Top Silicon Valley VC defends Apple

Top Silicon Valley VC defends Apple

Summary: Michael Moritz said there's no other company like it in the past 50 years...

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TOPICS: Apple
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Michael Moritz is chairman of Sequoia Capital, one of Silicon Valley's oldest and most successful VC firms. He's also a former journalist and he revisits those skills in an article written for the Financial Times opinion section: Perspective on Apple amid the clamour.

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Apple versus Virgin Megastore, San Francisco 2009.
(Credit: Tom Foremski)

It's a well-argued piece that, "It is difficult to think of a company of the past 50 years whose influence and ingenuity have been as profound or widespread as the one formerly known as Apple Computer, Inc."

Sequoia was an early investor in Apple Computer [$AAPL] in 1978, so he is defending his investment firm's reputation for picking long-lasting winners, as well as that of Apple's.

He reminds readers that in 1998 Michael Dell, founder of PC company Dell [$DELL], said Apple should be shut down and any assets distributed to shareholders. Ironic since Dell is now looking to shed its shareholders in a leveraged buyout to take the company private.

Meanwhile, Apple is sending its shareholders $2.5 billion in dividends.

He points to Apple's recent financial results which showed 18 percent growth in sales and how impressive that is for a company of a large size, compared to sales at other giant tech giants such as Microsoft [$MSFT] at 4 percent, Cisco [$CSCO] about 6 percent, and IBM [$IBM], which shrank 2 percent. And that growth is without making large acquisitions, compared with the others.

"No company of similar size has grown at Apple's pace." And that growth comes from a very small number of products that have...

...thrown several mainline industries, including music, movies, television, publishing, cameras, and 35mm film, into convulsions. The entire Japanese consumer electronics sector, bereft of the software that helps distinguish Apple's products, has been hopelessly outpaced, as have Finland's Nokia and Canada's RIM.

Even the retailing industry has felt the Apple effect as its stores generate sales twice those of Tiffany, and four times that of "Michael Kors, the luxury retailer of the moment."

[I would add Virgin Megastores, see photo above. A simple two-level cube of a building versus five floors of music, videos, games, and books of the Virgin Megastore--across the street from each other in San Francisco.]

Well said. And those achievements will always be Apple's. However, as with automobile mirrors, past successes appear larger than the current reality for Apple.

The stock market looks to the future and the recent loss of value in Apple stock reflects the fact of a more difficult future for the company, as others learn from its successes in design, manufacture, and software to build competitive products.

Topic: Apple

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11 comments
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  • What a Joke..

    "Michael Moritz says there's no other company like it in past 50 years..."

    Apple is a million miles away from reaching the leagues of IBM and Microsoft.

    All Apple sold was some rip-off devices with no substance. The future of Apple is bleak with the current set of platform and products.
    Owlll1net
    • Said the troll

      waiting to be fed...

      I'm looking forward to another entertaining "discussion" between Microsoft and Apple fanbois, calling each other "morons" etc.
      Smalahove
    • True, MS had MS-DOS...

      Wait. They bought that and it was just a clone of CP/M...

      ;-)
      Bruizer
    • Maybe not Microsoft but...

      Your comment is essentially correct in that really if there never was an Apple computer, our lives would not be much different. IBM on the other hand helped to evolution data computing and invested billions in R&D with results that we are still benefiting. Jobs once bragged that Apple spent $0 on R&D. What Apple did best was marketing and design (and give them credit where credit is due). We would have still had mp3 players, smart phones, tablets, etc without them, they just help make them work for the mass market sooner then later.

      This is no jab at Apple, they are a great company but in the end, they did not really change much in the course of human history.
      Rann Xeroxx
  • However [] past successes appear larger than the current reality for Apple.

    Based on what?

    The iPhone only grew daily sales by 40%. What a failure.

    The iPad only grew daily sales by 60%. What a failure.

    iMac, the past product line much like the Apple II of the past, did show a decline.

    Boy, most companies would dream of having product failures like these.
    Bruizer
  • This guy is smoking pipe

    The world is what it is today in no small part because of Microsoft. Microsoft made the PC popular around the world. I can't imagine where we would be today otherwise.

    Apple had (is having) a nice run but saying no other company rivals what Apple did in the last 50 years is fanboy talking shit
    Master Wayne
    • Correct, you can't imagine

      Just like you, many Microsoft religion followers could not imagine what the world without the damage Microsoft has done could have been. But some of us know computing before Microsoft, the agony of many during Microsoft and the joy of even more when the Microsoft's "dominance" is coming to an end.

      You know, only one can be first. Later, many may be "better" for shorter or longer periods, but the "first" crown never changes heads. But then, history is rewritten many times.

      As for Apple. They do just what they were doing 30 years ago: designing and selling personal computers. It takes great courage and imagination to keep doing the same thing, when everyone else around you who attempted it failed one way or another.

      Remember IBM was going to eliminate Apple from this personal computer business. They employed both Intel and Microsoft to fight the battle ... until the day came when IBM realised they lost the war and abandoned the business totally.
      danbi
    • Yes, but

      Apple has rung the bell of change (as pointed out in the article) in many industries: Music & Movies, TV & Retail and now also in PC tech where they have long been also-rans; and MS, IBM & HP are struggling to keep up. We've seen it before in other industries (Auto's & Ships come to mind), so it's nothing new, but it is a real and profound change. Ad itt will change again, no doubt.

      The critical success factor for Apple has been their ability to innovate in a very real and profound way with products that are pretty much right the first time. This is deeply, deeply impressive. Whether they can continue to do this in the future with a different CEO remains to be seen and is probably the key worry for investors at this point.

      Which highlights the issues with the PC-tech opposition: at this point MS seem to be bereft of the leadership that they need to drive the company hard until it is successful: the Win 8 launch has been very disappointing, and very poorly handled. Even something as fundamental as launching your own hardware product based around Win 8 at the SAME time as you are wanting your OEM's, the engine of your success for the last generation, to commit resources to COMPETING products - how stupid was that? If you want an RT and PRO Win 8 tablet, launch it 12 months after the OEMs have had a go. Now, MS's bagging of the OEMs looks like a company wanting a scapegoat - MS of old wouldn't have stooped so low. And they have pissed the OEMs off so much that even producing and selling a Chromebook looks like a good idea to them. It's pretty basic stuff, yet MS has managed to get it completely wrong. Way to go Steve.

      IBM & HP are probably less concerned, they have broader portfolios and significant services business to keep the fires burning. MS? Not so much.
      skiwi
      • IBM doesn't have a PC business...

        Well said, but IBM doesn't have a PC business so the issue is different for them. Of the PC makers, Lenovo appears to be best placed and I wouldn't underestimate the issues for HP, I would think that their services business needs more commitment from senior levels to succeed - IBM has already made this work.

        Otherwise, good post! Makes a change from the usual anti-Apple, anti-MS drivel from people with too much time on their hands and an EQ of 0.
        paddle.
      • the critical success factor

        for Apple was not their ability to innovate. They were far more innovative in the past than they are now. The critical success factor was that they finally got marketing right. Whereas Nokia had prototypes rotting away in the drawer, Apple saw when the right time for Smartphones had come AND they managed to make it a lifestyle product with a huge success - to the point where they practically achieved that sublime form of marketing where the product virtually sells itself, without the needs for ads or sales talks.

        The fact that they have become more aggressive in their advertisement suggests that Apple itself feels that they are losing grip on people.
        hydroxide
  • Apple

    Fact is both Apple and Microsoft revolutionized the computing industry. IBM was a monolith in technology but was stuck in neutral as a company. It took the partnership of Microsoft and the competition of Apple to bring the tech industry out of the universities and big businesses and into the home. Apple launched the first salvo with the, Apple II and Macintosh. Microsoft dragged IBM and its ilk kicking and screaming into the future. If it wasn't for MS and Apple, the tech world would be a very different creature today.
    dfl274