Trip Chowdhry: Apple is doomed

This quirky independent analyst—a ubiquitous presence at developer conferences—sees zero innovation (repeat, zero innovation) at Apple.

From his latest note to subscribers, broken English and eccentric formatting intact:

(-) Apple has been singularly focused on pleasing the Wall Street Analysts by wrongly focusing on optimizing Profitability and ignoring to create the most innovative Products

• Apple stock trades on a multiple based on product innovation, and not on profitability matrix
• Apple Product road-map is NULL – Stock multiple contraction will occur
• Apple has raised the price of iPhones >$1,000, while having zero innovation and zero new capabilities. In doing so, Apple’s customer base has been priced out,
  • at >$1,000 iPhone, customer expects ground breaking capabilities, which iPhone X has none
  • Apple has taken its customer base for granted, which is a recipe for disaster, and sadly, there is no Steve Jobs this time around to bail out Apple

(-) iPhone franchise has been around for >10 years, which is a very long time for any electronic device; dynamics will be similar to iPod, iMac and iPad … spiral fatigue sets in

• Expecting y-y growth in iPhones is fundamentally flawed
• having iPhone upgrades as investment thesis is fundamentally flawed…not going to work

(-) Apple App Economy thesis is Dead; Ecosystem thesis is also Dead

• App Discovery on Apple Store is a perpetual problem for Developers
• The most revenue generating Apps – Netflix, AirBnB, UBER, LYFT etc pay Zero$ to Apple
  • Question for the investors, where do you see the leverage within Apple AppStore, they cannot even get $0.01 from any of the most revenue generating Apps
• Apple Ecosystem thesis is Super Dead…
  • Question for the investors, if Apple Ecosystem thesis was alive and well, then why Apple Home Pod has become a royal failure
  • …why has Apple TV continued to struggle for more than 10 years
  • …why Beats acquisition (a $3.5 Billion) has been a flop

(-) Apple Software Skills in backend technologies is ZERO; Front-end is FINE; DML (Deep Machine Learning) is ZERO; Developer Ecosystem is Slipping

• Apple is losing Developers within its Ecosystem to MSFT, AMZN, GOOGL and UBER
• Developer interest in iOS Hackathons is Dwindling
• Apple has very poor lead generation program for Developers; both MSFT and AMZN-AWS has 10x better lead generation program for the Developers
• The above is secular negative for Apple…
  • Less Developers = Less Developers on Apple Platform = Less Applications = Market share losses

(+) Services Revenue is the only bright spot, but growth may not be durable …we are monitoring the situation

• The components of Service revenues include: Digital Content and Services, Apple Care, Apple Pay, Licensing and others
  • (+) Digital Content and Services revenues will continue to grow ..
  • (+/_) Apple Care revenues will start Plateauing in the FY3Q’2019 and beyond, as Apple hardware Unit sales continue to show negative y-y growth
  • (-) Apple Pay is struggling because of very poor execution on a very promising opportunity, it should not be a part of any investment thesis

My take: I usually ignore Trip Chowdhry’s hyperbolic missives, but this one—with its Street-low Apple price target—could cause some trouble. Are there still investors, I wonder, who take him seriously?

See also: How wrong-headed can one Apple analyst be? (From Fortune.com, July 8, 2013)

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