The calls for Apple CEO Tim Cook’s head on a platter are growing because APPL is in the ditch and it’s all because the company did not diversify fast enough. Well, name another company at similar size as diversified as Apple and you’ll come up empty.
Google? Nope. An advertising company. Facebook? Uh uh. An advertising company. Amazon? Not really, either. How about Samsung? Yes, but not in the way Apple is diversified. What did Apple do wrong?
It depends upon who you ask, right?
Apple should have bought Adobe. Apple should have bought Tesla. Apple should have bought Netflix.
Netflix? The movie streaming company? Yes, that Netflix.
While most analysts and critics love Apple’s rapidly growing Services business, some think it should grow faster. Daniel Ives:
You need content, you need fuel in that engine. They’re lacking original content and lacking video content, which is why we believe they’ll buy a large film studio in 2019
Uh oh. Watch out, Disney. Watch out Sony.
Watch out Apple’s checkbook. Disney has a market cap of almost $170-billion, and Netflix isn’t far behind at $155-billion. Both or either would take Apple some time to digest, you know?
In my opinion, the biggest strategic mistake Apple has made since Cook took over is not buying Netflix… That was the deal that they needed to do because it comes down to content.
Netflix, of course, cuts deals with movie and TV show producers for content, but in recent years has spent billions to create its own original and exclusive content. Belatedly, as always, Apple says it will spend a billion on original content.
Analyst Samik Chatterjee:
We think Netflix is best strategic fit on leading position in engagement level as well as original content, differentiating itself from pure aggregators of content… We believe there is value to acquiring the most successful player in this space, which is hard to replicate with a smaller player in this market.
Translation: “Buy Netflix already.”
The deals Netflix has with video content producers can be replicated and they likely would have no trouble cutting a worthy contract with Apple, too. Plus, buying Netflix would cost tens of billions of dollars which could be spent on original content and video deals exclusive to Apple.
I’m not the only one to thank gawd that Apple did not buy Netflix. Cathie Wood of ARK Invest:
They should be building – they definitely need to update their content in terms of video, (but) I don’t agree that Netflix is a good way to do it,,, Netflix is horizontal in terms of platforms, it’s on Android, it’s on Samsung – what are they going to do, lose those customers? That doesn’t make any sense to me.
Apple could easily afford to spend $50-billion on original content and dwarf most streaming content providers from Netflix to Sony to Disney. The only negative is that it just won’t happen overnight and the market is fickle to players that move slowly.