Did Apple’s Tim Cook Abandon Steve Jobs’ Final Project?

If Steve Jobs "cracked the code," why is Tim Cook sitting on this product?

Aug 1, 2014 at 10:00AM

For his eponymous biography, Steve Jobs, former CEO of Apple (NASDAQ:AAPL), gave author Walter Issacson a preview into Apple's next product -- a TV set -- with this quote [emphasis added]:

I'd like to create an integrated television set that is completely easy to use. It would be seamlessly synched with all of your devices and with iCloud. It will have the simplest user interface you could imagine. I finally cracked it.

This revelation, released in the posthumous book, fueled speculation for years in regards to its release. Noted Piper Jaffray analyst Gene Munster has guessed incorrectly that Apple's TV was on the verge of being released seemingly forever now. And he's not alone -- many are eagerly anticipating its release.

Alas, nearly three years after Jobs' death, there's still no Apple TV. What's more, most new product rumors center on a payment service, the iPhone 6, and the smart watch that's being called iTime. Has Tim Cook abandoned Jobs' final discussed product?

Not that Apple TV!
Casual readers will note that "Apple TV" already exists, and rightfully so. However, that isn't what Jobs was referring to. Apple TV already existed at the time of the interview, coming to market in early 2007. Jobs was looking at a TV set -- not another streaming, "me-too" device that competes with Google's Chromecast dongle and privately held Roku. Jobs' vision appeared bigger: a disruptive, game-changing step forward, much like the iPhone and iPad.

And it appears the television industry could use some disruption. Sales have been sluggish for the last couple of years, according to IHS's industry report, culminating in the U.S. market's massive 9% drop in unit sales last year. And while some of the blame can be attributed to poor macroeconomics, much of this stems from a lack of innovation. The IHS specifically mentions smart TVs -- just what Jobs had envisioned -- as the one bright spot in the report.

Are margins what's keeping Apple away?
After Cook took the reins, Wall Street was somewhat reluctant to accept him as the next Steve Jobs. Although Apple continued to report amazing quarterly numbers, doubts crept in. A familiar refrain about a "lack of new and imaginative products" developed. But an even larger discussion centered over Apple's quarterly gross margins -- especially after Apple's margins hit an absurd 47%. As the infographic below shows, it wouldn't touch that high-water mark again, and it's averaged "only" 40.25% since -- and even lower than that recently. 

While it's hard to speculate on a product that isn't in existence yet, it would be hard for an Apple TV unit to approach these lofty margins. The TV business is hallmarked by price cuts and competition. And while it is a stretch to think of the TV market today as a commodity market with very few differentiators, many would-be TV shoppers are extremely price-conscious. Apple could use a premium-pricing strategy due to its following and brand cachet, but in the end, asking for such lofty margins would probably price it out of most people's budgets.

Final thoughts
Tim Cook is no Steve Jobs. And in many ways, that's a good thing. Jobs was at best indifferent to shareholders, and by withholding Apple's growing cash hoard, in some ways even punitive toward them. However, as far as Apple fans and customers go, we really want to see Jobs' last discussed product. Mr. Cook, we're waiting!

Jamal Carnette has no position in any stocks mentioned. The Motley Fool recommends Apple, Google (A shares), and Google (C shares). The Motley Fool owns shares of Apple, Google (A shares), and Google (C shares). 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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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