Tech blogs and mainstream media reports in 2013 consistently presented Apple as beset by a series of unsolvable problems, from flagging sales and slipping market share to a generalized lack of innovation. In hindsight, the media was disastrously, egregiously wrong about the horses it chose to back in the technology market this year. Perhaps they'll do a better job in 2014.
2013 started out with analysts and market research groups heaping contempt upon Apple's prospects, particularly in comparison with Google's Android, Samsung and Microsoft's refreshed Windows 8 efforts.
Bizarrely, Google, Samsung and Microsoft were the companies in 2013 with sales problems and a lack of innovation, while Apple continued to remain the most profitable and successful in executing its strategies and the company everyone else in the industry looked to for ideas and leadership.
It's almost as if Apple's year end "Misunderstood" holiday ad (above) was an elaborate yet subtle analogy for how Apple itself was perceived throughout the year, apparently brooding in isolation from the rest of the tech industry family until pulling out a surprise at the end that left its tech siblings and industry observers teary eyed and in need of a hug once they realized what the company had secretly been working on the whole time.
2013 started out with analysts and market research groups heaping contempt upon Apple's prospects, particularly in comparison with Google's Android, Samsung and Microsoft's refreshed Windows 8 efforts.
Bizarrely, Google, Samsung and Microsoft were the companies in 2013 with sales problems and a lack of innovation, while Apple continued to remain the most profitable and successful in executing its strategies and the company everyone else in the industry looked to for ideas and leadership.
It's almost as if Apple's year end "Misunderstood" holiday ad (above) was an elaborate yet subtle analogy for how Apple itself was perceived throughout the year, apparently brooding in isolation from the rest of the tech industry family until pulling out a surprise at the end that left its tech siblings and industry observers teary eyed and in need of a hug once they realized what the company had secretly been working on the whole time.
For example, two weeks before the end of 2012, research firm OTR Global announced Apple would only sell 35-37 million iPhones in the holiday Q1, far short of the 47 million consensus. Citigroup similarly downgraded the company after reporting "evidence of Apple order cuts to some suppliers" based on the firm's talks with suppliers in Asia.
That negative outlook wasn't unanimous; Topeka Capital analyst Brian White characterized what he called the "growing concerns around iPhone 5" and the "doomsday scenarios" of many of his as peers as simply being "inaccurate," and indeed he was correct. As it turned out, Apple actually beat The Street's consensus in iPhone 5 sales during the launch quarter.
However, media coverage of analysts' remarks focused on the negative and issued no corrections after being proven wrong. A report by Sam Mattera of "Benzinga Insights" published by Forbes cited all three analysts' comments but the all-important headline bet on failure to assume the worst for Apple.
That particular piece was titled "Apple iPhone 5 Sales Showing Weakness," even though nothing in any of those remarks provided any evidence that Apple's iPhone sales were actually weak.
It was the insight of most analysts that proved to be weak, not the sales of iPhone 5. The sheer volume of similarly inaccurate reports, issued with confident authority throughout 2013, created a bulwark of nonsense that more informed sources were forced to pull down over and over again.
Checks without balances
"Channel checks" and "supplier checks" would continue to be citied throughout 2013 to "prove" things that were simply false, constructing a tower of mass delusion fabricated out of conjecture, invented rumors and flawed prognostications.
Despite regularly being proven completely wrong after the fact, there were rarely any mentions at all of the historical inaccuracy of previous "checks" when a new batch of negative news was reported, based on more "checks" floated by non-credible analyst depositors. "the supply chain is very complex, and we obviously have multiple sources for things... Even if a particular data point were factual, it would be impossible to interpret that data point as to what it meant for our business." - Tim Cook
Throughout 2013, Apple's chief executive Tim Cook repeatedly warned analysts against drawing conclusions based on such "checks" with suppliers, stating "the supply chain is very complex, and we obviously have multiple sources for things... Even if a particular data point were factual, it would be impossible to interpret that data point as to what it meant for our business."
However, prominent analysts ignored Cook's admonitions and wrote up "checks" of insufficient fact anyway, racking up a series of predictions and observations that were flatly wrong and wholly misleading.
Instead of dinging the credit rating of the "channel check" bouncers, the flood of wrongheaded negativity and inaccurate predictions issued about Apple by a series of analysts and research firms throughout 2013 actually penalized Apple and the minority of analysts who were correct, wildly distorting Apple's share price to the point where the people who were factually wrong the most suddenly became the reliable authorities on where Apple's stock was heading.
It was as if blind drivers with no real understanding of mechanics or physics had predicted that Apple's vehicle was fated to fail for a series of wrong-headed reasons, but then sure enough it did because they managed to drive it into the ditch themselves.
Then, after managing to crash Apple's perceived valuation, the drivers got out and blamed Cook for the company's stock price dip, as if we'd all forgotten how the very same analysts had done the same thing to Apple's valuation in 2008 while Steve Jobs was at the helm.
Bad advisors blame the facts for being wrong
In addition to predicting an iPhone sales slump that failed to occur, analysts also invented problems for iPhone 5 based on their own flawed understanding of consumer demand, which appeared to be derived entirely from the decisions being made by the relative commercial failures competing with Apple.
Analysts incessantly harped on iPhone 5 for not incorporating NFC, the technology Google failed to successfully deploy in 2012 and eventually abandoned after the search giant's massive investment in Google Wallet collapsed at the feet of consumer apathy.
While apparently well versed on the supposed importance of NFC, analysts and media sources seemed to remain oblivious about the advantages of Bluetooth LE, the technology Apple selected for iOS 7 iBeacons and which is now supported across the entire iPhone range; support for BLE on Android devices is spotty and hampered by hardware fragmentation.
Android's failed focus on NFC was mirrored by its licensees' focus on selling high volumes of cheap, largely unprofitable handsets. So analysts similarly assailed Apple for not selling cheap, loss leader phones, then boldly predicted that Apple would do just that in 2013 with the release of a "iPhone 5c as in Cheap" model.
When the company failed to follow their failed predictions, a series of analysts slashed their outlook for the firm. It was as if a meteorologist had arrogantly condemned the Earth for not raining as he had predicted would occur, then issued a proclamation announcing that the Earth was headed for bleak, desolate ruin for having failed to rain.
Analysts were so upset that iPhone 5c failed to be what they predicted that they chastised the device (a revamped edition of last year's iPhone 5) for not outselling the more expensive, top of the line iPhone 5s, which is of course not what it was designed to do.
Analysts' scathing hatred of Apple's iPhone 5c was so intense that they largely failed to notice that it erased competing Android phones from the top of the sales charts in both the U.S. and in Japan, and was found to be very effective at attracting Android switchers, which is of course what it was designed to do.
Dovetailing with their incorrect predictions of a cheap iPhone, prominent analysts also predicted Apple would follow Samsung's efforts to sell a big screen iPhone in 2013. However, Samsung and other Android licensees were primarily selling cheap and big screen phones because Apple had taken over the cream of the market: premium 4 inch iPhones and 7.9 and and 9.7 inch iPads, the exact form factors to sell in the greatest quantity and at the highest profits.
Why analysts were pummeling Apple for not racing to follow its less successful competitors, most of whom were actually losing money, made no sense at the beginning of 2013. But it made even less sense as 2013 progressed, because "cheap and big" continued to fail in the market in competition with Apple's offerings, which were neither big nor cheap, but were profitable and popular at sustainable pricing.
When definitively failing to succeed, change the definition of success
Upstaging the hubris of analysts who found their own nonsensical predictions inherently infallible, market research groups determined within 2013 to change the definition of commercial success in the smartphone and tablet markets from profitability buffered by a strong, sustainable ecosystem (the very conditions that kept Microsoft Windows in power throughout the 1990s) to simply the volume of shipments that were estimated to have occurred worldwide by a collective composite of unnamed companies (the very definition of the cutthroat PC hardware makers who performed poorly during the PC era, resulting in mergers and bankruptcy).
Remember the outstanding success of the iPod? According to the logic of this year's market researchers, It simply never happened because millions of people in developing countries could never afford to buy iPods or access iTunes. The real success story in MP3 players were ostensibly the sources of piles of no-name audio devices produced in China, even though those devices had no commercial significance or cultural impact.
Of course, nobody who lived through the iPod's heyday in the 2000s would buy such a nonsensical historical revision today. In 2013 however, Strategy Analytics, IDC and Gartner convinced virtually everyone that Apple's iPhone and iPad were essentially unimportant because mountains of no-name phones and tablets were retroactively discovered and presented in charts that assigned "Android" as much as an 80 percent collective share of the "market."
Most astoundingly, the entire concept that Android was the world's most important platform for tablets and smartphones was invented entirely within the second half of 2013. Strategy Analytics concocted its numbers denigrating the success and significance of the iPad in July, while IDC followed suit in October.
Within just months, the entire notion of sustainable capitalistic enterprise was turned upside down. The tech world was retrained to believe that the point of being in business was not to create desirable products that could attract paying customers who would fuel the profits required to retain talent and invest in future innovation.
Instead, we were led to believe that the real measure of success was to produce vast volumes of barely functional devices that people would be loath to pay anything to acquire, necessitating shortcuts and compromises that would effectively render the products unfit for regular use.
Sure enough, even in an open, competitive market, Android devices can't fetch a fraction of the Average Selling Price of an iPhone or iPad, and simply aren't used to make purchases, run innovative apps, support custom business software development, or even browse the web on a scale comparable to iOS devices, despite outnumbering them.
The reason for the curious redefinition of success in the mobile device industry that occurred in 2013 was explained by Strategy Analytics, which outlined on its website that one of its most valuable "high stakes projects" for its clients is the practice of "influencing consumer behavior and buying preferences."
And the plain fact was that Apple's competitors desperately needed some artificial fact fluffing by paid statisticians, because their 2013 was far worse than even the most sourly dour interpretations of Apple's reality crafted by analysts.
Google's ugly 2013
One likely wouldn't realize it by looking at Google's surging stock price, but 2013 provided further clarity that Google's dominant position over the web was failing to extend into the overwhelming trend toward mobile devices. Mobile device users are not primarily searching Google's landing page as a starting point for online activity. They are increasingly turning to apps, including Facebook and Twitter, to find what they are looking for.Apple's competitors desperately needed some artificial fact fluffing by paid statisticians, because their 2013 was far worse than even the most sourly dour interpretations of Apple's reality crafted by analysts
Additionally, the most commercially valuable mobile users are iOS users. And Apple has introduced two features that have intercepted iOS mobile users before they plugged into the Googleplex: Siri in 2011, and Apple's own Maps in 2012. In 2013, Apple's iOS 7 solidified the detachment of mobile users' umbilical cord from Google, linking Siri search to Microsoft's Bing rather than Google for general purpose search.
And while the media promoted Google's own Maps app for iOS 6 last December as the solution for the crisis they had invented surrounding Apple's own bundled Maps offering, it became clear in 2013 that Apple's Maps claimed a very large chunk of Google's maps business that Google's own Maps app failed to win back.
Two iPhone hardware features also had a significant impact on the overall allure of Google's Android platform. The first was iPhone 5's support for LTE, which erased Android's strongest exclusive feature advantage over iPhone. Apple immediately took over the top spot among LTE phones in 2013, then doubled down this fall with the release of iPhone 5s and iPhone 5c, which expanded LTE support to the largest number of carriers, including China Mobile's TD-LTE.
A second major hardware feature to debut in 2013 was Apple's 64-bit A7, which not only delivered the power to enhance apps, capture sophisticated photos and support Touch ID, but also clarified that Apple owns the profitable, high end luxury market in smartphones and tablets.
It also helped establish which media outlets are completely devoid of any credibility.
Google doesn't even have an articulated 64-bit strategy for Android because Android isn't moving forward as a cutting edge mobile platform. Instead, Android is retrenching into a role of supporting low end, budget devices, where a 64-bit processor isn't even relevant. Google's own Moto X unveiled itself as an uninspiring basic device of which the most exciting feature was the ability to customize its exterior color. When that flopped, Google pushed out an even lower end device.
The most exciting Google device all year was a feature limited, me-too copy of AirPlay sold as a loss leader dongle. Other than that, the company unveiled another cheap, profitless and significantly flawed Nexus 7 tablet, another commercially irrelevant Nexus smartphone, that supremely overhyped Moto X offering that delivered an uncanny impression of Microsoft's Zune launch, and a series of Mac clones under the Chrome brand that differ from Apple's offerings in that they don't actually sell in meaningful volumes.
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