Much of Apple’s success has come on the back of the company’s ability to introduce revolutionary products at the right moment. The iMac, iTunes, iPod, iPhone and iPad were a succession of game changing innovations that turned Apple into a worldwide mega-brand. Lately though, sales have been slowing, and Apple is turning its attention away from its devices and toward services. This is worrying some analysts, including James Wang, who spoke to Barron’s reporter Tae Kim about Apples “innovation DNA.” Kim reports:
Even some Apple (ticker: AAPL) investors are questioning the technology giant’s services offering event earlier this week.
On Monday, the company unveiled an array of new paid services such as Apple TV+ (video subscription), Apple Arcade (gaming subscription), and Apple News+ (news and magazine subscription).
But in a phone interview with Barron’s on Tuesday, ARK Invest technology analyst James Wang explained why Apple’s new services strategy is worrisome. He also gave his appraisal of Nvidia ’s (NVDA) recently announced acquisition of Mellanox and handicapped the big chip war between Advanced Micro Devices (AMD) and Intel (INTC) this year.
Wang is a technology analyst focused on artificial intelligence and internet companies at ARK Invest, an investment firm with $6 billion in assets under management. Previously, he spent nine years at Nvidia as a product manager and analyst. He is quickly gaining a reputation for writing one of the more insightful social media feeds on technology trends.
In addition to Apple, his firm also owns shares in Nvidia, Netflix (NFLX), and AMD. You can find James on his Twitter feed @jwangark.
Here’s an edited transcript from our interview with the technology analyst:
Barron’s: What did you think about the Apple Services event? The content strategy?
I thought this is one of Apple’s weaker events from a presentation and narrative perspective. But if you look at it from an end-user perspective, none of these services are super-compelling and differentiated versus competitors.
Apple’s original DNA was built upon building products that other companies couldn’t build and bringing to market something that was much, much better and more well thought out. I think it’s very hard to argue that any of these products are more well thought out and better rounded than existing products from Netflix and Spotify (SPOT).
So I on the one hand, I see them trying to really satisfy Wall Street and demonstrate the financial model, on the other, I am somewhat concerned that they’re losing their core DNA, which is to build great products that don’t exist, to create markets, rather than compete in markets.
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Jeremy Jones, CFA
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