same high standards as Apple. Microsoft, Samsung, and Google are said to be one-upping Apple in core competencies like hardware and design. Yet, these companies don't face anywhere near the amount of criticism thrown at Apple.
Even when looking at companies that deserve to be put on a pedestal, such as Amazon, Tesla, and Tencent (WeChat), a double standard becomes apparent. While these companies are doing great things in terms of building promising customer relationships, none are exposed to the level of cynicism facing Apple. A company that is heralded in the press as surpassing Apple as a leader should face the same high standards used to judge Apple. Unfortunately, this never happens. The bull's-eye is never removed from Apple's back and given to another company.
Grading on a Curve
A massive curve is being used to grade companies not named Apple. The list of recent examples is extensive.
Samsung. Samsung released its Galaxy S8 flagship smartphone to near unanimous praise this past April. Tech media positioned the phone as a sign of Samsung taking the smartphone design baton from Apple. The phone was said to be an engineering marvel, standing apart from iPhone, and every other smartphone for that matter. YouTube vloggers, some with financial ties to Samsung, couldn’t say enough positive things about the phone. Samsung had beaten Apple to market with a smartphone lacking a dedicated home button and having reduced front bezels.
Only a few days after launch, Galaxy S8 problems began to appear. In what has become a perennial occurrence with Samsung, smartphone features that were positioned as key attributes of the device were shown to be gimmicks. Samsung’s facial recognition software was easily spoofed with pictures. The company was forced to backtrack in terms of positioning facial scanning as a secure biometrical identification method. These problems should have led many to reassess claims that Samsung was the smartphone design leader.
Due to the home button being removed, Samsung decided to move the Galaxy S8 fingerprint reader to the back of the phone. It quickly became apparent that the decision was a questionable one. Instead of being labeled as a major design compromise, many reviewers brushed off the awkwardly positioned fingerprint reader as just a Samsung quirk. If the same scenario happened to Apple, leadership would be questioned and the company's strategy would be put into doubt. For Samsung, it was business as usual.
Microsoft. Microsoft has enjoyed two years of unanimous media praise for its Surface products. The company is said to push the boundaries of personal computing forward with Surface. Unlike Apple, Microsoft is viewed as giving consumers something they want before they even know they want it. Microsoft’s Surface business is being graded on a curve. The product category is losing in the marketplace as consumers show little to no interest in tablet/laptop hybrids. Despite poor sales, there has been no discernible change to the Surface narrative in the press. The same kind of sales decline for iPad led many to question Apple's entire strategy and vision. The goal posts continue to move for Microsoft. Surface success is now said to be found with enterprise adoption despite Microsoft spending the better part of the past five years positioning Surface for consumers.
Amazon. No company is currently receiving more praise than Amazon. While some of this is justified, a strong case can be made that Amazon's product strategy is being graded on a curve. Stationary speakers powered by Alexa are positioned by many as the future of personal computing. The lack of retort or debate regarding this claim is astounding. The tech community has elevated Amazon Echo on one of the tallest product pedestals around. Boilerplate language referencing Echo's success and popularity are found in every smart home article despite Amazon providing very few clues as to how the devices are selling or being used. Newer Echo devices such as the Echo Show and Echo Look led some tech reviewers to bend over backwards in an attempt to avoid the appearance of not "getting it." This behavior stands out when compared to the sheer level of skepticism thrown at Apple's HomePod, a device that isn't even available for sale.
Google. The company is said to be getting better at hardware, and a few people are starting to declare Google the new design leader. Google Pixel is positioned by some as a sign of Google even beating Apple at hardware. In reality, there are a growing number of signs indicating Google continues to fumble forward when it comes to hardware. While Pixel's growing number of issues are well-covered in the press, the degree to which Google received the benefit of the doubt in the first place is something not afforded to Apple.
Tesla. While Tesla receives its fair share of criticism from Wall Street, the tech community rarely pushes back against the company. Tesla's growing manufacturing struggles and missed deadlines are written off as typical Elon Musk antics. Meanwhile, Apple's manufacturing struggles are viewed as a sign of bad decision-making.
Snap. One word: Spectacles. The sunglasses with camera was looked at as a sign of Snap innovating faster than Apple. Long lines in front of a Spectacles vending machine were said to demonstrate how Snap was grabbing just as much buzz and interest as Apple during one of its global product launches. Not surprisingly, Spectacles flopped in the marketplace.
The stark difference in how Amazon Echo and Apple Watch have been portrayed in the press highlight the double standard facing Apple. Neither Amazon nor Apple officially disclose product sales for each respective product, although Apple provides many more helpful Apple Watch sales clues. This makes it interesting how Amazon Echo has been declared a resounding success while Apple Watch receives doubt and criticism.
Amazon Echo and Apple Watch were likely selling at roughly the same pace during the first half of 2017. When considering Apple Watch sells at average selling price that is more than 5x that of Echo's, it's clear Apple Watch has been the revenue winner. In addition, given how some people have purchased four or five Echo devices, Apple Watch likely has wider user adoption.
Why is Apple Watch momentum and sales success not reported while Amazon Echo is positioned as the next big computing platform? Amazon doesn't have the same kind of bull's-eye placed on its back compared to Apple. Amazon Echo doesn't receive any where near as much criticism or cynicism as Apple Watch does.
Nowhere is the double standard Apple faces on display more than when China is discussed. Apple is the best-selling western brand in China. The company will bring in $45B of revenue this year in Greater China, selling upwards of 50M iPhones. According to Apple management commentary, Apple is seeing solid sales growth through its App Store in China. In addition, the iPad and Mac continue to sell well. Apple Retail store traffic and sales are also up year-over-year. However, judging by the press, Apple is one step away from implosion in China. Whether it is competition from the low-end, which is not new or unique to China, or services companies like Tencent (WeChat) stealing Apple users, a narrative with lots of holes, Apple’s strategy in China is being severely questioned.
While Apple has clearly experienced trouble in China, which likely played a role in Apple appointing Isabel Ge Mahe as VP of Greater China, the lack of criticism facing other companies regarding China is noteworthy. Amazon, Facebook, and Netflix, three companies considered to be among the most innovative entities today, have little to no presence in China. In some cases, it’s not a stretch to say these companies will never have a presence in the country. Yet, this reality is not viewed as a problem or hindrance for these companies. Instead, China is positioned as a wildcard opportunity containing just upside and little to no downside. For Apple, China is viewed in the exact opposite way, representing a lot risk with little to no upside opportunity.
Why is a double standard applied to Apple? Why are competitors being graded on a curve? I have a few theories:
1) People like underdogs. It's not that people necessary want to see Apple fall, but rather people want to get behind the underdog. It makes for a good story. A recent example of this is found with Andy Rubin's Essential getting into the smartphone market. Despite Essential's smartphone being positioned right next to iPhone, there was a notable lack of skepticism and proper analysis facing both the company and smartphone. Essential should never have been positioned as a genuine iPhone threat. Microsoft Surface's battle against Mac and iPad represents another underdog story that some people just don't seem to get enough of. In reality, there isn't much of a battle when looking at sales. Similar underdog stories are found with Amazon's Alexa outpacing Siri, Samsung beating iPhone in terms of design, Google matching up with Apple hardware, and Tesla grabbing more buzz than Apple.
2) Founder bias. There is a tendency for people to give companies run by founders the benefit of the doubt, while companies like Apple have a much higher bar to jump over. Few have made much out of Mark Zuckerberg's growing list of bad product bets and lack of vision. Zuckerberg's fascination with VR is at worst merely laughed off. Larry Page's and Sergey Brin's lack of focus are widely known and mentioned, but rarely questioned in terms of Alphabet's grand vision. Jeff Bezos can do no wrong, despite plenty of examples of Amazon making mistakes. Tesla has become all about Elon Musk's vision with few discussing the company's strategic blunders and holes. Meanwhile, each step Tim Cook and Jony Ive take is questioned more than the previous step. The only difference between these companies: Facebook, Alphabet, Amazon, and Tesla are led by founders, while Apple isn't.
3) Apple is misunderstood. Apple lacks a strong narrative in Silicon Valley and Wall Street. While much of this is due to Apple's own doing, the situation leads to unknown regarding how to judge Apple's performance. Many still view and grade Apple as if it is a technology company. In reality, Apple is a design company. This likely contributes to an elevated amount of skepticism and cynicism being applied to Apple's actions.
The high standards applied to Apple should not be lowered in an effort to remove the double standard applied to the company. Leaders should receive an outsized amount of attention and criticism. Instead, the bar needs to be raised for companies not named Apple. If a company is said to be outpacing Apple, that company deserves to have a bull's-eye placed on its back. When it comes to the underdogs, stories should not romanticize David slaying Goliath, but detail the challenges and risks found in going up against Apple. Once problems and issue emerge, which they undoubtedly will, they should be covered as closely as the initial stories filled with optimism.
Apple is a polarizing company. This guarantees that the company will continue to face an outsized amount of skepticism and cynicism going forward. It's time that the same level of criticism be given to companies said to be giving Apple a run for its money as a Silicon Valley and Wall Street leader.
Receive my analysis and perspective on Apple throughout the week via exclusive daily emails (2-3 stories a day, 10-12 stories a week). To sign up, visit the membership page.