Apple: The goose that lays the golden eggs

Join Horace Dediu, Daniel Eran Dilger (and me) in New York City Thursday (8/16).

I have a limited supply of half-off tickets to The Goose that lays the golden eggs, a day-long seminar for long-term Apple investors in Manhattan tomorrow. With apologies to my current subscribers (for whom I have undying love), I'm offering them to first-time 12-month subscribers. Tickets (not sold at the door) cost $750. A year of Apple 3.0 costs $100. You do the math.

Dediu's agenda:

  • How to read the company’s performance given its published results. We will review how to build a model of the company’s financials and how it can be used to forecast the next quarter. We can go line-by-line through the income statement.
  • How to think about the markets Apple considers important. This is the best way to forecast the company’s performance beyond its current portfolio. This requires calibrating your sense of timing of innovations. What is too early, what is too small, what is something where Apple can’t exercise control? Innovation theory is essential to this understanding. If you know where Apple could go next and where it won’t it helps you build patience into your planning.
  • How to understand Apple’s culture and its resources and processes. This gets into the critical management question that leadership at Apple is concerned with. I’ve had a few conversations with and have some great insight from former managers. Curiously, this is Apple’s greatest competitive advantage and its sustainability is the key “moat” question. Most people don’t even realize that this is the most important question for investors.
  • How to understand the market’s reaction to Apple. If you understand the three points above it becomes necessary to juxtapose how others see the company. There is a compelling case of asymmetry of information even though “everyone” is watching the same data. I use the fable of “The Goose that Lays the Golden Eggs” to best describe how most people react when they observe Apple. Apple is something which cannot possibly exist and therefore it is fragile and must be treated as a transient system. It leads to deep discounting in the market. This cognitive illusion has an opposite: monopolies are over-valued because they are seen as invulnerable and permanent even though they are brittle. I use antifragility as another metaphor. Many anecdotes from Steve Jobs also indicate that he understood this asymmetry and instilled it in the company. Investors need to understand this dynamic in order to profit from it.

Interested? Write me at First come, first served.

My take: Nobody applies the theory of innovative disruption to Apple and its competitors with more clarity—or graphical flair—than Horace Dediu. For a preview, see his write-up of his Apple summit in Los Angeles two months ago: On knowing the value of everything and the price of nothing.

Click to enlarge.


  1. Fred Stein said:
    Sounds great. Enjoy.

    The insight in the second bullet is worth the price of admission (or a few years sub to Apple 3.0).

    Innovation, by itself, is no big deal. Many people see the next big thing long before it reaches the inflection at the bottom of the “S-curve”. The challenge is to know how close we are to that inflection and then make many brilliant decisions about how to delver the product or service that will be among the winners. (Steve and Sir Jony have talked about this process of iteration, trade-off, debate to turn an idea into reality.)

    Apple has successes and failures in this.

    Success: Apple Watch came to market well after others had delivered smart watches and other multi-function wrist wearables. Apple Watch quickly set the bar in the category. Even so, only the 3rd version really delivered. The rest of category is a mess of OS fragmentation, which will lead to products that will die off sooner rather than later. Samsung, Huawei, and Google Watches will survive because they each have the money and will to keep it going. But all three will compete for left-overs, table scraps, leaving poor ROI for themselves and eco-system partners.

    Not successful..yet.: Siri suffers from wrist mover disadvantage. Since Apple acquired Sirs, AI hardware and software technologies have proliferated like the Cambrian Explosion. Lacking any insider info, I can only guess that Giannandrea will lead a complete redo. It’s long overdue. It’s essential. It will happen.

    August 15, 2018

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