Saying outlandish things gets people to talk about you. I have one of his books on value investing that is very boring, very academic and not insightful or useful, so I was starting there.
My problem with his opinion is that it's clearly rebutted by Apple's performance in PCs, which is the market most directly comparable to consumer electronics, and is de facto part of it. Apple has by far the highest margins in personal computers, has almost always had the highest margins in personal computers from 1980 until now, even in the dark days between Steves when management tried to commoditize their own product.
And if anything, it's market share AND margins are growing substantially right now, clearly they have the most valuable PC business in the world given it's significant market share combined with it's substantial profitability.
And it's not brand name, it's functionality. The windows operating system and commodity PC functionality have improved constantly and substantially over time, but Apple's R&D efforts have more than kept pace. In fact, Job's performance in the PC market is IMHO more impressive than his accomplishments with the iPhone/iPad/iPod. When he rejoined the company he pulled the plug on licensing the hardware, causing market share to plummet from nearly 10% all the way down to 2% world-wide. They re-engineered the product substantially, moving it from PowerPC (where it had just been ported) to Intel, and upgraded the operating system with a Unix core.
Today market share has grown to over 10% in the U.S., and 5% world-wide, numbers Apple hasn't seen in at least a decade, or longer.
If Greenwald said in the long run we, and Apple are both dead, I couldn't dispute it. If he said that Apple would become a niche player because it's products would remain too expensive and margins to high as commodity technologies like Android become widespread, I'd shrug and consider he might be right.
But when he says the economics of this business are lousy, while Apple has successfully rebutted that truism for 30 years in PCs, it's pretty clear he doesn't understand the business. Focus on this.
Quote:
Apple is unlikely to be as sustainably profitable as it is today. All these things are consumer electronics. In the software race they’re losing to Google, and Google is giving it away for free. Android is likely to be the Windows of the mobile world, and Apple is likely to be a minority system. The open system has always won. Always
First, they aren't "losing" in software, they give away almost all of their software.
What he doesn't understand is that consumer electronics can't be a commodity when it's dependent on software, and in many applications Apple has the best software, and the only way to get it to buy Apple hardware.
Second, he claims Open always wins, then says Android is going to the biggest winner like Windows was on PCs, yet Windows ISN'T OPEN.
What made Windows successful wasn't that it was Open, it was that it provided a consistent platform for developers to distribute graphical applications that ran on the vast majority of personal computer hardware, they brought the value of graphical interfaces to the masses. The Macintosh never became the dominant hardware platform because it never had the broad range of necessary software or hardware that the PC market had.
And no phone user cares about Open, they care about applications. The only benefit of Android's "open-ness" is that handset manufactures and service providers can modify it at their whim because they get the source code for free. But that's not an end user benefit, in fact it's a negative. Every Android phone can work differently and have different user interface features and organization, and being inconsistent in a UI is the fastest way to degrade it's value.
And even worse Google is giving away the OS so they can bombard Android phones with advertisements, and that's not a plus for users either.
Apple's platform is open almost as much as it needs to be, developers can write software for the Mac, iPhone, iPad, etc. And today the tables are turned, the majority of the best mobile apps are on iPhone/iPad, not Android, and that's one of biggest drivers of the iPhone/iPad success. And the Mac actually now has more software than Windows, because you can run every Windows app on a Mac, and a bunch of apps for specific niches (DTP, Music, Video) that run better natively on the Mac than they do on Windows.
What wins in the consumer space isn't technodweeb commoditized processors, memory cards, Open OSs. It's ease of use, features, value. No one wants to reboot their phone to install a new Linux kernel.
And I'm not claiming that Apple is going to win in the phone space, the tablet space or anywhere else, or that they won't eventually be commoditized. What I'm saying is that these are new markets and there is a great deal of facts that make the outcome very uncertain. In fact I believe Android will be the dominant phone platform of the future. But I'd be shocked, if at worst Apple isn't' a very profitable market player with a very substantial niche for a long time to come.
The fact that this pompous academic can spout off black and white pronunciations and backing them up solely with backwards looking generalities pretty much tells the tale.
He might as well have said, Sony couldn't do it, and Steve Jobs, I knew Akio Morita, and you're no Akio Morita. That about sums up his argument in a single sentence.