Two solutions for Apple's sliding profits: Convertible notebooks and cellular networks

Two solutions for Apple's sliding profits: Convertible notebooks and cellular networks

Summary: To most of us, Apple's success approaches rocket ship status, but to analysts and investors, it's a different story. I have two ideas that could help Apple move into a higher orbit.

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TOPICS: Apple, iPhone, iPad, Telcos
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It might seem silly to read a headline that Apple's first quarter 2013 profits are off, but that's exactly what's happened. It has caused Apple stock to suffer a double-digit slump today. Shocking, I know. But there are two things that Apple can do, at least in my mind, to boost sales and expand its reach into the future. The first is that Apple can create a new, convertible notebook computer and it can buy US Cellular. Are you shocked at these suggestions? They make total sense to me.

The Apple convertible notebook

Apple complains that the iPad has hurt its Mac sales. Well, that shouldn't surprise you or anyone. It is, after all, the post-PC era, isn't it?* That's what I thought they wanted to happen. I guess we were both wrong.

Anyway, here's my idea for a convertible notebook. I think the Macbook Air would be the perfect choice for this idea, by the way.

A Macbook Air is a really cool notebook/ultrabook computer. To make it cooler, allow its screen to detach from the keyboard to become a tablet, and make the screen touch-capable. Convertible. I would have to buy one. It would be like getting two computing devices for the price of one. A notebook and a tablet. Ultra convenient and ultra useful. Ultra big-seller, too.

The Apple Cellular network

To my knowledge, US Cellular is the only major US cell carrier that doesn't support Apple phones and related hardware. I think Apple should buy US Cellular and make it an exclusive Apple provider. Just think of it. Two great companies merged into one that provides awesome integrated service and hardware to its customers.

US Cellular has a great cellular network. I used it exclusively for many years, until my family wanted iPhones and we had to change to AT&T. What a downer that was. We loved US Cellular. Great service. Great prices. Great network. But, alas, no iStuff. So we bailed after being faithful customers for more than 10 years.

Apple would do well to purchase the cellular provider and make it an exclusive Apple network. I'm fairly sure that Apple's profits would rise from selling its cellular gadgetry direct to the public, and then supporting those services themselves. Just think of the possibilities if Apple had its own cellular network. Perhaps there'd be an unlimited data plan for iPhones, exclusive service offerings, and better service integration. Right now, the cellular competitors are trying to supply services to too many different types of gadgets, and can't do any of it efficiently.

An all-Apple solution gets my vote.

So there you have it. My solution for Apple is to create a new product and to acquire its own cell phone network business to provide exclusive Apple network services. Can you just imagine the corporate buy-in to such an acquisition? I can.

So, to Apple: you're welcome.

Maybe I should be Apple's next CEO. I have a lot of ideas for new products, new services, and a new Apple.

What do you think of my ideas to bring more profits to Apple? Do you like the idea of a convertible Macbook Air? How about my idea for an Apple cellular network? Talk back and let me know.

*If you've kept up with this column, you know that I hate the term "post-PC era." It's just silly.

Topics: Apple, iPhone, iPad, Telcos

About

Kenneth 'Ken' Hess is a full-time Windows and Linux system administrator with 20 years of experience with Mac, Linux, UNIX, and Windows systems in large multi-data center environments.

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26 comments
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  • We have the convertible Air

    They are sold with Windows 8 on them!!!
    jatbains
    • Close

      The Windows Pro is more what I'm describing. But, yes, a real computer that converts to a tablet and back again.
      khess
      • Microsoft tried that.

        Let's see how it's working out for them this afternoon.
        Userama
        • Pretty good.

          http://www.google.com/finance?q=NASDAQ:MSFT&ei=pJwBUZCpNoeulQPaDw
          mrefuman
  • US Cellular buyout

    I have been a customer of US Cellular and a one time employee. While I think that a Apple buyout of the company would be cool, the logistics and practicality would make it impossible. Users and ARPU would cap out in very little time, making the buyout worthless with the exception of users buying iTunes and app store content.
    A better and cheaper bet would be to start an MVNO, as per Steve Jobs' original idea, lease time and data off the major networks and provide cheap services to users, possibly even taking a smaller margin on the ARPU in order to generate revenue from the iTunes store. The capital investment would be substantially cheaper, less PR mess than dealing with US Cellular customers who are very committed, and who do not all want an iPhone or the additional data plan that goes with it.
    teamfatman76
  • Regarding those sliding profits and future product plans

    Ken, your ideas are NOT WITHOUT merit. Both suggestions could result in a) new desirable product lines and b) a profitable business venture.

    The downsides to those suggestions are a) a loss of subsidized iPhone products among the telcoms in retaliation and b) an overlap of product capabilities and lack of product focus.

    Consider, however, the prime reason for your creative suggestions - the downward slide in Apple stock value.

    There could be another reason for the downward spiral and that reason is working to Apple's LONG TERM benefit. Apple has gone on record expressing a desire to back back $10 billion dollars worth of stock!

    The lower the stock price goes, the easier (and more profitable) it is to re-purchase that stock by Apple. Then, those persons holding remaining outstanding stock options will be rewarded with increased dividend payments. The downward spiral of Apple's stock values may indeed be manipulation but not in the way you might suspect.

    Besides, Apple has $137 BILLION dollars in ready cash!!!!! Unbelievable. I wouldn't worry too much about Apple.

    And, finally, Apple has gone on record as planning to use $9 BILLION dollars this year in capital expenditures.

    Don't you think $9 billion is just a wee bit too large of an amount to devote for product refreshes this year?

    I suspect Apple has MAJOR plans for ground breaking products to be introduced this year. Let's just wait and see.
    kenosha77a
    • 72billion in cash

      Apple reported 72billion cash balance.
      where's the other 60 odd billion stashed?
      warboat
  • Huh?

    Do I understand correctly that you want to put all iDevices on the 8th largest cellular network with only limited (and leased) 4g?
    30otnix
    • 4G

      Um, check your facts, US Cell owns a huge chunk of 4G LTE spectrum, Verizon leases from them.
      teamfatman76
      • Um, I did.

        Direct from their website:
        "The 4G LTE network is now available in select cities.... See uscellular.com/4G for complete coverage details. 4G LTE service provided through King Street Wireless, a partner of U.S. Cellular."

        Owning Spectrum does not automatically give them nationwide 4g LTE...Dish Network has quite a bit of spectrum too. Verizon leases from everybody.
        30otnix
        • 4G

          Ok, but this is a common business practice for all carriers, why point that out? It's not pertinent.
          teamfatman76
          • 4G

            Not sure I understand what your pronoun(s) is/are referring to. All I am saying is that US Cellular has a very small 4g coverage area currently in place and that it will take significant investment to expand that coverage nationwide. And based on current expectations of 4g speeds for any upper tier smart phone offering iDevices exclusively on said network seems to be a nonstarter.
            30otnix
  • Sorry

    First, stock pricing issues may be a pressure to change something, but I hope Apple is smart enough to not manage by stock price. Who looks to be managing by stock price, for example? HP.

    Apple saw sales and revenue growth for its key products. Profits were healthy.

    Convertible MBA? I don't know. I think it either gets its allure tarnished by being too expensive or it requires other compromises to be price competitive. We are seeing products like these come to market, but it's too soon to say the feature actually moves units. My guess, no. It's a violation of an Occam Razor-esque rule I'm suggesting here. If you want to be a tablet, be a great tablet. If you want to sell a laptop, sell a great laptop. More to the point, something that addresses two use cases appeals only to those who think they have both use cases. I think we are all Vennsperienced enough to know about the intersection of sets.

    In any case, with convertibles coming to market Apple's design lab is sure to have been working in ideas along the line to see if they can release a product that they can bring to market in an other than me-too manner.

    About the telephony business, what would Apple know about it? What could Apple do with a minor US player that would profitably transform the market in a way that isn't quickly copied by the folks with better networks and comparable capitalization? How much profit is possible and is it enough to draw resources from whatever next big thing Apple may be working on?

    Besides, I'm no investor, but I'm told that when a company announces an acquisition, the stick price for the acquirer goes down and the price for the acquired goes up, if the acquired is big enough to matter.

    So 2013-01-24, good profits, lots of cash, but falling stock price. There's only one alleged problem there. Buying a US Cellular solves it how?
    DannyO_0x98
  • Two solutions for Apple's sliding profits: Convertible notebooks and cellul

    the market for designer clothing and accessories is very small compared to the overall size of the market. apple's designer market is fully saturated at the moment and will not expand whatever kind of magic apple take out of its sleeve. the only redeeming factor for apple is for the market to get out of recession and thus expand the upper middle class and hope that they too will hop on the apple bandwagon.
    kc63092@...
  • It would be awesome but too cannabalistic of them

    It would be awesome to have a Mac Air that doubles as an iPad. Or maybe vice versa. I would probably buy one....it would fill both my needs of a very portable tablet and (sometimes) a laptop. Sometimes I need file folder structure/control and easy trasnfers. Windows 8 Pro is something I may try out but I feel it will be lacking a bit. 4 hours battery life? Ugh. Still, it will be better than lugging around a huge laptop and then a tablet during work. The market will demand a product and Apple will have to respond, at some point. Probably at a much higher price point than what the Air is at now. I truly hope Windows 8 Pro tablets are what they are promising. Who knows, maybe we will have that ultra-convertible I think a lot of us want.

    Short of massive consumer demand, they get too much in profits from selling you both an ipad and a laptop right now though..
    Stormborn
  • Buy US Cellular

    Apple will ruin US Cellular! As much as I would like an iPhone, US Cell is too good and I fear Apple would destroy it. Hands off!!
    blothe
  • :) Sounds like you are an Apple fan who is just seeing the light

    Try Surface Pro or any number of Windows 8 based hybrids. You don't even need 2 operating systems you know ...
    As for a mobile network, I think Apple would really struggle to cope with that business, it really isn't as easy as it looks, anyway, who would they have to blame for poor reception or problems other than themselves. I know verticalisation is their thing, but I think owning their own carrier would leave them far too exposed and would also cause problems with their relationships with other carriers.
    dc@...
  • How many times?

    How many times have you walked into and out of a store without buying anything? Or in and out of a restaurant without eating? Or pick up a product and put it back because it didn't suit your needs? Usually it all comes down to a Company that chooses to make stuff it likes versus stuff the Customer wants. Microsoft seems to have entered this territory if you believe the press and Apple is one step behind or so says the Stock Market. When all else fails, remember that if there's nothing wrong with your money, there's no excuse for a product you're expected to pay for.
    trm1945
  • Here's a much better idea for Apple.

    Bring down the prices for all of their devices, and, for sure, they'll gain a much larger customer base. Then, use that customer base to sell them things, or to increase sales of the other devices which the user(s) might not have yet. Thus, a consumer could be tempted to buy a Mac (or an iPhone or iPad), if the price were lower, say, by $500, or $200 or $100, depending on the device.. Then, through advertising in their iCloud and Siri, sell other products, including iPads and iPhones and all kinds of accessories and apps.

    Would there be a market for lower priced Apple devices, For certain, and that would reduce the available number of customers to other manufacturers.
    adornoe
  • RE: Lowering prices.

    Wonderful idea, adornoe. Did you learn in business school that you should lower the price of a product when you can't make enough to keep up with demand? Maybe you noticed yesterday that Samsung reported quarterly earnings that were less than HALF of what Apples were? What's this about Samsung beating Apple's butt? Oh, yeah. Apple should definitely lower their prices.
    Userama